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19 4. CONCRETENESS: OVERVIEW OF THE NECESSARY EU REGULATORY CHANGES 39 https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FED_ESRS_E1.pdf. 40 https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FED_ESRS_E4.pdf 41 https://www.consilium.europa.eu/media/57644/st10835-xx22.pdf (page 21). 42 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016R1011. 4.1. The relevant EU regulations to ensure a consistent EU framework on corporate targets and transition plans Existing EU texts on targets and transition plans at corporate level Texts Summary of the text Corporate Sustainability Reporting Directive (CSRD), Articles 19a and 29a “Article 19 (a): 2. The information referred to in paragraph 1 shall contain: (...) (iii) the plans of the undertaking, including implementing actions and related financial and investment plans, to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement and the objective of achieving climate neutrality by 2050 as established in Regulation (EU) 2021/1119 (European Climate Law), and where relevant, the exposure of the undertaking to coal, oil and gas-related activities; (...) (b) a description of the time-bound targets related to sustainability matters set by the undertaking, including where appropriate absolute greenhouse gas emission reduction targets at least for 2030 and 2050, a description of the progress the undertaking has made towards achieving those targets, and a specification of whether the undertaking’s targets related to environmental matters are based on conclusive scientific evidence;” CSRD, Level 2: EFRAG draft ESRS E1 and E4 - Disclosure Requirement E1-1 (climate change) – Transition plan for climate change mitigation 39 ; - Disclosure Requirement E4-1 (biodiversity) – Transition plan in line with the targets of no net loss by 2030, net gain from 2030 and full recovery by 2050 40 . EU Taxonomy, Article 8 CSRD recital 26: “ Information disclosed in accordance with Article 8 of Regulation (EU) 2020/852 about the amount of Capex or Opex associated with activities aligned with the Taxonomy could support financial and investment plans related to these transition plans where appropriate ” 41 . Benchmark Regulation “ Article 19b. Requirements for EU Climate Transition Benchmarks: Administrators of EU Climate Transition Benchmarks shall select, weight, or exclude underlying assets issued by companies that follow a decarbonisation trajectory by 31 December 2022, in accordance with the following requirements: (i) the companies disclose measurable carbon emission reduction targets to be achieved within specific timeframes; (ii) the companies disclose a reduction in carbon emissions which is disaggregated down to the level of relevant operating subsidiaries; (iii) the companies disclose annual information on progress made towards those targets; (...). ” Article 54. Review: “ 4. By 31 December 2022, the Commission shall review the minimum standards for EU Climate Transition Benchmarks and for EU Paris-aligned Benchmarks in order to ensure that the selection of the underlying assets is coherent with environmentally sustainable investments as defined in a Union-wide framework. ” 42 Texts under negotiation paving the way for the introduction of targets and transition plans at corporate level Texts Summary of the text Corporate Sustainability Due Diligence Directive (CSDDD) “ Article 15 Combating climate change: 1. Member States shall ensure that companies referred to in Article 2(1), point (a), and Article 2(2), point (a), shall adopt a plan to ensure that the business model and strategy of the company are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement. This plan shall, in particular, identify, on the basis of information reasonably available to the company, the extent to which climate change is a risk for, or an impact of, the company’s operations. 2. Member States shall ensure that, in case climate change is or should have been identified as a principal risk for, or a principal impact of, the company’s operations, the company includes emission reduction objectives in its plan. ” -> Please see the specific briefing of WWF and other organisations on this Article. Capital Requirement Directive (CRD) Article 76 (2) – subparagraph 2: “Member States shall ensure that the management body develops specific plans and quantifiable targets to monitor and address the risks arising in the short, medium and long-term from the misalignment of the business model and strategy of the institutions, with the relevant Union policy objectives or broader transition trends towards a sustainable economy in relation to environmental, social and governance factors.” Article 87 a (4) “4. Competent authorities shall assess and monitor developments of institutions’ practices