OECD Guidance on Transition Finance

Annex B. Mapping of transition plan elements

Table A B.1 below provides a mapping of existing initiatives focused on transition plans and compares them across several key components identified in Chapter 4 to ensure the credibility of transition plans.

Table A B.1. Mapping of key elements of existing initiatives focused on transition plans

Initiative	L-T target	Interim target	Use of scenario analysis	Consistency with 1.5	Scope 3 emissions	Use of taxonomies	Performance and progress measurement	Information on use of carbon credits and offsets	DNSH	Just transition	Financial plans and internal coherence; governance and accountability	Transparency and verification	Tailored approach for SMEs	Policy engagement
ACT	PA temperature goal	N/A	✓	No	Coverage varies by sector. To be included where relevant.	✓	✓	In line with standards (whether national or international) guaranteeing robustness, additionality, transparency, and permanence Shall not be subtracted from the GHG inventory Excluded from the calculation of quantitative ACT indicators related to targets, material investments and sold product performance.	No	No	✓	✓	✓	✓
CA100+	GHG targets by 2050	2025 and 2026-2035 targets	✓	✓	Targets to include scope 3 relevant for the sector Publish methodology for scope 3 targets	Increase/ disclosure green revenues in line with EU taxonomy	✓	No offsets where viable decarbonisation options exist	No	Under development	✓	No	No	✓
CBI	Net zero by 2050	3-5 year targets	No	✓	Upstream scope 3 emissions to be included in KPIs; downstream to be disclosed for stranded activities	No	✓	Should not be used	No	No	✓	✓	No	No
CDP	Net zero by 2050	Five-ten year interim	✓	✓	Included in annual inventory	No	✓	No	No	✓	✓	✓	No	✓
CPI	Net zero by 2050	✓	✓	✓	For all companies including subsidiaries	No	Emission metrics in both absolute terms and intensity-based; to be updated annually	State share of offsets (to decline over time) Consistency with global standards	Transparency on unavoidable trade-offs	✓	✓	✓	✓	✓
CSL	Net zero by 2050	2030 targets	✓	✓	Included in targets when significant and data allows	No	✓	Use clear rules if using carbon offset	✓	✓	✓	No	No	✓
EFRAG	PA temperature goal	5-year rolling targets and 2030 target	✓	✓	To be disclosed	Disclosure required by the EU Taxonomy (share of Taxonomy-compliant turnover, CapEx and OpEx or on their green asset ratio)	✓	Removals, carbon credits or avoided emissions should not be means to achieve targets When carbon credits are used, explanation needed on the extent of their use and quality	As per EU taxonomy	Covered in the social standards	✓	✓	✓	Covered in the RBC standard
GFANZ	Net zero by 2050	To 2030 and earlier	No	✓	Net-zero commitments to cover Scope 3 emissions of companies in sectors that are significant climate change contributors or where Scope 3 emissions are material and data is available.	✓	✓	Consider credits purchased by portfolio companies separately from their emissions and advocate for disclosure regarding type of credit and accounting methodology	No	✓	✓	✓	✓	✓
ICMA	L-T GHG targets		No	Ideally	Included in targets. Estimated on a 'best effort' basis for some sectors until calculation methodologies are developed.	No	Intensity and absolute	No	Yes	Just transition reference	✓	✓	No	No
IFRS/ISSB	PA temperature goal	✓	✓	✓	To be disclosed. If excluded, the reason for omission to be provided.	No	✓	Disclosure on: extent of reliance on offsets; verification/ certification; type and other factors/ assumptions	No	No	✓	✓	No	No
IGCC	Alignment with PA temperature goal and net zero by 2050.	✓	✓	✓	To be included in net-zero targets if material.	No	✓	To be used only as a last resort. When used, disclosure needed on: Share of targets consisting of offsets Share by type of offset Average price paid and assumptions on permanence and other factors Intended timeframe for their use Criteria used to assess credibility How double-counting is avoided.	No	✓	✓	✓	No	✓
SBTi	Net zero by 2050	5-10 year targets	No	✓	To be included in targets. For companies with scope 3 emissions that are at least 40% of total emissions at least 67% of scope 3 emissions must also be covered in near-term targets.	No	✓	Targets require long-term deep decarbonisation targets of 90-95% across all scopes before 2050. When a company reaches its net zero target, only a limited amount of residual emissions can be neutralised with high quality carbon removals (no more than 5‑10)	Partially	No	No	No	✓	No
TCFD	Transparency on dates	No	✓	global temperature goal (e.g. 1.5)	Transparency on scope of emissions considered	No	✓	Transparency on use of removals and offsets	No	No	✓	✓	No	No
TPT	Alignment with PA temperature goal, ideally 1.5 by 2050.	✓	Sensitivity analysis	No	✓	No	✓	Transparency on the reliance of offsets/carbon credits: Whether they are verified/certified Type Factors to assess credibility and integrity (e.g. permanence)	Partially	✓	✓	✓	✓	✓

