Methodology

About the Toolkit

In collaboration with the Climate Bonds Initiative, Capital Markets Malaysia (CMM) has developed the Transition Strategy Toolkit designed to guide ASEAN corporates on the underlying principles and elements to be incorporated when developing climate transition plans. This toolkit guides users through the Climate Bonds Initiative’s Five (5) Principles for an ambitious transition.

The Toolkit aims to:
  • lay the groundwork for a credible transition label to enable investors to easily identify investments that support a low-carbon transition
  • incorporate guidance which could be relevant for companies and investors in ASEAN Member States, aligned to Paris Agreement or respective national targets
  • provide direction to corporates in developing a credible transition strategy which underscores science-based and widely accepted transition principles
  • support corporates seeking to attract private capital for their transition finance needs

Methodology

Climate Bonds Initiative has identified five (5) Hallmarks that underpin a credible entity climate mitigation transition plan. These Hallmarks encompass the required ambition in terms of entity-level performance targets and the entity’s commitment and capacity to achieve those forward-looking goals. These 5 Hallmarks are encapsulated in the ‘Triple A’ framework of Ambition, Action, and Accountability, demonstrating the entity’s willingness, ability, and transparency in progressing towards a sustainable future, offering essential guidance for assessing the comprehensiveness of a transition plan. These Hallmarks are fully aligned with and build on the thematic guidelines from the International Capital Market Association (ICMA), as well as the disclosure requirements from the Task Force on Climate-Related Financial Disclosures (TCFD), among others.

5 Hallmarks For A Credible Transition Plan

Hallmark 1

Performance Targets: The importance of key performance indicators

Paris-Aligned Targets: The Need for 1.5°C Speed

  • Select sector-specific transition pathway aligned with Paris Agreement Goals
  • Company-specific KPIs that align as early as possible with that pathway
  • Science-based
  • Include Scope 1, 2, and 3 emissions and address short-, medium-, and long-term 

Hallmark 2

Robust Plans: Action, Financing and Governance

  • Action:  Set strategy and plan to deliver on KPIs
  • Financing:  Prepare associated financing plan, cost estimates, sources of funding
  • Governance:  Implement (changes to) relevant governance frameworks to enact change

Hallmark 3

Implementation Plans

Interim indicators while deploying financing, for example:

  • Roll out of capital expenditure
  • Changes to operating expenditure
  • Decommissioning/phase-out of activities
  • Supplier engagement
  • Other actions detailed in plan

Hallmark 4

Internal Reporting

  • Re-evaluate and re-calibrate KPIs as needed
  • Tracking performance against selected KPIs

Hallmark 5

External Reporting

  • External reporting and independent verification on the KPIs and strategy to deliver (per Hallmarks 1 and 2)
  • Annual reporting of independently verified progress in terms of action taken and performance against targets (per Hallmarks 3 and 4)