13 preparers, and others, this document provides additional guidance for preparers regarding disclosures of climate- related metrics and targets and key information from transition plans . The Taskforce also modified certain aspects of its 2017 Implementing the Recommendations of the Taskforce on Climate-related Financial Disclosures (2017 annexe) to provide additional guidance on disclosing metrics, targets and transition plan information in line with the TCFD recommendations . It should be noted, however, that the TCFD focuses only on climate-related financial risks, which only cover one part of the EU double materiality approach for corporate reporting and must therefore be completed. 2.4. The Taskforce on Nature-related Financial Disclosures (TNFD) To further define transition pathways to a nature-positive economy, the TNFD will look to the Global Biodiversity Framework of the Convention on Biological Diversity (CBD), including specific targets agreed upon: they could form the basis of development of scenarios and targets enabling nature-positive transition plans 27 . The Taskforce will also look towards the development of goals and objectives for nature and biodiversity within national and local policies, which will set the level of ambition and context for targets set by companies and financial institutions. The implications of these policy frameworks will be considered in subsequent beta versions of the TNFD framework, particularly in relation to metrics, targets and scenarios. 2.5. The Glasgow Financial Alliance for Net Zero (GFANZ) GFANZ has published a set of frameworks 28 , tools and other resources to support financial institutions’ efforts to finance and enable the whole-economy transition to net zero emissions, including a corporate transition plan standard in September 2022 29 . GFANZ frameworks and tools have been developed to translate net-zero emission commitments from financial institutions into action. In those documents, financial institutions are recommended to develop a “ net-zero transition plan ” that articulates their transition goals, the specific actions they will take, and the accountability 27 https://framework.tnfd.global/wp-content/uploads/2022/06/TNFD-Full-Report-Mar-2022-Beta-v0-1.pdf . 28 https://assets.bbhub.io/company/sites/63/2022/06/GFANZ_Towards-a-Global-Baseline-for-Net-Zero-Transition-Planning_June2022.pdf. 29 https://www.gfanzero.com/press/gfanz-releases-report-to-provide-blueprint-for-real-economy-transition-plans/. 30 https://sustainablefutures.linklaters.com/post/102hqyd/gfanz-and-un-race-to-zero-announce-transition-plan-guidance-and-membership-criter#:~:text=The%20RTZ%20announced%20an%20update,achieve%20net%20zero%20by%20 2050 31 https://www.climatebonds.net/files/files/Transition%20Finance/Transition-Finance-for-Transforming-Companies-6-Sept-2022.pdf. 32 https://g20sfwg.org/wp-content/uploads/2022/10/2022-G20-Sustainable-Finance-Report-2.pdf. 33 https://www.ifrs.org/content/dam/ifrs/project/climate-related-disclosures/issb-exposure-draft-2022-2-climate-related-disclosures.pdf . mechanisms they will implement to ensure their plans are credible. Financial institutions’ transition plans should finance activities that lead to reductions in emissions and support the global economy’s transition to net zero. Similarly, the UN Race to Zero (RtZ) published transition plan guidance 30 . 2.6. The Climate Bond Initiative (CBI) As recalled by the CBI 31 , beyond the green label, a variety of other use-of-proceed bonds have emerged in recent years. These include the explicitly labelled ‘Transition Bonds’. By the end of H1 2022, 53 Transition use-of-proceed Bonds have been issued, with issuance dominated by issuers from Japan and China, following the launch of Transition Finance programmes in these countries for hard-to-abate sectors. Given the increasing attraction of Sustainability-Linked Bonds and corporate net zero targets, to issuers, investors and underwriters alike, Climate Bonds is expanding its certification to encompass the certification of credibly transitioning entities in order to support market developments. 2.7. The G20 Sustainable Finance Working Group The G20 Sustainable Finance Working Group has developed a set of high-level principles for transition finance in their latest report 32 . It states that transition finance must be part of credible, time-bound and target-based plans that show which investments are necessary for the transition towards climate neutrality, as opposed to those that would adversely impact the transition. 