German government told to work with France on European transition plan rules
Advisory body says EU and UK expectations must be harmonised to avoid confusion
The German Government has been advised to collaborate with its French counterparts to develop standardised rules on corporate climate transition plans.
In a report published this week, the government’s sustainable finance committee called for closer cooperation between Europe’s major economies to provide companies and financial institutions with coherent expectations about how they should devise and communicate their net zero strategies.
Specifically, the authors said, Germany should start “coordinating approaches with France and the United Kingdom”.
France has been pushing thinking around climate transition plans for many years. It was the first country to consider making ‘say on climate’ mandatory, meaning companies would have to get their decarbonisation strategies approved by shareholders at annual meetings. Those plans were dropped last year.
The environment ministry works with environmental non-profit CDP on a project called Assessing Low-Carbon Transition, which has evaluated the credibility of hundreds of French corporate climate plans.
Last week, the French supervisor AMF published a report on the challenges of developing transition plans under the EU’s Corporate Sustainability Reporting Directive.
Elsewhere, the UK has shot into pole position on the topic after the country’s treasury appointed a Transition Plan Taskforce (TPT) to develop high-level and sector-level guidelines for ‘gold standard’ transition plans. Regulators are moving to integrate the expectations into existing reporting rules.
The disclosure of transition plans is already required under the EU’s Corporate Sustainability Reporting Directive, although there is no clear guidance about what they should look like.
Germany’s sustainable finance committee, made up of 34 experts from finance, industry, science and civil society, advised the government to “constructively examine the UK TPT recommendations and work to avoid inconsistencies between German/EU and UK requirements for the preparation of transition plans”.
It added that “policy initiatives” were needed to ensure interoperability, and “should be launched in the near future in collaboration with France, with a view to EU support”.
To give companies more certainty about the direction of travel, the report urges the government to translate its nationally-determined contribution – its climate pledge under the Paris Agreement – into “sectoral transition pathways supported by industrial policy and other measures, in collaboration with the private sector”.
Germany is increasingly being seen as a laggard on climate policy, both nationally and at EU level. In recent weeks, it has been under scrutiny for seeking to derail the introduction of the EU Corporate Sustainability Due Diligence Directive, which would be the first law in the world to require companies to develop and implement Paris-aligned transition plans.
