February 2025
Climate change mitigation, climate mitigation plan, and transition plan for climate mitigation all share a common goal: reducing greenhouse gas (GHG) emissions to prevent further global warming beyond 1.5°C. As the climate crisis intensifies, businesses face increasing pressure from investors, customers, and governments to take action.
The Paris Agreement set the global goal to limit temperature rise to 1.5°C, but reports from the Intergovernmental Panel on Climate Change (IPCC) show we are on track to exceed this threshold. To prevent this, businesses must transition from fossil fuels to renewable energy, restore natural ecosystems, and ensure a just transition that protects workers and communities.
With the Corporate Sustainability Due Diligence Directive (CSDDD) taking effect in 2027, large companies must adopt climate transition plans by law. Similarly, the Corporate Sustainability Reporting Directive (CSRD) requires such plans when climate is a material issue.
In this blog, we’ll break down what a climate transition plan is, what it must include, and how to create one that meets regulatory requirements.
What is a climate mitigation?
Climate mitigation refers to actions taken to reduce or prevent greenhouse gas (GHG) emissions, limiting global warming to 1.5°C in line with the Paris Agreement. This includes shifting to renewable energy, cutting emissions, and protecting natural ecosystems to build a sustainable future.
What is a climate transition/mitigation plan?
A climate transition plan outlines how a company will align its business model with the goal of limiting global warming to 1.5°C, as set by the Paris Agreement. It ensures the company remains relevant in a net-zero carbon economy by setting short-, medium-, and long-term targets for reducing greenhouse gas (GHG) emissions.
A credible transition plan is based on science-based targets, accountability mechanisms, and regular reporting using standardized, comparable, and reliable metrics. Fortunately, both the CSDDD and CSRD share the same definition of a climate transition plan, aligning regulatory requirements.
What should a climate transition plan include?
CSDDD require in-scope companies to adopt plans that contains four components:.
Time-bound targets
Companies have to set targets related to climate change for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence and, where appropriate, absolute emission reduction targets for GHG for scope 1, 2 and 3, as well as GHG emissions for each significant category, including short-, medium and long-term targets.
Description of decarbonization levers
Companies must include key actions that it plans to undertake in order to reach the targets under point one above, including, where appropriate, changes in the product and service portfolio of the company and the adoption of new technologies.
Funding the implementation
Include both an explanation and a quantification of investments and funding that enables the implementation of the transition plan.
Role of the company’s management
Describe the role of the administrative, management and supervisory bodies of the company with regard to the plan.
By including these four pillars, companies not only meet compliance requirements but also demonstrate leadership in climate action.
How do you develop a climate transition plan?
Although the CSDDD does not yet provide detailed guidance, best practices are emerging. Here’s a five-step approach to creating a robust transition plan:
Step 1. Set your GHG baseline
- Measure and track Scope 1, 2, and 3 emissions as the foundation for your plan.
- Update data annually to ensure accuracy.
Step 2. Climate target roadmap
- Set clear targets aligned with the 1.5°C goal and net-zero by 2050.
- Ideally define targets for short-, medium- and long-term.
- Include flexibility for future growth and changes in business models.
Step 3. Conduct risk assessment
- Identify physical and transition risks (e.g., extreme weather, regulatory shifts).
- Use insights to prioritize decarbonization levers.
Step 4. Action planning and financial allocation
- Identify costs, investments, and necessary resources for implementation.
- Outline specific steps to achieve emissions reduction.
Step 5. Implement, monitor and adjust
- Implement decarbonization initiatives, track progress, and adapt to evolving conditions.
Monitoring and reporting
To comply with CSDDD, companies must track progress toward climate targets and update their plans when circumstances change. Regular monitoring and public reporting ensure transparency and accountability.
Need a solution for tracking your supply chain emissions? Talk to one of our experts today
Why should companies invest in a climate transition plan?
Beyond compliance, having a climate transition plan is essential for:
- Risk mitigation – Climate change poses financial risks, from supply chain disruptions to regulatory penalties.
- Competitive advantage – Companies with strong sustainability commitments outperform in procurement and investment decisions.
- Reputation & leadership – Aligning with climate goals builds trust with investors, customers, and stakeholders.
For companies aiming to lead in sustainability, a well-developed transition plan isn’t just a regulatory requirement - it’s a business necessity.
Get started today
With CSDDD taking effect in 2027, having a climate transition plan will no longer be optional. Companies must align with the Paris Agreement, set clear reduction targets, and track progress - or risk penalties and missed opportunities.
The good news? You don’t have to do it alone. Digital platforms can simplify emissions tracking and help you stay ahead of regulations. We are one of them!
Ready to take action? Talk to one of our experts today
Related blog posts you might like:
