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As climate commitments face increased investor scrutiny, the need for clear and credible transition plans has never been greater. Recognizing this, the International Financial Reporting Standards (IFRS) Foundation has issued new technical guidance to help companies align their climate transition plans with IFRS S2, the global baseline for climate-related disclosures. The update, released in June 2025, aims to clarify how organizations can disclose credible, actionable transition plans in line with investor expectations.
According to this guideline, a transition plan is a methodical blueprint for bringing operations, financial planning, and corporate strategy into line with a net-zero economy. These plans should now incorporate the following, per the IFRS:
Targets for reducing emissions (short, medium, and long term)
Strategies for allocating capital to achieve these targets
Information regarding the processes for accountability and governance
Concrete timelines for KPIs and milestones
Crucially, the guidance distinguishes between aspirational goals and actionable strategies, pushing companies to demonstrate tangible progress rather than simply outline long-term ambitions. This means organizations can no longer rely on vague promises or distant net-zero targets without a defined path to get there. The new framework encourages them to disclose not just where they want to go, but how and when they plan to get there, highlighting interim targets, milestones, investment plans, and internal governance structures to support execution.
For jurisdictions like Singapore, UAE, and the EU that are rapidly aligning with ISSB standards (IFRS S1 & S2), this update brings much-needed clarity and standardization. Investors will now be better equipped to evaluate whether a company’s transition plan is credible or merely symbolic.
With transition plans becoming a cornerstone of ESG disclosures, this new IFRS guidance is a step forward in transforming climate commitments into measurable corporate action. Businesses should revisit their current plans and reporting processes to ensure alignment and build investor trust. Let’s take this as a chance to move beyond promises and build a future where goals are not just declared but demonstrated too.
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