Reclaim Finance Calls for Standardised Transition Plans

The lack of a standardised approach to sustainable transition targets set by companies and financial institutions in response to emerging regulations for greenhouse gas emissions reductions creates significant greenwashing risk, a new report has found. Conducted by Reclaim Finance, a non-profit affiliated with the French branch of the Friends of the Earth Federation, the research drew on the analysis of 26 existing international frameworks, setting out clear expectations on what is needed to ensure plans are credible, and identifying critical red flag for measures that aren’t fit for purpose. Reclaim Finance called on EU policymakers and supervisors to define a robust transition plan standard and enforcement mechanisms, and on auditors and financial institutions to leverage its recommendations. A robust plan should include decarbonisation targets, engagement strategy, reporting and governance, while also recognising risks around biodiversity and the need for a just transition, Reclaim Finance argued. “The integration of transition plans in reporting, due diligence and prudential rules clearly signals the European Union intends to rely on these plans to reach climate goals as well as mitigate related risks,” said Paul Schreiber, Senior Policy Advisor at Reclaim Finance. “But so far, it has failed to standardise their content and to set up any enforcement mechanism. This means companies can adopt purely ‘cosmetic’ transition plans that mask corporate climate inaction, yet still comply with EU regulations.” With more than 920 publicly-listed companies now setting net zero targets, clear standards that financial institutions, regulators, and civil society can rely on are critical if these plans are to deliver the necessary carbon emission reductions and transform company practices.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2024 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top