Financing and Transition Planning: From Strategy to Implementation

This article summarizes the key insights from presentations and discussions at the financial sector workshop hosted by the Climate Governance Initiative on 7 May 2025 in Singapore. The goal of the workshop was to explore how board directors can lead forward-looking transition planning.

Climate change and nature loss are not distant risks of the future, they are present-day realities. Transition planning is therefore a crucial tool for identifying and managing climate and environmental risks, while also serving as an opportunity to reshape business models. Strong transition strategies enable companies to maintain access to financing, meet investor and regulatory expectations, and ensure long-term resilience and competitiveness. Board members should treat oversight of transition planning as a key part of their responsibilities.

Transition Planning: Universal Principles and Practical Application

Every company will approach transition planning in its own way, but there are foundational governance tools and principles that can help board members effectively lead and oversee the process. These tools can support the development of investment strategies aligned with transition goals or guide the assessment of transition plans of companies they invest in or lend to. For companies seeking funding for their own transition, robust governance of transition planning can help attract investment.

Disclosures on governance:

The Transition Plan Taskforce (TPT), under the International Financial Reporting Standards Foundation, is developing a transition plan disclosure framework, which includes five key reporting pillars:

  1. Strategic foundations

  2. Implementation strategy

  3. Stakeholder engagement strategy

  4. Metrics and targets

  5. Governance, which specifically highlights the role of boards, including their responsibilities and actions in ensuring a credible transition plan (see more in the TPT Disclosure Framework).

The World Economic Forum has developed a set of principles for effective climate governance, offering practical questions and guidance to help directors actively lead the transition. See Climate Governance Principles for more information.

Nine Practical Actions for Board Directors

Workshop participants collectively identified nine ways in which board members can contribute to a successful green transition:

  1. Align leadership and oversight, foster collaboration, and create a shared vision

Bridge leadership and supervisory structures.
Encourage collaboration between departments and with external stakeholders.
Develop a common vision for the transition.

  1. Align organizational culture and incentives

Introduce internal incentives to motivate staff and leadership.
Use incentives tied to long-term goals, rather than short-term performance only.

  1. Start with a comprehensive, expert assessment

Conduct a thorough assessment of transition risks and opportunities.
Bring in external experts if needed to ensure objectivity and depth.

  1. Ensure transparency and accountability

Report progress regularly to all key stakeholders.
Set clear timelines and expectations as accountability mechanisms.

  1. Improve risk quantification

Measure transition risks and integrate them into the risk management system.
Use external support if needed to build internal capacity.

  1. Embed long-term thinking

Avoid the “tyranny of the urgent” – boards must champion long-term resilience.
Consider establishing or strengthening sustainability committees with a clear mandate to oversee risk assessments and transition plans, empowered for long-term action and able to adapt to new information.

  1. Strengthen board leadership and oversight

Board members should act as champions of transition culture.
Provide training for board members, as many lack the knowledge or confidence to act.
Boards can support, guide, and encourage rather than demand immediate results.

  1. Establish a disclosure plan

Develop a disclosure strategy aligned with international standards (e.g., ISSB, taxonomy).
Link disclosures to broader strategy, risk management, and investment planning.

  1. Upgrade risk management systems

Update existing enterprise risk management (ERM) systems to fully integrate climate and transition risks and address past blind spots where these risks were overlooked.

Vir: Climate Governance Initiative. Transition Finance and Planning: From Strategy to Action.