From targets to transition: Why Oceania’s next climate move must be the doing

From claims to credibility

Most companies selected for this year’s research were chosen because they either had a transition plan in place or intended to disclose one in 2024. Globally, 64% of companies self-report having such a plan; in Oceania, the figure is 67%.

A credible transition plan – as defined in the EY Global Climate Action Barometer – is a time-bound, science-aligned pathway showing how an organisation will reshape its assets, operations and business model to decarbonise in line with a 1.5°C trajectory, manage climate risks and opportunities, and contribute to the wider economy’s shift to net zero.

From frameworks to follow-through

Companies have spent the past two years preparing to disclose, not preparing to do.

Most large organisations in Australia and New Zealand have strong governance oversight of climate risk. Eighty-four percent of Oceania companies disclose board-level responsibility, significantly higher than the global average of 72%. Risk assessments are largely complete, baselines measured and decarbonisation levers identified.

Frameworks themselves do not cut emissions; they simply describe how an organisation might act. The next step – implementing the operational shifts that change footprints, supply chains and capital flows – is, for many companies, still a large stride.

One number illustrates the gap: only 4% of Oceania boards oversee climate-related capital allocation. Boards understand the risk, but the spending has not yet followed.

The policy pivot

What will close the gap? Three developments converged in 2025 that will continue to play out in 2026:

1. AASB S2 and NZ CS climate disclosures: From 1 January 2025, large entities in Australia must disclose the financial effects of climate-related risks and opportunities. In New Zealand this requirement will now commence from FY27. Companies need to quantify the expected impacts on cashflow, asset values and investment plans. Read more on the EY Sustainability Disclosure Hub.
2. Australian Treasury’s transition plan guidance: This will outline what credible transition planning looks like in practice: key assumptions, capital dependencies, governance, scenario alignment and progress metrics. Currently in draft consultation, the guidance will raise expectations and provide a reference point for investors looking to differentiate ambition from execution.
3. Safeguard Mechanism begins to bite: For Australia’s 215 heaviest emitters, carbon now shows up as a line item in financial performance. Baselines decline by 4.9% each year to 2030. Companies that delay decarbonisation face rising costs. Those that invest early can reduce exposure and improve predictability. EY modelling has found reforms to the Safeguard Mechanism won’t just impact the entities that account for 28% of Australia’s emissions – they will reverberate through Australia’s economy.

Overall, these three developments make it harder for companies to rely on high-level commitments or distant targets. They also make it easier for markets to reward progress and to penalise stagnation.

The financial stakes are rising

The EY Global Climate Action Barometer estimates that the global cost of inaction averages 15% of annual revenue. Across Oceania, the financial effects are already visible in flood-damaged assets, supply chain disruptions, insurance volatility and investor scrutiny of high-emissions portfolios.

Yet only 17% of global companies disclose the financial impact of climate risks. In Oceania, the figure falls to 8%, and to just 5% in Australia.

This lack of disclosure does not mean the risks are low or absent. It means they are not yet fully understood or quantified. For investors assessing long-term value, opacity creates uncertainty. For boards, it creates vulnerability, as risk cannot be governed if it is not priced.