Climate Transition Plans: A Practical Framework for Investor Reporting

For many SMEs, investor climate reporting is becoming a regular part of the growth journey. But that doesn’t mean it's easy...

Funds are under pressure from LPs and regulators to understand the carbon footprint of their portfolios, identify transition risks, and track progress toward Net Zero. Which means more and more businesses are being asked to provide:

Annual emissions data (Scopes 1, 2, and 3)
Science-based reduction targets
A plan to reach them
Regular updates on progress

That’s a big ask – especially when you don’t have an in-house sustainability team.

A Climate Transition Plan (CTP) provides a clear, structured way to respond.

A Recap - Why investors are asking for this

Climate risk is now investment risk. From TCFD to SFDR, regulations are pushing funds to disclose how they manage climate-related exposure. As a result, portfolio companies are being asked to understand and report emissions impact.

For general partners, having credible, comparable data across their portfolio makes it easier to report to LPs, assess climate risk, and back businesses leading the low-carbon transition.

For SMEs, this creates a new challenge – and a new opportunity.

The upside - Why your business should build a Net Zero plan

Providing a robust CTP isn’t just about keeping your investors happy. It helps you:

Stand out in funding rounds – Investors increasingly favour companies that can show they’re managing climate risk – and taking credible steps toward Net Zero.
Build operational resilience – Understanding your carbon footprint can help spot inefficiencies, reducing costs, as well as identify key risks and opportunities as a result of the transition to a low carbon economy that you might otherwise overlook.
Avoid greenwashing – Without a clear, data-backed plan, it’s easy to make pledges that don’t hold up under scrutiny. A structured Climate Transition Plan shows that your claims are credible – helping you build trust with clients, customers, and investors.

What a good Climate Transition Plan includes

A CTP is essentially your climate strategy in one place. It combines five key elements:

1. Full-scope carbon footprint

Measure your emissions across Scopes 1, 2, and 3, in line with the GHG Protocol (the global standard for carbon accounting). This gives you a clear starting point, called your baseline.

2. Science-based targets

Set Net Zero goals that align with the Science Based Targets initiative (SBTi) – the globally recognised framework for climate action. This means committing to reduce emissions in line with a 1.5°C pathway, consistent with the Paris Agreement, including a near-term target (e.g. 2030) and a long-term commitment (e.g. 2050, with 90%+ reduction).

3. Decarbonisation plan

This is where ambition becomes action. A strong plan maps out the steps you'll actually take to reach your target – grounded in data, and tailored to your business. We’ll break it down in detail below.

4. Offset strategy

Where appropriate, invest in high-integrity carbon offsets.

5. Reporting and governance

Track progress over time. Share updates with your board and investors. Embed oversight into leadership roles.

How to build your decarbonisation plan

Step 1: Hotspot analysis

‍Start by understanding where your emissions are coming from. Use your GHG inventory to identify the highest-impact categories – typically, this will include areas like purchased goods and services, business travel, and upstream/downstream logistics.

Sort emissions sources from high to low using GHG Protocol categories., then zoom in on the big ones. The goal here is to generate a ranked list of priorities based on impact.

Step 2: Identify practical steps

‍For each hotspot, explore ways to reduce emissions. Some actions will be internal – like switching to renewable energy, establishing a sustainable travel policy, or making changes to materials you use in your products. Others will require collaboration – for example, asking suppliers for emissions data or educating customers on how to use your products in a more carbon-efficient way.

You might need to lean on third-party expertise here.

Step 3: Quantify potential impact

‍Estimate the carbon savings for each action. This helps you to understand which levers will move the needle, and to understand how far toward your goal your identified plans will take you.

Step 4: Consider timelines, cost, and challenges

‍Now assess the practical side. For each action, note:

How long will it take?
What will it cost (low, medium, high)?
Are there any blockers – technical, regulatory, or supply chain-related?

This adds practical commercial and operational context to your decisions, and again helps you to prioritise. Your plans need to be feasible to be credible after all.

Step 5: Prioritise your action plan‍

Finally, bring it all together. Use the insights above to prioritise your plan based on two things:

Impact – which actions offer the greatest CO₂ reduction?
Feasibility – which are realistic to implement given your resources and constraints?

Your plan should balance ambition with pragmatism. It’s about showing progress – and giving your investors confidence that your path to Net Zero is grounded in data, not guesswork.