CORPORATE CLIMATE TRANSITION PLANS: WHAT TO LOOK FOR

Reclaim Finance establishes a comprehensive framework to identify insufficient or greenwashed corporate climate transition plans. The report outlines five essential steps for a robust plan: setting science-based absolute emission targets, developing a detailed decarbonization strategy (including financial alignment and fossil fuel phase-outs), implementing a value-chain engagement strategy, integrating reporting and governance, and addressing just transition and biodiversity. It further maps these criteria to the EU's European Sustainability Reporting Standards (ESRS) and the European Central Bank's (ECB) supervisory expectations to help companies and financial institutions meet regulatory obligations.

• Robust decarbonization targets must be based on absolute emission reductions and aligned with a 1.5°C no/low overshoot pathway, such as the IEA NZE (2023 update).
• To be considered robust, targets must cover all greenhouse gases and all jurisdictions where the entity is active. Scope 1 and 2 emissions must be fully included, while Scope 3 emissions must be included in medium- and long-term targets, and at least 90% of total emissions must be covered in short-term targets if some Scope 3 is excluded.
• A credible transition plan requires a specific timeline with targets for 2025, 2030, 2035, and carbon neutrality by 2050 at the latest. Short-term ambition should ensure emissions do not rise above base year values and are reduced by 42-50% by 2030.
• Carbon offsets must not be used in short- or medium-term targets and should only address residual emissions (typically 5-10%) in carbon neutrality targets after at least 90% emission reductions have been achieved.
• Entities must provide a quantitative and qualitative assessment of 'locked-in' GHG emissions from existing and planned assets, explaining how these may jeopardize targets and detailing plans for decommissioning or transformation.
• Financial planning must be aligned with the transition plan, including the use of capex targets that ensure no new investment goes to harmful projects, such as new fossil fuel production.
• For entities in the fossil fuel value chain and financial institutions, a robust plan requires an immediate end to support for new coal, oil, and gas production projects and midstream infrastructure, including LNG terminals.
• Engagement strategies must cover all key stakeholders in the value chain and include an escalation process with timebound consequences for stakeholders who do not align with climate goals.
• Governance requirements for a robust plan include board-level responsibility for climate matters, the linking of executive remuneration to climate performance, and a review process for the plan every three years.
• Transition plans must address biodiversity by cutting support for activities causing deforestation and peatland loss by 2025 and ecosystem conversion by 2030, while integrating KPIs to ensure a 'Just Transition' for workers and communities.
• The report's minimum criteria directly map to the EU's ESRS E1-1 requirements regarding GHG targets, financial levers, and operational integration, as well as the ECB's supervisory expectations on climate-related risk management.

APA

Schreiber, P. (2024). CORPORATE CLIMATE TRANSITION PLANS: WHAT TO LOOK FOR. Reclaim Finance. https://reclaimfinance.org/site/wp-content/uploads/2024/01/Report-Climate-Transition-Plan-Reclaim-Finance-January-2024.pdf

Chicago

Schreiber, Paul. CORPORATE CLIMATE TRANSITION PLANS: WHAT TO LOOK FOR. Reclaim Finance, 2024. https://reclaimfinance.org/site/wp-content/uploads/2024/01/Report-Climate-Transition-Plan-Reclaim-Finance-January-2024.pdf.

Wikipedia

{{cite report |last1=Schreiber |first1=Paul |title=CORPORATE CLIMATE TRANSITION PLANS: WHAT TO LOOK FOR |publisher=Reclaim Finance |date=January 2024 |url=https://reclaimfinance.org/site/wp-content/uploads/2024/01/Report-Climate-Transition-Plan-Reclaim-Finance-January-2024.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{schreiber2024corporate, author = {Schreiber, Paul}, title = {{CORPORATE CLIMATE TRANSITION PLANS: WHAT TO LOOK FOR}}, institution = {Reclaim Finance}, year = {2024}, month = jan, url = {https://reclaimfinance.org/site/wp-content/uploads/2024/01/Report-Climate-Transition-Plan-Reclaim-Finance-January-2024.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }