EU Platform on Sustainable Finance makes recommendations on the development and assessment of corporate transition plans

The EU Platform on Sustainable Finance has published a report on the development and assessment of corporate transition plans. The PSF identifies core elements for evaluating transition plans and makes recommendations to the European Commission on how best to improve the effectiveness of its policy framework and support the market's provision and access to transition finance. In its report, the PSF states that companies should clearly communicate to financial market participants any gaps and how they will be addressed. Financial market participants should then use credible and robust transition plans to help inform their investment and lending decisions, supporting companies in enhancing their plans over time.

The key recommendations addressed in the report include:

• developing sectoral transition pathways for high-emitting sectors at the EU level, including technology roadmaps;
• providing guidance for selecting scenarios that can be used for credible science-based corporate target setting and transition planning;
• creating criteria for qualifying targets as credible and science-based;
• considering robust transition plans as a valuable source of information for discussions on future decarbonization initiatives and infrastructure planning;
• conducting further work to explain the depreciation of assets at risk of becoming stranded, the impact of embedded emissions in fossil fuel reserves, and the identification of carbon lock-in with new investments;
• introducing a monitoring framework or a public registry of emission-reduction data per sector to track implementation of transition plans at company and sector-level; and
• implementing a common transition plan template for non-financial undertakings, for use across different areas of EU legislation.

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