The Board’s Role in Transition Planning: Why Credibility Is the New Currency

Companies across Southeast Asia are making more climate commitments than ever before. Net-zero pledges, decarbonisation targets, and ESG statements are now common across annual reports and press releases. But without a credible plan to deliver on those promises, companies risk falling into a widening gap between ambition and action and boards must be the ones to close it.

For businesses in transition-exposed sectors, credible climate planning is no longer a branding exercise. It’s a requirement, one that is increasingly demanded by investors, regulators, and stakeholders alike.

Transition Plans Are Now a Governance Priority

The concept of a corporate transition plan has moved from best practice to expectation. A transition plan outlines how a company will adapt its business model, strategy, operations, and governance to align with the goals of the Paris Agreement.

According to the guide, a credible plan typically includes:

- Measurable, science-based emissions targets

- Clear timelines and interim goals

- Detailed implementation measures and financial allocations

- Risk management and oversight mechanisms

- Transparency and regular progress reporting

What Makes a Transition Plan Credible?

Boards must ensure that climate transition planning is more than just a box-ticking exercise. A credible plan should be grounded in the company’s actual operations and risks, supported by clear data, and regularly reviewed at the board level.

The guide outlines several credibility markers boards should look for:

- Alignment with science: Targets should reflect what is needed to limit warming to 1.5°C.

- Short- and medium-term milestones: Relying solely on long-term goals weakens accountability.

- Operational integration: Climate plans should influence capital allocation, product development, supply chains, and workforce decisions.

- Governance and incentives: Board committees and executive compensation should be aligned with climate goals.

- Scenario analysis: Plans should consider a range of climate futures and the company’s resilience under each.

Boards that lack visibility into these components are not exercising full oversight.

Why This Matters Now

Transition planning is fast becoming a boardroom benchmark. International frameworks such as the TCFD and ISSB have already embedded the expectation for disclosure. Across Asia, regulators are catching up and investors are increasingly using transition credibility as a screening tool for capital allocation.

In Southeast Asia, where many companies are in high-emitting sectors or face significant physical climate risks, transition planning is not only about decarbonisation, it’s about business continuity and future competitiveness.

Boards that delay or delegate this responsibility risk being left behind, or worse — being held accountable for plans that fail to meet scrutiny.

A Strategic Imperative

Climate transition planning is not just a sustainability function. It is a core governance issue that sits firmly within the board’s remit. Directors must actively review, challenge, and support the development of these plans and ensure they are credible, strategic, and forward-looking.

Done right, transition planning builds resilience, strengthens trust, and positions companies to lead in a low-carbon economy. And that’s exactly the kind of leadership Southeast Asia needs right now.

Download the full guide here.