concerning their environmental, social and governance strategy and risk management, including the plans to be prepared in accordance with Article 76, as well as the progress made and the risks to adapt their business models to the relevant policy objectives of the Union or broader transition trends towards a sustainable economy, taking into account sustainability related product offering, transition finance policies, related loan origination policies, and environmental, social and governance related targets and limits.” Solvency II Parliament amendment: “Article 44a Transition plan: 1. In order to demonstrate alignment with the Green Deal and the objective of carbon neutrality by 2050 at the latest as established in Regulation (EU) 2021/1119(European Climate Law),insurance and reinsurance undertakings in scope of Directive (EU)2021/0104 (COD) [CSRD Directive] shall develop and adopt a transition plan by no later than [1 year after the date of the application of the Directive]. 2. The plan shall be approved by the administrative, management or supervisory body of the insurance or reinsurance undertaking. The plan shall be reviewed at least every 2 years. 3. The plan shall be subject to the disclosure obligations referred to in article 19aand article 29a of the Directive amending Directive 2013/34/EU, Directive 2004/109/EC, Directive2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting.” EU Green Bond Standard regulation (EU GBS) Parliament’s position: “Article 7b - Transition plans: 1. Before issuing a European green bond or a sustainability-linked bond, issuers of such bonds that are subject to an obligation to create transition plans pursuant to Article 19a(2a) or Article 29a(2a) of Directive 2013/34/EU [as amended by the CSRD] shall be required to have received a positive opinion by an auditor on the alignment of the transition plan with the objective to achieve climate neutrality by 2050 at the latest, as set out in Regulation (EU) 2021/1119.” EU Taxonomy Report of the EU Platform on sustainable finance recommending an extended taxonomy 43 , that the Commission should build on to issue its own report. Text under negotiation paving the way for the introduction of targets and transition plans at site level EU Emissions Trading System (EU ETS) Parliament’s position 44 : “Article 10a (1) – subparagraph 2a In addition to the requirements set out in the third subparagraph of this paragraph, by 1 July 2025, operators in sectors or subsectors eligible for free allocation of allowances pursuant to Articles 10a and 10b shall establish a decarbonisation plan for each of their installations for its activities covered by this Directive. That plan shall be consistent with the climate-neutrality objective set out in Article 2(1) of Regulation (EU) 2021/1119 and any relevant sectoral roadmaps prepared in accordance with Article 10 of that Regulation and shall set out (...)” Industrial Emissions Directive (IED) “Article 27d Transformation towards a clean, circular and climate neutral industry: 1. Member States shall require that by 30 June 2030 the operator includes in its environmental management system referred to in Article 14a a transformation plan for each installation carrying out any activity listed in points 1, 2, 3, 4, 6.1 a, and 6.1 b of Annex I. The transformation plan shall contain information on how the installation will transform itself during the 2030-2050 period in order to contribute to the emergence of a sustainable, clean, circular and climate-neutral economy by 2050, using the format referred to in paragraph 4.” 2. Member States shall require that, as part of the review of the permit conditions pursuant to Article 21(3) following the publication of decisions on BAT conclusions after 1 January 2030, the operator includes in its environmental management system referred to in Article 14a a transformation plan for each installation carrying out any activity listed in Annex I that is not referred to in paragraph 1. The transformation plan shall contain information on how the installation will transform itself during the 2030-2050 period in order to contribute to the emergence of a sustainable, clean, circular and climate- neutral economy by 2050, using the format referred to in paragraph 4. (...) 4. The Commission shall by 30 June 2028, adopt an implementing act establishing the format for the transformation plans. This implementing act shall be adopted in accordance with the examination procedure referred to in Article 75(2).’ 43 https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/220329-sustainable-finance-platform-finance-report-environmental-transition-taxonomy_en.pdf 44 The Commission also tabled a form of conditionality in ETS, but which is much weaker than the Parliament’s one.

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