Australian Government publishes climate-related transition planning guidance

What you need to know

• On 24 August 2026, the Australian Government published guidance on climate-related transition planning. The guidance is intended to support organisations in undertaking good practice, internationally-aligned transition planning regarding the impacts of the net zero transition and changing climate on their operations.
• The guidance is structured around a four-stage planning cycle: assess, set ambitions, plan actions, and implement. It builds on the Transition Plan Taskforce (TPT) Transition Planning Cycle while incorporating Australian-specific policy, physical-risk and regulatory context. The guidance is voluntary and does not create an obligation to prepare a transition plan or inform mandatory disclosures under the Australian ISSB-aligned sustainability reporting standard AASB S2. The guidance articulates what the Australian Treasury considers good practice and may inform investor, lender and stakeholder expectations over time.

What you need to do

• Organisations can use this guidance as a starting point for their transition planning, adapting its four-stage process to their circumstances. The guidance does not address disclosure obligations under AASB S2 and reporting entities subject to those requirements should refer separately to Australian Accounting Standards Board (AASB) and Australian Securities and Investments Commission (ASIC) materials.

Background

Transition planning is an ongoing strategic process through which organisations identify, assess their exposure and respond to climate-related risks and opportunities (CROs) and deliver their climate ambition. Transition planning informs mitigation and adaptation measures that an organisation can take and provides a pathway to realise the emission reduction targets set by an organisation.

80% of ASX200 companies by market capitalisation have set net zero emissions targets¹, and organisations face growing market expectations to demonstrate how they plan to meet these targets and respond to the transition and changing climate. The guidance forms part of the Australian Government's Sustainable Finance Roadmap and complements other priority initiatives including the mandatory climate-related financial disclosure regime and the Australian Sustainable Finance Taxonomy (see Navigating the New Landscape of Climate Reporting: Lessons from New Zealand and Climate litigation in Australia: Key developments in 2025 and what's ahead for 2026).

Overview of the guidance

On 24 August 2026, the Australian Government published voluntary guidance on climate-related transition planning. The guidance, which does not create an obligation to prepare a transition plan or inform mandatory disclosures under AASB S2, is intended to support organisations in undertaking good practice, internationally-aligned transition planning regarding the impacts of the net zero transition and changing climate on their operations.

Providing voluntary guidance for transition planning was one of the priority initiatives identified in the Australian Government’s Sustainable Finance Roadmap. The guidance reflects the consensus from extensive consultation during 2025 with government, industry and non‑government stakeholders including those represented on a Transition Plan Working Group.

The guidance is framed as supporting the internal planning process rather than disclosure, directly responding to requests from the accountancy sector for greater clarity on this distinction.

The guidance builds on the TPT Transition Planning Cycle² while incorporating Australian policy, physical-risk and regulatory context including references to governance, capital expenditure alignment, carbon-credit mitigation hierarchy and stakeholder engagement and dedicated First Nations content. These include references to the Australian Net Zero Plan³, sector emissions reduction plans⁴, the National Climate Risk Assessment⁵ and the National Climate Scenario Guidance⁶. Governance, capital expenditure alignment, carbon-credit mitigation hierarchy and stakeholder engagement, including dedicated First Nations content, were all substantially incorporated.

The guidance adopts a four-stage planning cycle:

• Stage 1 requires organisations to assess their position, including board engagement, stakeholder mapping, CRO assessment, emissions measurement, and identification of transition and adaptation levers.
• Stage 2 addresses the setting of strategic ambitions, covering mitigation and adaptation objectives, key assumptions and external factors, and implications for the business model and value chain.
• Stage 3 focuses on planning actions, including developing mitigation and adaptation measures, reviewing governance and people strategies, developing engagement strategies, integrating actions into financial planning, and setting metrics and targets.
• Stage 4 involves implementation, monitoring, review and iteration.

Adaptation is embedded alongside mitigation throughout the four stages, responding to submissions from the academic sector emphasising Australia's high physical-risk exposure.

A notable feature of the guidance is the three-tier proportionality framework, which differentiates the approaches organisations can take towards transition planning:

1. Focus on fundamentals (Low climate risk exposure | Low complexity): a credible, principles-aligned climate narrative that articulates ambition and clearly signals intent for action.

2. Fully business integrated (Medium climate risk exposure | Medium complexity): transition planning fully embedded within business strategy, governance and risk management processes.

3. Technical and target aligned (High climate risk exposure | High complexity): rigorous and investment-grade strategic ambitions based on scientific evidence supported by detailed analysis and targets.

This graduated approach allows less experienced organisations to commence with simpler ambitions and improve over time and those in sectors with a lower exposure to climate risks to take a proportionate approach to their transition planning.

Differences from the TPT Disclosure Framework

While the Australian guidance builds on the TPT architecture, key distinctions exist:

• The TPT Disclosure Framework (October 2023)⁷ is oriented primarily towards disclosure, providing detailed recommendations on what a transition plan should report to investors through general-purpose financial reports.
• The Australian guidance is oriented towards the planning process itself, providing practical advice on how to develop, implement and iterate a plan. Where TPT uses prescriptive language for recommended disclosures subject to materiality, the Australian guidance does not impose any mandatory minimum content.
• The Australian guidance integrates adaptation more prominently and systematically than the TPT, reflecting Australia's elevated physical-risk profile.
• The Australian guidance adds specific domestic content, including the Safeguard Mechanism, sector emissions reduction plans, the Australian Sustainable Finance Taxonomy, First Nations engagement resources and state and territory programs.
• The Australian guidance specifies that it is not designed to support disclosures under the AASB S2 mandatory reporting regime, whereas the TPT Disclosure Framework provides that its Disclosure Recommendations can be used to guide more effective reporting on the transition plan-related aspects of IFRS S2.

Practical implications

Organisations considering transition planning may use this guidance as a structured starting point, adapting its four-stage process to their circumstances. Although voluntary, the guidance articulates what Treasury considers good practice and may inform investor, lender and stakeholder expectations over time.

Reporting entities subject to AASB S2 should note that the guidance does not address those disclosure obligations; those entities should refer separately to AASB and ASIC materials⁸.

Further voluntary guidance and sector-specific materials are signalled for future development, and organisations are encouraged to engage with the Sustainable Finance Taxonomy as a complementary tool for identifying transition levers and setting financial targets.

Want to know more?

• The basics of transition planning (14 May 2026) - for a simple description of what TPs are and how to prepare one.
• Sector Transition Plans guidance supports sector benchmarking, coordination and accountability (28 October 2025) - for the latest on the UK government's approach to transition plan guidance.
• Our Integrated solution around Transition Planning - for how we help clients to navigate the complex and evolving sustainability reporting landscape needed to build on their net zero ambitions.

Authors: Elena Lambros, Partner, Risk Advisory; Becky Clissmann, Expertise Counsel and Rob Heslenfeld, Executive, Risk Advisory.