Note: This mapping includes some initiatives which are in draft/proposal form, such as the ISSB Exposure Draft on Climate-related Disclosures, the draft EU Sustainability Reporting Standards and the UK Transition Plan Taskforce (TPT) Call for Evidence document. This mapping includes GFANZ Recommendations and Guidance on Financial Institution Net-zero Transition Plans, noting the Real-economy Transition Plans workstream is under development.

Source: (ACT, 2019[1]; CA100+, 2021[2]; CBI, 2021[3]; CDP, 2021[4]; CPI, 2022[5]; CSL, 2021[6]; EFRAG, 2022[7]; GFANZ, 2022[8]; ICMA, 2020[9]; IFRS, 2022[10]) (IFRS, 2022[10]) (IGCC, 2022[11]; SBTi, 2021[12]; TCFD, 2021[13]; TPT, 2022[14]).

References

[1] ACT (2019), ACT Framework, https://actinitiative.org/wp-content/uploads/pdf/act-framework-eng-2019-04-09.pdf (accessed on 1 May 2022).

[2] CA100+ (2021), Net Zero Company Benchmark, https://www.climateaction100.org/net-zero-company-benchmark/ (accessed on 29 April 2022).

[3] CBI (2021), Transition finance for transforming companies, https://www.climatebonds.net/files/files/Transition%20Finance/Transition%20Finance%20for%20Transforming%20Companies%20ENG%20-%2010%20Sept%202021%20.pdf (accessed on 29 April 2022).

[4] CDP (2021), Climate Transition Plan: Discussion Paper, https://cdn.cdp.net/cdp-production/cms/guidance_docs/pdfs/000/002/840/original/Climate-Transition-Plans.pdf?1636038499 (accessed on 29 April 2022).

[5] CPI (2022), What Makes a Transition Plan Credible? Considerations for financial institutions, https://www.climatepolicyinitiative.org/wp-content/uploads/2022/03/Credible-Transition-Plans.pdf (accessed on 29 April 2022).

[6] CSL (2021), “The Good Transition Plan - Climate Action Strategy Development Guidance for Banks & Lending Institutions: COP26-version”, https://static1.squarespace.com/static/5e0a586857ea746075c561a3/t/61fa7a928bf1444954619fa5/1643805346245/CSLN+Good+Transition+Report+01.22.pdf (accessed on 29 April 2022).

[7] EFRAG (2022), Exposure Draft ESRS E1 Climate Change, https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FED_ESRS_E1.pdf (accessed on 29 April 2022).

[8] GFANZ (2022), Financial Institution Net-zero Transition Plans, https://assets.bbhub.io/company/sites/63/2022/06/GFANZ_Recommendations-and-Guidance-on-Net-zero-Transition-Plans-for-the-Financial-Sector_June2022.pdf.

[9] ICMA (2020), Climate Transition Finance Handbook, https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/Climate-Transition-Finance-Handbook-December-2020-091220.pdf (accessed on 30 April 2022).

[10] IFRS (2022), Draft IFRS S2 Climate-related Disclosures, https://www.ifrs.org/content/dam/ifrs/project/climate-related-disclosures/issb-exposure-draft-2022-2-climate-related-disclosures.pdf (accessed on 29 April 2022).

[11] IGCC (2022), Corporate Climate Transition Plans: A guide to investor expectations, https://igcc.org.au/wp-content/uploads/2022/03/IGCC-corporate-transition-plan-investor-expectations.pdf (accessed on 30 April 2022).

[12] SBTi (2021), SBTi Corporate Net-Zero Standard, https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf (accessed on 29 April 2022).

[13] TCFD (2021), Task Force on Climate-Related Financial Disclosures - Guidance on Metrics, Targets, and Transition Plans, https://assets.bbhub.io/company/sites/60/2021/07/2021-Metrics_Targets_Guidance-1.pdf (accessed on 4 April 2022).

[14] TPT (2022), A Sector-Neutral Framework for private sector transition plans - Call for Evidence, Transition Plan Taskforce (TPT), https://transitiontaskforce.net/wp-content/uploads/2022/05/TPT_Call_for_Evidence.pdf.