ERM: The Importance of Climate Transition Planning

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Paul Simpson, Partner, Climate Change and Sustainability at ERM
Paul Simpson, Partner at ERM, believes that climate transition planning is a key tool for reporting strength, unlocking capital & attracting investors

Climate change poses unprecedented challenges to the planet and economy, and businesses are increasingly recognising the need for robust climate transition planning.

More than 70% of Fortune 500 companies have committed to net zero targets, yet only a fraction have comprehensive transition plans in place.

“Corporate climate action is at a critical juncture,” says Paul Simpson, Partner, Climate Change and Sustainability at ERM, the largest global pure play sustainability consultancy.

ERM's logo

“While companies increasingly understand their climate-related risks and impacts, and many are setting ambitious targets to address them, businesses still find it difficult to convert targets into operational actions that create commercial value.”

Climate transition planning is more than just a corporate responsibility — it's a strategic imperative that can unlock significant capital and drive long-term value creation.

As investors, regulators and consumers demand greater transparency and action on climate issues, companies that proactively address their climate risks and opportunities are positioning themselves for success in a low-carbon future.

Meet Paul Simpson

Alongside his role at ERM, where he has been a partner since 2023, Paul serves as an advisor to various organisations working on climate change and environmental impact, including Watershed. 

He is passionate about the transition to net zero and, in 2001, founded CDP, a global non-profit that drives companies, cities and governments to measure and reduce their greenhouse gas emissions, safeguard water resources and protect forests. 

CDP logo

In 2022, Paul was made an Officer of the Order of the British Empire (OBE) for services to Tackling Climate Change. 

Previously, he has served on the boards or as a member of:

  • Science Based Targets initiative
  • We Mean Business
  • The Investor Agenda 
  • Climate Disclosure Standards Board, now part of the International Sustainability Standards Board
  • International Integrated Reporting Council (IIRC)
  • Global Stranded Assets Advisory Council for the Smith School of Enterprise and the Environment at the University of Oxford
  • Friends of Climate Action group at the World Economic Forum
  • EIRIS, now part of Moody's
  • Global Agenda Council on Measuring Sustainability at the World Economic Forum
  • United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) Policy Dialogue

Attracting investor confidence

One of the primary benefits of robust climate transition planning is its ability to attract and retain investor confidence. 

“Done right, climate transition planning is a great tool for bridging the valuation and communication gap between companies and investors,” Paul explains.

Integrating renewable energy into transition plans can future-proof energy risk

In recent years, we've seen a dramatic shift in investor priorities, with climate considerations moving to the forefront of investment decisions. 

According to a 2024 survey by the Global Sustainable Investment Alliance, more than 60% of global assets under management now incorporate ESG factors, with climate change being a top concern.

Investors are increasingly seeking companies with clear, actionable plans to navigate the transition to a low-carbon economy.

By developing and communicating comprehensive climate transition plans, companies can demonstrate their readiness to manage climate-related risks and capitalise on emerging opportunities. 

This transparency and foresight can lead to improved access to capital, lower cost of capital and enhanced shareholder value.

Regulatory compliance and risk mitigation

As governments worldwide intensify their efforts to combat climate change, regulatory landscapes are evolving rapidly.

The introduction of carbon pricing mechanisms, mandatory emissions reporting and climate-related financial disclosures in many jurisdictions has created a complex regulatory environment for businesses to navigate.

“A wave of new requirements for companies has put climate transition planning firmly on the map,” Paul continues. 

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“Beginning in 2025, the EU Corporate Sustainability Reporting Directive (CSRD) expects 14,000 companies to state whether they have a climate transition plan and provide details if they do, while the EU Corporate Sustainability Due Diligence Directive (CSDDD) wants 6,000 companies to have transition plans ready by 2027. 

“The International Sustainability Standards Board (ISSB), whose framework has been adopted by regulators worldwide, also increased its focus on transition planning by incorporating the Transition Plan Taskforce (TPT).

“The TPT is widely recognised as a trailblazer in transition planning disclosures.”

Effective climate transition planning enables companies to stay ahead of regulatory curves, mitigating compliance risks and avoiding potential penalties. 

Moreover, it allows businesses to identify and address climate-related physical and transition risks proactively, enhancing overall resilience and business continuity.

The road to net zero

As we move deeper into the climate decade, effective climate transition planning will increasingly become a key differentiator for businesses across all sectors.

Companies that embrace this challenge and develop robust, forward-looking plans will not only contribute to global climate goals but also position themselves for long-term success in a rapidly changing business landscape.

“Climate transition planning is not a silver bullet that will solve all the complexities of the transition to a low-carbon economy,” Paul says. 

“However, if companies and investors put in the work, transition planning can lay the foundation for capturing the commercial value of decarbonisation and improving communication and mutual understanding between companies and investors. 

“The capital flows this would unlock could bring a net zero future much closer.”


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