What a transition plan is
The UK's climate reporting standard, UK SRS S2, defines a climate-related transition plan as the part of a company's overall strategy that lays out its targets, actions or resources for moving to a lower-carbon economy, including cutting its greenhouse gas emissions. In plain English: where you are now, where you are going, and how you will get there.
It is different from a net zero pledge. A pledge is a date. A transition plan is the route, with the steps dated and someone responsible for each. Our net zero guide covers setting the destination. This post is about writing down the route.
Who has to have one
| Who | Position in October 2026 |
|---|---|
| Most UK listed companies | For accounting periods from 1 January 2027, must say in the annual report whether they have published a transition plan and where, or explain why not. The FCA does not require them to have one |
| FTSE 100 and UK-regulated financial institutions | The government consulted from June to September 2025 on making them develop and implement credible plans. It has not yet published its decision |
| Small and medium-sized businesses | No requirement, and none proposed |
So the pressure on a small firm is commercial, not legal. A large company's plan only works if its suppliers cut emissions too, which is why "do you have a transition plan?" is turning up in supplier questionnaires. Our post on UK SRS S2 and suppliers explains what those customers have to report.
The five parts, scaled down
Most guidance on transition plans comes from the Transition Plan Taskforce, set up by HM Treasury in 2022, whose Disclosure Framework was published in October 2023. The IFRS Foundation took responsibility for it in 2024. It has five elements. Here is what each means for a small firm, and where a PPN 006 Carbon Reduction Plan already covers it.
| Element | For a small firm | Already in a Carbon Reduction Plan? |
|---|---|---|
| Foundations | Your ambition (net zero year, interim target) and what it means for the business | The commitment, yes. Business effects, add a paragraph |
| Implementation strategy | The actions on your own operations, with dates and rough costs | Completed and planned initiatives, yes. Add dates and costs |
| Engagement strategy | How you work with suppliers, customers and staff to cut emissions | Usually not. Add a short section |
| Metrics and targets | Baseline, current footprint, targets and how you track them | Yes, for Scope 1, 2 and the required Scope 3 |
| Governance | Who owns the plan, how often it is reviewed and who signs it off | Sign-off, yes. Name an owner and a review date |
The gaps are small: a paragraph on what the plan means for the business, a section on suppliers and customers, and a named owner. If you have already written a Carbon Reduction Plan, you are most of the way there.
Start with the biggest sources
A plan is only credible if its actions hit the emissions that matter. Take an illustrative 20-person firm with an office, a small warehouse and two vans. With the 2026 government factors, its Scope 1 and 2 footprint is 19.99 tonnes CO2e:
| Source | tCO2e | Share | Action in the plan |
|---|---|---|---|
| Van diesel, 4,000 litres | 10.33 | 52% | Route planning now, electric vans at replacement |
| Gas heating, 35,000 kWh | 6.38 | 32% | Heating controls now, heat pump when the boiler is due |
| Electricity, 25,000 kWh | 3.27 | 16% | LED lighting, switch-off routines, then a renewable tariff |
The plan writes itself from the table: heating and vans together are 84% of the footprint, so they get dated actions tied to when the boiler and the vans are due for replacement. Timing changes to the natural replacement cycle keeps the cost down and makes the plan believable.
Keep it honest
- Separate what you have done from what you plan to do, and date both.
- Don't count offsets as reductions. If you buy them, report them separately.
- Say what you are assuming, for example that the grid keeps getting cleaner, so a reader can see which cuts are yours.
- Review it every year against the footprint, and restate the baseline if the business changes shape.
If a customer asks whether your target is science-based, our guide to science-based targets for SMEs explains the SME route. For the risks a plan should take account of, see climate risk for small suppliers.
How Carbon Recycling helps
Carbon Recycling gives you the metrics and targets half of a transition plan from your own data: a baseline and current footprint across Scopes 1, 2 and 3, broken down by source so you can see where to act, a reduction target with a pathway chart, and a list of completed and planned initiatives. It turns these into a PPN 006 Carbon Reduction Plan ready for sign-off, which you can extend with the engagement and governance sections above. Each year's figures are measured against the baseline, so you can show whether the plan is working.