Increasingly through 2023 in our meetings with the financial community one common theme emerged; that investment teams were becoming ever more confused by the myriad of transition assessment methodologies available, each claiming to be better than the other.

In 2024, this theme now dominates most of our behind closed-door meetings. Furthermore, it often comes up in our meeting with corporates; “damned if we do, damned if we don’t” is a phrase we often hear.

Before you utter, “oh no not another one”, no, we are not launching our own. In this note, Mike Coffin, uses the Oil & Gas sector as a case study, stripping back the verbiage and offering answers to the following questions –

1. What are transition plans?
2. What’s the intent of mandating them?
3. How do they differ between sectors?
4. How should they be used in investment decision-making?
5. Is there too much focus on emissions?

The note suggests key markers to allow build clear strategies and tactic appropriate metrics, all aimed at portfolio managers and equity/credit analysts, to support them to assess the threat of the transition to the value of their investments.

For stewardship, sustainability and responsible investment professionals, this guide provides tools to support engagement, both internally with investment teams and externally with corporates, by outlining sector-appropriate metrics.

Finally, we hope financial regulators, policymakers and civil society organisations may find it useful to ensure clarity on the intent behind requests to set plans.