Does my Client have a Credible Transition Plan?

Martin McAspur-Lohmann

Assessing a client’s transition plan is key to ensuring sustainable finance decisions. In this video, Marin McAspurn-Lohmann explores how to gather relevant data, evaluate credibility using key criteria, benchmark against sector pathways, and engage clients effectively throughout their transition.

Banking Sector

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Does my Client have a Credible Transition Plan?

11 mins 53 secs

Key learning objectives:

Identify the key data sources needed to evaluate a client’s sustainability transition plan
Understand the criteria used to assess the credibility of a transition plan
Understand how sectoral benchmarks help compare a client’s progress against industry standards
Outline strategies for effective client engagement in transition planning

Overview:

A credible transition plan is essential for aligning financial support with sustainability goals. Finance professionals should learn to gather key data on a client’s carbon footprint and sustainability strategy, evaluate their transition plan against seven credibility criteria, and benchmark their progress against sectoral pathways. Financial institutions play a critical role in not only assessing but also guiding clients through their sustainability journeys. Effective engagement, including regular reviews and benchmarking, ensures continuous alignment with climate goals while strengthening client relationships.

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Summary

Why is evaluating a client’s transition plan important?

Understanding a client’s sustainability transition plan helps financial institutions assess risks, align investments with net-zero targets, and provide strategic guidance. A credible plan ensures that the client is making measurable progress toward sustainability goals, avoiding greenwashing, and maintaining access to financial services.

What key data should financial institutions gather?

To assess a client’s transition plan, financial institutions should collect data from sustainability reports, ESG disclosures, and third-party platforms like the Carbon Disclosure Project (CDP) and Science Based Targets initiative (SBTi). Critical metrics include:

Greenhouse gas (GHG) emissions (Scope 1, 2, and ideally Scope 3)
Energy sources and usage
Resource consumption and waste management practices
Net-zero strategies and progress reports

Regular meetings with clients help verify data accuracy and identify challenges in implementation.

What makes a transition plan credible?

A credible transition plan aligns with financial regulations and industry frameworks like TCFD/ISSB, SBTi, and CSRD. It must meet seven key criteria:

Alignment with global targets – Does the plan aim for net zero by 2050?
Clear milestones and metrics – Are progress tracking systems in place?
Coverage of all relevant emissions – Does the plan address Scope 1, 2, and 3 emissions?
Risk management strategies – How does the client handle financial, regulatory, and technological risks?
Corporate governance – Are sustainability roles clearly defined within leadership?
Stakeholder engagement – How does the company communicate its plan to investors and regulators?
Third-party verification – Has the plan been audited or validated by organisations like the SBTi?

Assessing these factors helps institutions determine whether a client’s plan is robust and actionable.

How can financial institutions benchmark transition plans?

Benchmarking involves comparing a client’s transition plan to sectoral pathways developed by industry bodies such as the IPCC, UNEP, and IEA. Financial institutions should evaluate:

How quickly the client is transitioning relative to peers
The ambition and feasibility of their net-zero targets
The effectiveness of their strategies and technologies

This comparison identifies gaps and areas for improvement, allowing financial advisors to provide targeted recommendations.

How can financial institutions support clients in their transition?

Beyond assessment, financial institutions play a key role in facilitating the transition by:

Providing green bonds, sustainability-linked loans, and transition financing
Offering advisory services for risk management, M&A, and financial structuring
Ensuring continuous monitoring and feedback to adapt strategies over time

Regular engagement, data-driven insights, and alignment with evolving sectoral benchmarks ensure that clients remain on track toward sustainability goals.

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Martin McAspur-Lohmann

Martin McAspurn-Lohmann, a banking and corporate finance professional with over two decades of experience, has managed large teams and advised corporates and funds in energy and commodities sectors on debt and equity transactions. He is passionate about the energy transition and has been involved in banks' transition and sustainability strategies since 2015, including client advisory services, product development, and managing transition risks.

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