Beyond the checklist: how to assess a transition plan

‍Four experts explain how banks and investors now assess a company’s ability to deliver:

• Sophie Dejonckheere, Director, Head of Climate & Transition Strategy at Lloyds Bank

• Lizzy Girling, Head of Sustainable Finance Products and Frameworks and Social Sustainability at Standard Chartered

• Vanessa Havard-Williams OBE, Senior Independent Director of UK Export Finance

• Julia Haake, Chief Revenue Officer at EthiFinance

A checklist, yes, but it is only the foundation

The UK transition finance guidelines are built around 15 core criteria: interim targets aligned with the Paris Agreement, decarbonisation actions and strong governance. They are currently in draft form and are expected to be finalised in 2027.

For Vanessa Harvard-Williams OBE, who led the review underpinning the guidelines, the real difficulty begins where the checklist ends: “A plan is all very well, but what we are looking for is execution and progress.”

Two companies, two realities

Two companies may set the same emissions reduction target without having the same likelihood of achieving it. The guidelines therefore distinguish between two concepts. A dependency is something the company needs in order to deliver its transition. A contextual factor affects its business without determining its transition pathway.

Vanessa gives the example of a power plant that uses water from a river to cool its facilities. This summer in Hungary, falling water levels put this type of access under pressure. That is a dependency: the company must demonstrate that it has identified the issue and knows how to address it.

Investors want evidence

This shift is already visible in portfolios. Julia Haake sees it at EthiFinance: “A few years ago, everything revolved around the carbon footprint, Scopes 1, 2 and 3. Today, the conversation is about transition strategy, CapEx, governance and milestones.”

In France, the SRI label is a key driver. Since the beginning of the year, at least 15% of portfolio companies in sectors with a high climate impact must have a credible transition plan. More than 1,000 funds and around 150 asset management companies are affected. The main constraint is data: corporate disclosures remain fragmented and difficult to compare.

How engagement with companies changes the assessment

At Standard Chartered, the assessment begins with publicly available information, before discussions with the client’s relationship manager complete the picture. Lizzy Girling draws a clear conclusion: “In almost every example I have seen, our view changes based on the more detailed information we are then able to gather.”

At Lloyds, the methodology had to be adapted for project finance. A carbon capture project backed by major oil companies would not pass the test applied to its sponsors. The bank therefore assesses the borrower’s own plan, because the project itself deserves support.

Adaptation and resilience: a growing priority

This summer’s heatwaves placed an ageing electricity grid, and therefore the energy companies financed by banks, under strain. The issue should weigh heavily in assessments in 2026. Yet investing to prevent losses brings no financial reward today. Lizzy Girlingdeho puts it bluntly: “There is no incentive for our clients to act, because that action is not reflected in any preferential pricing for their financing.”

AI accelerates, humans decide

AI saves time on straightforward questions, such as whether a company has a target. Climate policies and selected technologies remain more difficult to compare from one company to another. At Lloyds, the tool aims to achieve 85% reliability compared with a human review and has not reached that level yet. It tends to rely on its preferred document and does not flag contradictions between two sources.

Sophie Dejonckheere is unequivocal: “No transition plan will be approved without human sign-off in the next five to ten years, I think, at Lloyds.”

What will remain beyond the reach of frameworks

Within three years, resilience and physical risk should be better integrated, while nature is likely to progress more slowly. Political uncertainty, however, will remain. Sophie Dejonckheere says: “Political uncertainty will never be systematised. We will always need experts and nuance. No framework will be able to capture it, because no one knows who will be elected next.”

Julia Haake nevertheless sees a long-term trend. Mandatory regulation has been scaled back in Europe, but banks and investors continue to ask companies the same questions. More transition plans and greater transparency should follow.

The panel’s message is ultimately straightforward: a transition plan is no longer simply a series of commitments. Its credibility depends on its ability to withstand real-world constraints, whether operational, climatic, financial or political.

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Watch the replay of the “Banking the Transition” webinar.

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