Beyond disclosure: Making transition plans your competitive advantage

Across boardrooms, the sustainability conversation is undergoing a necessary shift. What once centered on climate ambition is now a question of commercial readiness: How can sustainability deliver real-world impact while also creating long-term financial value?

Frameworks such as the Global Reporting Initiative (GRI) and ISSB’s IFRS S1 and S2 have developed how organizations assess and disclose sustainability and climate-related risks. These necessary frameworks help to identify sustainability risks and opportunities primarily through an eye on ‘what you say’ in disclosures. Though once a financial firm has established what is material, next is how to act on it. That next step requires a transition plan.

Transition plans have notably become a mechanism for turning ambition into action. A transition plan is a forward-looking, time-bound actionable road map that outlines how an organization will adapt its business model, operations, and capital allocation to align with the goals of a low-carbon, resilient, and sustainable economy. And importantly, the financial firm’s strategic objectives.

As recognized by the UK-based Transition Plan Taskforce (TPT) and embedded into the ISSB’s IFRS S2 standard, credible transition plans are built on three foundational pillars:

• Ambition: Clear and credible long-term goals (such as Net Zero or nature-positive outcomes), supported by interim targets.
• Action: Specific measures and investments across the value chain to deliver those goals.
• Accountability: Governance, incentives, and data frameworks to ensure delivery and drive transparency.

Transition plans are no longer just for climate leaders. Increasingly, investors, regulators, clients, and supply chain partners expect organizations, including financial institutions, to be able to articulate a credible plan to transition. For organizations across the Middle East, this is an opportunity to progress, and to lead.

A common misconception is that transition plans are simply updated decarbonization strategies. In practice, they can be business transformation roadmaps of different scales. They should be designed to enable companies to rewire how sustainability value is created and preserved by embedding sustainability into corporate strategy, lending, investment or underwriting decisions, innovation, and enterprise risk management.

A credible transition plan supports sustainability in two ways:

• Value preservation: Including managing climate and nature-related risks, avoiding stranded assets, ensuring license to operate, and improving resilience.
• Value creation: Including unlocking new markets, innovating products and services, and partnerships that align with sustainability and driving revenue for the firm.

Transition planning is the strategic lever that can turn sustainability from a potential or actual cost to a driver of financial performance.

For organizations across the GCC, transition planning is particularly pertinent. National development agendas such as Saudi Arabia’s Vision 2030 and the UAE’s Net Zero 2050 Strategy are reshaping the role of the private sector in economic diversification and climate leadership. Organizations in the GCC are increasingly engaged in global capital markets where sustainability-linked finance, ESG risk integration, and emissions-related lending conditions are prevalent. In Saudi Arabia for example, banks are looking to the UK and European markets to raise debt as the local market looks to mitigate a liquidity shortage to fund an abundance of opportunities, though only a handful have issued sustainable or green labelled debt.

For funds and investment firms, the expectation from boards and investment committees to drive ESG value creation is growing, with ESG due diligence one tool to map sustainability factors to enterprise value. Transition plans allow organizations to understand, engage, and support clients in high-emitting sectors; ultimately steering capital towards real economy decarbonization and positioning financial firms as enablers of the national transition.

Regulators in the region are continuing to formalize transition expectations with Principles for Climate Transition Planning expected in the UAE following a consultation. These principles provide a regulatory and supervisory framework for financial institutions, covering areas such as:

• Clear objectives and strategic integration of transition planning
• Robust governance, board level oversight, metrics, and data management
• Stakeholder engagement, disclosure, and continuous plan updates

In Oman, the Central Bank of Oman (CBO) has taken a progressive step. All registered banks were required to submit board-approved ESG implementation plan by June 30, 2025. CBO expects financial firms to lead the country’s transition to a sustainable and green financial system.

The most effective transition plans are the product of meaningful collaboration across your organization and beyond. Success and advocacy depend on engaging business functions, embedding sustainability into day-to-day decision-making, and aligning teams around a shared commercial and sustainability vision.

A clear and actionable approach should demonstrate that:

• Business and strategy speak one language: Business, treasury, and sustainability functions with risk oversight codesign capital allocation rules, aligning internal carbon pricing, green CapEx thresholds, and external sustainable-finance options so that a financial firm’s financing, investment, and underwriting decisions are aligned with the objectives of the transition plan and support long-term value creation.

• Clients and portfolio companies are actively engaged: A financial firm’s transition plan is effectively a roll up of the transition plans’ of the organizations on its balance sheet. Transition advisory capabilities and active, educational engagement with the organizations in a financial firm’s portfolios are critical for driving adaptation and mitigation opportunities. Client exits and asset disposals should be scrutinized at board level.

• Risks, opportunities and levers are jointly prioritized: Cross-functional workshops map adaptation and mitigation risks to opportunities with clarity on how it creates value for the organization, be that margin, fee revenue, asset value increases, or market growth. These levers make the plan actionable, with clarity on when to pull them and in what timeframes.

• Enterprise data that is shared and trusted: Teams across finance, operations, and sustainability work from a single, verified view of Scope 1, 2 and 3 (including financed) emissions, so decisions are enabled using a single “source of truth”.

• Firm-wide stakeholder engagement is baked in: Functions such as procurement, product, HR, and investor relations who regularly engage suppliers, customers, regulators, and investors, feed into the plan ensuring it evolves with market signals and maintains external credibility.

• Operating models and roles are clear and bought into: Governance structures embed climate accountability into existing committees; each business unit has named owners for delivering, tracking, and reporting progress on the transition plan.

In practice, transition plans become most powerful when they are embedded into the core of how the financial firm operates and are proportionate to it. They should not be a standalone sustainability initiative.

Our guidance runs across a four-phase transition planning journey, underpinned by our regional experience and global leading practice.

Diagnose: We work with you to baseline your current climate and sustainability position, the risks and opportunities to understand the size of the challenge.

Develop: We help define and set your strategic ambition for sustainability value creation and preservation and develop an actionable transition plan, including a set of levers and engagement strategy.

Embed: We co-create with you the operating model, governance processes, roles and responsibilities that are proportionate to your organization.

Evolve: The transition plan is a living document, requiring monitoring and reporting, integration into business planning and mechanisms to make it happen such as internal carbon pricing.

A transition plan is not an ESG compliance exercise. It is your strategic actionable plan for creating and preserving sustainability value.

Climate is a journey. Outcomes need a plan. Let’s build your transition plan together.

This article was supported by Zacharias Malik, Assistant Manager, Sustainability Solutions.