Climate transition plans in 2026: why your net zero transition plan is only as good as its baseline

A climate transition plan sets out how a company will cut its emissions to net zero: the targets, the actions, the money and who is accountable. In the UK it is not yet mandatory, but listed companies must say whether they have published one, and any plan is only as credible as the baseline data under it.

Most of the questions we hear about transition plans start with the document. Which template to use, and whether it should follow the Transition Plan Taskforce. Those are fair questions, and they are the easy part. The harder question is whether the numbers underneath the plan can show progress at all.

Is a climate transition plan mandatory in the UK?

Not yet. The government consulted on transition plan requirements from 25 June to 17 September 2025, building on a manifesto commitment to mandate credible 1.5°C-aligned plans for UK-regulated financial institutions and FTSE 100 companies. As of today the consultation page on GOV.UK still has no outcome published. Linklaters' current guide puts it plainly: the government is still deciding whether to make transition plans mandatory, and has said it would consult again on the detail. Small and medium-sized companies are not expected to be in scope of any future rule.

What already applies is lighter, and easy to underestimate:

• Listed companies: under the FCA's PS26/19, published on 30 September 2026, commercial companies with an equity listing must disclose whether they have published a climate-related transition plan, where to find it, or why not. This applies to accounting periods starting on or after 1 January 2027, so the first reports land in 2028. There is no requirement to produce a plan. The rest of UK SRS, including climate and Scope 3, is comply or explain, as we covered in our piece on UK SRS comply or explain.
• Central government suppliers: PPN 006 asks bidders for contracts above £5 million a year to submit a Carbon Reduction Plan that commits to net zero by 2050 in the UK and reports their emissions. Our carbon reduction plan template covers the format.
• Companies in CSRD scope: ESRS E1 asks you to disclose your transition plan for climate change mitigation if you have one, including how your targets fit a 1.5°C pathway, the decarbonisation levers, how the plan ties to financial planning and your progress. If you do not have one, you disclose whether and when you will adopt one. The Omnibus deleted the separate duty to adopt a plan under CSDDD, but this CSRD disclosure is unchanged. See CSRD after the Omnibus for who is still in scope.

So for most large UK companies the honest answer is that nobody will fine you for not having a transition plan. But investors, auditors and large customers increasingly read the absence of one as a signal, and the "state whether" rule makes that absence visible in the annual report.

What should a net zero transition plan include?

The Transition Plan Taskforce framework is still the reference most UK teams use, even though the TPT has been disbanded and the IFRS Foundation took over its disclosure materials in 2024. In June 2025 the ISSB also published guidance on transition plan disclosures under IFRS S2, built on the TPT work. The framework rests on three guiding principles: ambition, action and accountability. Those sit over five disclosure elements and 19 sub-elements.

In practice, a credible plan answers a short list of questions:

1. What is your baseline, by scope, and how was each number calculated?
2. What are your targets, for which scopes, and by when, with interim targets that are near enough to manage against?
3. Which levers will deliver the reduction, and how much does each one contribute?
4. What will it cost, and is that in the budget?
5. Who owns delivery, and who reviews progress?
6. How will you report progress each year, and what would trigger a change to the plan?

If you are still deciding between a net zero target and a carbon neutral claim, start with carbon neutral vs net zero. Offsets do not count as reductions in a net zero plan, which puts even more weight on the first question in that list.

Why most transition plans fail on the baseline

Here is the pattern we see. A company builds its first footprint fast, which is sensible. Electricity and gas come from bills. Fleet comes from fuel cards. Then the Scope 3 categories that matter most, purchased goods, business travel, sometimes commuting, come from spend data multiplied by an emissions factor per pound.

That baseline is fine for a first disclosure. It is a poor foundation for a transition plan, because spend-based numbers move with prices and budgets, not with what you actually changed. Cut your travel budget by a fifth and your travel emissions fall by a fifth, even if nobody travelled differently. Move a team from flights to rail at a similar cost and a spend-based inventory barely notices, even though the real emissions fell a long way.

A recent call with a UK accountancy firm building an ESG advisory service went exactly this way. Personal mileage is usually easy, because the expense system holds the miles. Flights take more work, so many teams fall back to spend. Taxi rides came up as an expense line where nobody knows where anyone went. Then the conversation turned to reduction, and the obvious lever was travel: trains instead of planes on the routes people use most. On spend-based data, that lever is close to invisible.

Our view is simple. Before you publish targets, decide which categories your plan depends on, and move those categories from spend-based to activity-based data first. You do not need perfect Scope 3 across all 15 categories. You need activity data where your levers are, so that when you act, the number moves for the right reason. Our guide to the 15 Scope 3 categories helps you pick.

Build the plan from the data, then write it

The order matters. Teams that write the plan first tend to pick round-number targets and then discover that half the reduction sits in categories they cannot measure well. Teams that start from the data find the plan almost writes itself, because the levers are visible in the numbers.

• Lock the boundary: which entities and sites are in, and what happens when you acquire a business. An acquisition can move your baseline more than any reduction action.
• Collect activity data from the people who hold it: facilities for meter readings, finance for supplier spend, travel for bookings. This is the slow part, and it is where most plans stall.
• Keep a source on every number: an auditor or a customer will ask where your baseline came from. A link to the bill or reply answers that in seconds.
• Model the levers against real data: a scenario that swaps flights for rail on your top routes is more useful to a board than "reduce travel emissions by 30%".

How Ella helps

Ella is carbon accounting software built as an AI agent, and its carbon tool is the most guided on the market. It sets your boundaries from how the business operates, builds your Scope 1 to 3 checklist instantly and sends collect links to the people who hold the data. It tracks missing responses and chases them, reads dragged-in bills, receipts and spend exports, and calculates activity and spend-based emissions automatically, with the source behind every figure. From that data set it produces your SECR summary, your reduction and net zero roadmap with scenarios, and the evidence trail behind it, with Ella's sustainability team on hand for expert support. See Ella's carbon accounting software.

A transition plan is a promise about future numbers. Make sure the current ones will hold up first.