August 18, 2025
By Pathzero Insights Team
The Australian Treasury's Climate-Related Transition Planning Guidance Consultation Paper, released in August 2025, offers a framework to assist organisations in crafting robust transition plans amid evolving climate risks and opportunities. As part of the Sustainable Finance Roadmap, this voluntary guidance complements the mandatory disclosures under AASB S2 Climate-Related Disclosures, which apply to large entities from financial years starting January 1, 2025. For superannuation funds, stewards of vast member assets, it provides a lens through which to evaluate investee strategies, enhance portfolio resilience, and align with fiduciary responsibilities under APRA's CPS 229.
In this piece, we outline the guidance's key elements and their interplay with AASB S2, drawing on the draft framework aligned with the IFRS Transition Planning Taskforce (TPT) Disclosure Framework. Our aim is to equip super funds with a clear reference as you navigate these developments, assess potential submissions (due September 24, 2025), and consider how to integrate transition planning into sustainability reporting.
At Pathzero, we recognise the complexities super funds face – from emissions data in private markets to physical risk assessments – and stand ready to support through our integrated solutions, including emissions fragmentation, physical risk analytics, public markets partnerships, and seamless platform integrations with custodial systems.
Understanding the guidance in context
The guidance promotes a structured approach to transition planning: an iterative process for setting climate ambitions, implementing actions, and monitoring progress toward a low-carbon, resilient economy. It rests on four principles – international alignment, domestic decarbonisation and adaptation support, ambition balanced with flexibility, and a climate-centric yet holistic view (encompassing just transition and nature considerations). While voluntary, it echoes global trends and could influence stakeholder expectations, particularly as 82% of ASX 200 companies (per Australian Council of Superannuation Investors) pursue net-zero commitments.
For super funds, this translates to a tool for scrutinising investee transition plans, informing stewardship via frameworks like Climate Action 100+ or the Investor Group on Climate Change (IGCC). It dovetails with AASB S2's requirements for disclosing material climate risks, opportunities, and transition plan details, fostering comparability and transparency in sustainability reports.
Illustrative components of a transition plan
The guidance envisions transition plans structured around five components, compatible with the IFRS TPT framework. Below, we illustrate expected inclusions, based on the draft, to depict how super funds might present these in sustainability reports. This supports AASB S2 by providing context on assumptions, value chain impacts, and metrics, while highlighting Australian-specific elements like the Net Zero Plan or Safeguard Mechanism. This is how they might be approached, including expected inclusions and a super fund perspective.
Section: Foundations
This foundational layer typically outlines strategic ambitions, providing a high-level roadmap for mitigation and adaptation.
Expected inclusions: Ambitions might include time-bound goals for portfolio emissions alignment, such as a commitment to net-zero financed emissions by 2050, with interim reductions tied to Australia's 2035 Nationally Determined Contribution (NDC). Adaptation could involve targets for minimising exposure to physical risks, like droughts affecting agricultural holdings. Broader elements often encompass just transition principles – ensuring equitable outcomes for communities – or nature integration via TNFD. Reports commonly describe business model implications, such as shifting allocations toward resilient assets, alongside scenario analysis (eg 1.5°C pathways) and assumptions on policy dependencies like sectoral emissions plans.
Super fund perspective: In reports, this might manifest as a narrative: "Our ambitions align 75% of assets under management (AUM) with net-zero pathways by 2035, informed by scenario testing under varying warming levels and domestic policies like the National Adaptation Plan."
Section: Implementation strategy
This section details actionable pathways, bridging ambitions to operational realities.
Expected inclusions: Decarbonisation levers could feature capital reallocation to renewables or divestment from high-emission sectors, while adaptation actions might address chronic risks through portfolio diversification. Financial planning typically highlights resource commitments, such as investments in low-carbon infrastructure, with references to the Australian Sustainable Finance Taxonomy for classifying activities. Co-benefits, like biodiversity enhancements via nature-based solutions, are frequently noted to address trade-offs.
Super fund perspective: Sustainability reports might illustrate: "We plan to direct 20% of AUM toward taxonomy-aligned renewables by 2027, reducing emissions intensity by 15%, while integrating physical risk data to safeguard against climate hazards."
Section: Engagement strategy
Engagement narratives here emphasise collaborative efforts to advance the plan.
Expected inclusions: Value chain interactions might involve dialogues with investees on scope 3 emissions, industry collaborations through ACSI or IGCC for sector benchmarks, and broader outreach—such as policy input on the Safeguard Mechanism or partnerships with First Nations groups for just transition. Communication strategies often underscore transparency with members and regulators.
Super fund perspective: Reports could exemplify: "Through Climate Action 100+, we engaged 15 investees in 2025, prompting three to adopt science-based targets, while advocating for supportive policies at the federal level."
Section: Metrics and targets
This component focuses on quantifiable benchmarks to demonstrate progress.
Expected inclusions: Targets are commonly science-based, such as a 40% reduction in financed emissions by 2030, with adaptation metrics like limiting high-risk asset exposure to 5% by 2035. Use of carbon credits (e.g., ACCUs) or renewable certificates (e.g., REGO) is clarified, prioritising direct reductions. Tracking involves GHG Protocol methodologies, often with third-party verification.
Super fund perspective: In reports, this might appear as dashboards: "Financed emissions baseline (2024) versus 2030 target, calculated PCAF-aligned, with annual scope 1-3 updates."
Section: Governance
Governance descriptions ensure accountability and integration.
Expected inclusions: Board oversight might involve quarterly reviews, with defined roles for ESG teams in execution. Culture and skills elements often include training on AASB S2, while incentives link remuneration to climate milestones.
Super fund perspective: Reports typically feature structures: "Our board oversees transition risks, with 80% of executives trained on disclosure standards by end-2025, aligning with APRA expectations."
Alignment with AASB S2, and reporting considerations
The guidance aligns seamlessly with AASB S2, enhancing disclosures on transition plans, scenario analysis, and value chain risks. For instance, assumptions in ‘Foundations’ support AASB S2's emphasis on dependencies, while metrics aid emissions reporting. Super funds can use this to create cohesive sustainability reports, cross-referencing AASB S2 elements for efficiency and credibility, mitigating ASIC greenwashing concerns under RG 280.
Practical implications for superannuation funds
Super funds will likely apply the guidance to assess investee plans, bolstering stewardship and portfolio alignment with net-zero goals. Challenges include data aggregation across private and public markets, but opportunities lie in leveraging tools for physical risk insights and emissions tracking. As a reference, this guidance invites reflection: Does your fund plan a submission? If so, how might it shape your reporting?
At Pathzero, we address these needs through our expertise in private markets emissions data, physical risk analytics, public markets integrations, and platform connectivity with custodial systems. Our network enables sourcing transition plan details from private investees, forming a comprehensive view to support disclosures. We invite discussions on how these capabilities can assist your fund's journey – contact us to explore tailored approaches.