How does a small company write a credible climate transition plan?

Write it in order: fix a measured baseline, choose a dated target, list actions with the tonnes and money behind each, check the actions add up to the target, state your assumptions and dependencies, then have the owner approve it and set a yearly review. Credibility comes from the numbers reconciling, not from length.

Step by step

1. Pick a baseline year with complete fuel and electricity records, and calculate Scope 1 and 2 with named factors.
2. Set the ambition: a percentage cut and a year, plus near-term milestones. Decide whether you will seek SBTi validation.
3. List actions from your own energy data: largest fuel and power users first. For each, estimate tonnes saved, capex, start year and owner.
4. Run the gap check: do the actions add up to the target? If not, add actions or change the target honestly.
5. Write down assumptions and dependencies, such as production growth, grid factor changes, discom approval for open access or a loan sanction.
6. Get approval from the owner or board, with a date, and fix when progress will be reported.

Use the TPT structure as a test

The Transition Plan Taskforce Disclosure Framework, now held by the IFRS Foundation, judges plans on three principles: ambition, action and accountability. It groups disclosures under five headings: foundations, implementation strategy, engagement strategy, metrics and targets, and governance. A small company does not need every item, but each heading should have at least a sentence of real content.

IFRS S2 asks companies that have a transition plan to disclose it with its key assumptions and dependencies, and the TCFD 2021 guidance asks for the same. Buyers who report under these rules will look for those two things.

Signs a reader uses to judge credibility

• Every number traces to a record and a factor source.
• Actions are dated and funded, not listed as intentions.
• Growth is accounted for: if output doubles, the plan says how emissions still fall.
• Offsets and certificates are shown separately from reductions.
• The plan says what you will engage suppliers and customers on, even if Scope 3 is not yet measured.

Keep it alive

Review it each year against actual emissions. If an action slips, say so and show the new date. A plan updated with honest progress is more credible to a lender than a perfect plan that never changes.

Worked example: a gap check that allows for growth

• Baseline FY 2024-25: Scope 1 600 t CO2 + Scope 2 1,400 t CO2 = 2,000 t CO2
• Output expected to grow 30 percent by FY 2030-31; if emissions grow with it: 2,000 x 1.30 = 2,600 t CO2 (assumption)
• Target: 40 percent below baseline, so 2,000 x 0.60 = 1,200 t CO2 in FY 2030-31
• Cut needed against the growth case: 2,600 minus 1,200 = 1,400 t CO2, not the 800 t a flat baseline suggests
• Rooftop solar 500 kWp x 1,400 kWh per kWp a year (assumed yield) = 700,000 kWh x 0.710 kg CO2 per kWh = 497 t CO2
• Compressor and motor upgrades: 150,000 kWh saved x 0.710 = 106.5 t CO2
• Total from actions: 497 + 106.5 = 603.5 t CO2; gap: 1,400 minus 603.5 = 796.5 t CO2 still to find

The plant, growth rate and target are illustrative. The grid factor is held at 0.710 kg CO2 per kWh (CEA version 21.0); say so in the plan, since future editions will change it.

What Senseible does here

Senseible builds the Scope 1 and 2 baseline from your invoices and bills, with the factor and source on each line, and the decarbonize India page sets out reduction actions to test against your gap. The plan itself is self-declared and approved by you.

• What a transition plan should include
• Answering a TCFD questionnaire
• MSME net zero roadmap in 12 months
• Decarbonize India

Sources: Transition Plan Taskforce Disclosure Framework (October 2023) and IFRS S2, paragraph 14, TCFD Guidance on Metrics, Targets, and Transition Plans (October 2021)

Last reviewed 2026-10-16.