The Australian Treasury is developing guidance on best practices for climate-related transition planning, and has released a consultation paper inviting feedback on the direction and design of this guidance.
Climateworks has engaged with Treasury over the past 18 months regarding our Guide to credibility for corporate climate transition plans, contributing to discussions on best practice.
We are pleased the guide was cited in Treasury’s Climate-related Transition Planning Guidance, reflecting alignment on the importance of credible corporate climate action.
Climateworks has been an active participant in conversations through our engagement with the Transition Planning Working Group, convened by Climateworks and the Energy Efficiency Council (EEC).
The group brings together representatives across industries with a common purpose to support credible transition plans. We welcome the opportunity, through this forum, to engage with Treasury to assist with the next stages of development of the guidance.
Submission summary
Climateworks welcomes Treasury’s draft Climate-related Transition Planning Guidance (hereafter referred to as the Guidance).
It represents a critical building block to support the market to mobilise capital towards a net zero economy, as outlined in the Sustainable Finance Strategy.
Our recommendations are designed to help Treasury deliver on the three pillars of the Sustainable Finance Roadmap: strengthening transparency, building system capabilities and reinforcing government leadership while ensuring Australian companies remain internationally competitive.
Climateworks supports the Guidance’s endorsement and alignment with the International Financial Reporting Standards Transition Plan Taskforce (IFRS TPT) Disclosure Framework.
This framework underpins international best practices and will assist companies in making complete and comparable disclosures to support decision-making.
Through this voluntary best-practice guidance, Treasury has an opportunity to encourage best-practice corporate transition planning, whilst allowing flexibility for companies to decide on the most appropriate level of ambition and implementation.
Clearly communicating international best practices in voluntary guidance is not being prescriptive. It will provide critical information for companies to know where the market is and is heading and allow them to make their own strategic decisions.
Companies can make informed decisions on how to retain leadership in their markets and remain competitive to attract global financial capital.
It will also support Treasury’s existing tools – mandatory climate-related disclosure requirements and the Sustainable Finance Taxonomy – to achieve their policy objectives: building more resilient companies and mobilising the allocation of capital towards activities that enable Australia’s net zero transition.
The Guidance will also be expected to offer practical advice, helping companies understand not just what to do, but how to do it.
For preparers that are in the early stages of their transition planning journey, clear, practical insights into transition planning processes are especially important.
By providing actionable steps that lead to best practices, the Guidance can help companies set a viable way forward that will respond to evolving market expectations.
Climateworks recommends that the Guidance:
- Clarify the design principles’ intended role, refine the language used to describe them, and add another principle to define the targeted audience and outcome.
- Provide additional information in The transition planning process section to better advise companies on legal considerations, practical implementation insights and specific guidance on the planning process, including scenario analysis.
- Communicate in Section 1.1: Mitigation and adaptation strategic ambition that the current observed international best practice is aligning the transition plan with limiting global warming to 1.5°C and that Australian companies may need to consider international policies when setting their strategic ambition.
- State that the integration of all material sustainability issues into transition planning – in particular, nature-related risks and opportunities – is international best practice and provide additional guidance for companies that wish to follow that approach.
- Provide further guidance on selecting and using science-based, sectoral and localised emissions reductions pathways to inform companies’ transition plans both for setting their strategic ambition and identifying implementation actions.
- Highlight how the Sustainable Finance Taxonomy can support company transition plans, including disclosure of taxonomy-aligned metrics.
- Expand best-practice guidance in Section 4.1 Setting and expressing targets to provide greater clarity on international expectations and standards for target setting, particularly regarding absolute metrics and targets and scope 1, 2 and 3 emissions coverage.
- Expand best-practice guidance in Section 4.2 Use of carbon credits and renewable energy certificates to help companies mitigate greenwashing risks, in particular regarding the credible use of carbon credits to counterbalance residual emissions and for beyond value chain mitigation (voluntary contributions to mitigation efforts outside a company’s value chain).
- Include further disclosure guidance on all forms of company lobbying activities that are relevant for climate transition plans in Section 3.3 Engaging with government, public sector and civil society.
- 10. Detail throughout the Guidance why transparent and complete disclosures are important for all companies, not just for reporting entities captured by sustainability reporting requirements under the Corporations Act 2001.
In 2025, Climateworks published The Climateworks Centre guide to credibility for corporate climate transition plans, drawing on and consolidating 34 global best practice resources, with input from many of Australia’s leading industry groups and climate transition experts.
We use this research, combined with extensive engagement in the Australian market, to inform these recommendations. Taken together, these recommendations strengthen the delivery of Treasury’s Sustainable Finance Roadmap, specifically Pillar 1, which aims to improve transparency on climate and sustainability.
They would ensure the Guidance is technically robust and strategically aligned with Treasury’s agenda.
Best-practice transition planning will strongly benefit companies and enable investors and lenders to allocate capital with confidence, aligning with the Roadmap’s objective of mobilising private finance.
More detail on these recommendations can be found in our submission [PDF 0.4mb].