European markets regulator urges EFRAG to resume work on transition plans

ESMA wants body to revive guidance approved for consultation last year, as research finds no ‘credible 1.5℃ plans’ among SBTi firms

The European Securities and Markets Authority (ESMA) is calling on EU advisors to move ahead with standards for the disclosure of climate transition plans. 

The supervisor told Real Economy Progress it was “important” that EFRAG, the body developing the bloc’s sustainability disclosure rules, turns its attention back to transition plans. 

EFRAG put the project on hold last year, to focus on streamlining the European Sustainability Reporting Standards (ESRS). 

But ESMA wants it to “now resume that work.” 

“Continued focus on implementation support will help market participants adopt the new requirements, especially in critical areas such as transition planning for climate change mitigation and, even more so, for biodiversity,” it added. 

The comments come as ESMA publishes its official opinion on proposed changes to the ESRS, in which it also “encouraged” EFRAG to “publish implementation guidance on the transition plan disclosures”. 

The group had its transition plan guidance approved for public consultation in January 2025, before putting it on the backburner.   

“EFRAG considered it appropriate to suspend the public consultation and finalisation of detailed transition plan guidance pending the outcome of the ESRS simplification,” a spokesperson said, adding that this was done to prevent misalignment with any revised standards.  

She acknowledged the “importance” of the transition plan guidance – “particularly in the context of simplified standards”, but said that resuming the work would have to be considered in the light of the final amendments to the ESRS and its “overall implementation priorities”. 

ESMA’s request comes as analysis by Morningstar Sustainalytics concludes that no company with a Science-Based Target Initiative (SBTi) target has a credible transition plan aligned with a 1.5℃ warming scenario.   

The ESG data provider looked at 1,450 companies with validated SBTi goals and found a quarter to be on a 1.5℃ – 2℃ pathway, compared with 17% among the broader research universe. 

Most firms with SBTi targets (56%) were found to be on a 2℃ – 2.5℃ pathway.