Credible company transition plans for climate change mitigation: a geographical dependency assessment

Starting in 2025, the Corporate Sustainability Reporting Directive (CSRD) will strengthen disclosure practices for company transition plans. These plans detail the contribution of corporates to the transition to a sustainable economy. In the meantime, credible transition plans have already become one of the key tools for companies to raise transition finance, as defined in Commission Recommendation (EU) 2023/1425. They are also expected to deliver highly valuable data serving different purposes –from strategy to risk management– and various stakeholders –from financial institutions to policymakers. Defining an EU Transition Plan Credibility Assessment Framework is therefore an opportunity to support the market, and may inform the definition and tracking of transition finance. The JRC has developed two tools –assessment questions and assessment KPIs– to assess specific determinants of a transition plan's credibility: geographical dependencies at asset-level (e.g. availability of resources, policy context) and how those dependencies are addressed. These assessment questions and KPIs may be used by companies to increase the credibility of their transition plan, by financial institutions to assess the credibility of companies’ transition plans and by policymakers to inform public policy and financing. Analysing the geographical dependencies of company transition plans in energy-intensive industries can inform stakeholder dialogues and infrastructure investments on the ground at EU, Member States and regional level. Territorial knowledge should be part of the design of industrial policy that is fit for the Clean Industrial deal, as it enhances public-private partnerships and multi-level governance.