Beyond Words: 3 Ways Climate Transition Plans Drive Action
Beyond Words: 3 Ways Climate Transition Plans Drive Action
Stakeholders and regulators are increasingly demanding transition plans that address climate-related risks due to their significant financial impact on enterprise value. Today, stakeholders want to know how management is mitigating these risks. A credible transition plan lays out a comprehensive strategy that aligns both business and financial planning. Ultimately, actions speak louder than words: articulating and executing on a credible transition plan that addresses climate-related risks is now a strategic imperative.
For real value, transition plans must move beyond high-level commitments. They need to demonstrate how a business will navigate evolving market dynamics, regulatory changes, and technological shifts. Below are three practical approaches organizations can take to transform climate pledges into meaningful action—and value.
1. Deploy What Works Today
The first step is grounded in feasibility. Which solutions are economically and technologically viable right now?
One immediate area of value is energy management. Reducing energy usage—by green-lighting previously unfunded energy efficiency projects or implementing strategic energy management programs, which —often leads to savings of over 10%. Securing low-carbon energy through power purchase agreements can reduce exposure to energy market volatility, and in recent years, many organizations have lowered energy spend through such agreements. Importantly, both approaches reduce emissions. Pro tip: involve your tax team to identify applicable tax credits or penalties that could enhance your analysis.
Another near-term opportunity lies in supply chain restructuring driven by geopolitics, tariffs, and other global factors. Applying a climate lens to these decisions can reduce emissions, including hard-to-abate Scope 3 emissions, while also increasing resilience. Building from the ground up—selecting low-carbon suppliers, choosing locations with cleaner grids, optimizing for rail or ocean freight—is always preferable to retrofitting solutions.
By focusing on actionable, current solutions, businesses can cut operating costs, improve resilience, and build credibility with stakeholders. This is where execution meets impact—and where companies can prove they’re not just talking about transition, they’re delivering it.
2. Prepare for What’s Coming
The second approach centers on readiness. Companies must identify emerging technologies, industrial trends, buyer behaviors, and impending regulations—such as alternative fuels, climate metrics in procurement scorecards, and carbon pricing mechanisms—and prepare to integrate these into operations and transition plans.
This requires investment in research and development, piloting innovative solutions, and transparently disclosing the steps required to reach commercial or technical viability. Scenario planning for future regulatory or market changes is also critical. By taking these steps, organizations position themselves to seize upcoming opportunities while mitigating long-term risk.
3. Shape the Future
The third and most strategic approach is influence. Companies have a unique opportunity to shape the future by engaging with policymakers, industry peers, and financial institutions. This means advocating for effective regulation, creating demand signals for emerging technologies, establishing carbon markets, and partnering with peers and innovators to accelerate commercialization.
By taking an active role in shaping the market, organizations can unlock new investment in transition finance, drive innovation, and ensure that future rules support long-term value creation. This is not just about compliance—it’s about leadership.
A Call to Action
Transition planning is no longer a niche concern—it’s a core business strategy. Consider your transition plan as a comprehensive strategy to respond to climate-related business risks and opportunities, and for implementing real solutions. Most importantly, communicate these three essentials in the context of business value, both internally and externally:
- Your ambition—whether it’s a target, goal, or commitment
- Your actions—detailing how you will achieve your ambition
- Your accountability structure—outlining how you will drive success
Join KPMG at New York Climate Week on September 23 for a Transition Plan Bootcamp, where we’ll explore each of these approaches and actions in greater depth and help you design your next steps. Register here.
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