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The document presents EFRAG's draft guidance on the implementation of climate change mitigation transition plans in line with the European Sustainability Reporting Standards (ESRS). The guidance explains the requirements for publishing information on the objectives, measures and funding of these plans, including their compliance with the Paris Agreement and the EU taxonomy. It also addresses potential negative impacts on society and biodiversity and contains frequently asked questions and answers on individual aspects of implementation. The document emphasizes the importance of integrating transition plans into the overall business strategy and regularly monitoring progress. It points to links with other EU legislation and international sustainability initiatives.
The document details ESRS disclosure requirements and links them to EU legislation such as the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy and others.
Document structure:
The document is divided into several chapters that deal with:
- European framework for transition plans.
- Specifics of requirements for disclosure of information on transition plans for climate change mitigation.
- Connection with other European regulatory frameworks and international standards.
- Frequently asked questions (FAQ).
Key points of the guideline:
- Target compatibility: Companies must publish their targets and explain how they are compatible with the 1.5°C target set by the Paris Agreement.
- Actions and decarbonisation levers: Companies must describe decarbonization levers, such as operational and product modifications that support emissions reductions.
- Investments and financing: Companies must disclose investments and financing to support these plans, including capital expenditure (CapEx) in accordance with the EU taxonomy.
- Additional disclosures: Companies carrying out activities covered by the EU Taxonomy for Sustainable Finance must disclose their compliance with the criteria of the taxonomy, including climate targets and compliance with technical screening criteria.
- Management and strategy: The document emphasizes that transition plans for climate change mitigation must be embedded in the company's overall strategy, with the explicit support of governing bodies, to ensure alignment between sustainability goals and company planning.
- Progress reporting: Companies are required to provide updates on progress in implementing their transition plans, including tracking the effectiveness of planned actions and their contribution to emissions reduction targets.
- Impacts, Risks and Opportunities (IROs) arising from the Climate Change Mitigation Transition Plan: The guidance emphasizes the importance of considering social and biodiversity impacts, risks and opportunities related to the transition plan for climate change mitigation. Companies must disclose how transition plans may affect workers, communities and ecosystems and how they may depend on adaptation measures.
Other important aspects:
- The document emphasizes the importance of considering other sources, such as sectoral standards and international frameworks, when preparing transition plans and publishing information.
- The document provides detailed explanations and examples, how to meet ESRS disclosure requirements.
- The document also contains frequently asked questions (FAQ), which clarify key aspects of the implementation of transition plans.
- It is important to note that this guideline is unenforceable and ESRS requirements take precedence.
This guidance is provided to companies a valuable tool to implement transitional climate change mitigation plans in line with the ESRS. Detailed explanations, examples and FAQs help companies meet disclosure requirements and ensure transparency and accountability in their decarbonisation efforts. Spring
