EFRAG’s releases draft guidance on transition plans

Here’s a note from David Carlin:

The European Financial Reporting Advisory Group (EFRAG) just released its draft guidance on transition plans, marking a significant milestone for companies across Europe. This guidance isn’t just a framework—it’s a roadmap for action on the journey to Net Zero.

Here’s why this matters:

– Clear Steps for Companies: The draft emphasizes practical steps for companies to create, report, and implement credible transition plans. This will directly influence how companies integrate climate action into every level of their business strategy.

– Investor-Grade Transparency: Investors are looking for transparency—and this guidance delivers. By clarifying EU expectations for transition plans, EFRAG is setting the stage for disclosures that meet rigorous, investor-grade standards. Expect greater scrutiny on targets, timelines, and accountability

– Alignment with Global Standards: @EFRAG’s guidance aligns closely with International Sustainability Standards Board (ISSB) and UK Transition Plan Taskforce (TPT) outputs, promoting interoperability and global coherence on effective and accountable transition plans

– Beyond Emissions: The guidance goes beyond emissions alone, covering risk management, financial impacts, and resilience. It encourages companies to disclose how climate risks are incorporated into financial planning and decision-making—a critical step for robust corporate resilience.

Why This Matters: The draft guidance isn’t just about meeting requirements; it’s an implementation playbook for companies to future-proof themselves.

As investors, policymakers, and consumers demand action, businesses must prioritize credible transition plans—or risk falling behind.

What’s your take on EFRAG’s draft transition plan guidance? Will this raise the bar for transition plans across Europe? Let’s discuss!