2.8. The IFRS Climate-related Disclosures The International Sustainability Standards Board 33 (ISSB) is proposing in draft form a range of disclosures about an entity’s transition plans. The Exposure Draft proposes requiring disclosure of information to enable users of general purpose financial reporting to understand the effects of climate-related risks and opportunities on an entity’s strategy and decision-making, i ncluding its transition plans. This includes information about how it plans to 2. FEASIBILITY: SEVERAL ROBUST MARKET PRECEDENTS The good news is that market precedents enable the establishment of an EU regulatory framework for corporate targets and transition plans. Markets are providing or developing methodologies available for companies and financial institutions. Most initiatives are currently focused on climate change, but others are getting quickly developed as well, in particular on biodiversity and freshwater. 23 The corporate standard (all sectors except finance) requires targets to be 5-10 years. The standard for financial institutions depends on the method used: for scope 3 engagement methods (portfolio coverage and temperature rating) targets should be up to 5 years; for scope 3 SDA and scope 1 and 2 targets they should be 5-15 years. 24 In addition, all companies involved in the sale or distribution of fossil fuels must set scope 3 targets for the use of sold products, irrespective of the share of these emissions compared to the total scope 1, 2, and 3 emissions of the company. 25 https://sciencebasedtargets.org/about-us/sbtn and https://sciencebasedtargetsnetwork.org/why-set-sbts-for-nature/ 26 https://sciencebasedtargetsnetwork.org/science-based-targets-for-companies/guidance/ and https://sciencebasedtargetsnetwork.org/resources/sbtn-public-consultation-2022/ . 2.1 The climate Science-Based Target initiative (SBTi) The Science-Based target initiative was founded by CDP, WRI and WWF in 2015, and is supported by the UN Global Compact and the We Mean Business Coalition. It provides target-setting methodologies that can be used by companies (and financial institutions) to set tailored near and long- term science-based climate targets. To date, more than 3700 companies set or committed to set targets through the initiative across 45 sectors in around 80 countries globally . Targets outline how companies or financial institutions will reduce their emissions over the next 5-10 years 23 . The framework was updated in 2020-2021 and now enables companies to choose a 1.5°C pathway or a well below 2°C pathway; it also requires companies to include Scope 3 emissions in their target setting when their scope 3 emissions represent 40% or more of the total company emissions 24 . The targets are validated by an independent committee. The number of companies in SBTI is skyrocketing, and so are the emissions reductions in turn. On average, between 2015 and 2020, companies with approved targets reduced combined scope 1 and 2 emissions by 29%. 2020 saw a year-on-year reduction in scope 1 and 2 emissions of 12%. In absolute terms, the difference between 2015 and 2020 emissions reductions is 419 MtCO2e, equivalent to 130% of the United Kingdom’s total emissions in 2020. 2.2. The Science-Based Target Network (SBTN) 25 The SBTN builds on the momentum of the Science- Based Targets initiative (SBTi). It is a large network of 60 organisations globally – including WWF - developing methods and resources for science-based targets (SBTs) for nature for companies. SBTN is structured in five areas: freshwater, land, biodiversity, ocean, and climate (for the climate mitigation issue, SBTN relies on SBTi: see section above). SBTN’s initial guidance for business is already available 26 . In early 2023, this guidance will form the basis of SBTN’s first release of Science-Based Targets for nature, which will include initial corporate target-setting methodologies on freshwater and on land. SBTN aims to have the world’s major companies to adopt science-based targets for water, land, ocean and biodiversity by 2025. 2.3. The Taskforce on Climate-related Financial Disclosure (TCFD) Since 2017, the Taskforce has sought to clarify issues raised by organisations in their implementation of the TCFD recommendations and provide additional supporting guidance and other information where appropriate. To address recent developments and feedback from users,