DATE
15.8.2025
AUTHORS
.webp)
Kevin Möller
TOPICS
Climate management
Governance & regulation
Reporting
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The Background: CSRD, ESRS, and the revised draft E1
As of September 2025 – based on the EFRAG draft dated July 31, 2025; Feedback accepted until September 30, 2025
The regulatory landscape for sustainability reporting in Europe is evolving rapidly. With the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS) are becoming the central framework for companies. Of particular importance is ESRS E1 “Climate Change,” which consolidates all climate-related disclosure requirements—from emissions inventories to transition plans.
On July 31, 2025, the European Financial Reporting Advisory Group (EFRAG), acting on behalf of the European Commission, presented revised draft ESRS standards (“revised ESRS”), which are open for public consultation until September 29, 2025. These are based on the European Commission’s Omnibus I proposal (February 2025), which aims to significantly streamline the CSRD.
What is a Climate Transition Plan?
A Climate Transition Plan (CTP) outlines how a company intends to make the transition to a net-zero economy in concrete terms—that is, the path to decarbonization. Unlike mere targets—such as committing to a 50% reduction in CO₂ emissions by 2030—the CTP also outlines the measures, investments, and organizational adjustments needed to actually achieve these goals. It thus serves as a strategic management tool that integrates climate strategy, business planning, and risk management.
Distinction Between CTP and Synonyms in Corporate Climate Management
In academic literature and corporate practice, numerous synonyms for the Climate Transition Plan (CTP) appear—such as transformation pathway, net-zero strategy, decarbonization roadmap, transition strategy, or green transition plan. Although these terms are often used interchangeably, there are differences in their scope and formal significance:
- Transition pathways or decarbonization roadmaps often describe a series of technical measures (e.g., energy efficiency, renewable energy).
- A net-zero strategy is usually communicated as a long-term political or business goal without necessarily defining the operational path to achieving it.
- "Transition strategy" or " Green Transition Plan" are less precise translations that tend to appear in an international context (e.g., UK, IFRS, TPT).
The Climate Transition Plan, as defined by ESRS E1, goes a step further: It is enshrined in regulation and requires not only the definition of targets but also a detailed roadmap that encompasses governance, investments, interim targets, and external dependencies. This clearly distinguishes the CTP from more general concepts and makes it the strategic cornerstone of CSRD reporting.
Key elements of the Climate Transition Plan
- Emissions inventory (Scopes 1–3 according to the GHG Protocol): Without a reliable data foundation, a robust CTP is not possible. Companies must provide complete inventories of their direct (Scope 1), indirect (Scope 2), and upstream and downstream emissions (Scope 3). In this regard, it is recommended to follow the globally leading frameworks of the GHG Protocol.
- Decarbonization measures: What specific levers are being used? Examples: energy efficiency programs, expansion of renewable energy, electrification of vehicle fleets, process changes, or supply chain projects.
- Timeline Roadmap: Short-, medium-, and long-term goals are assigned clear timeframes. Instead of abstract targets, specific interim goals and milestones must be identified to make progress measurable.
- Financial Planning (CapEx/OpEx):The CTP must outline which investments are necessary, how they will be financed, and what impact is expected on profitability and cash flow.
- Governance & Management: Climate issues must be on the agenda of the Executive Board and Supervisory Board. A credible CTP outlines responsibilities, control mechanisms, and incentive systems that ensure decarbonization does not remain a side project.
- Dependencies & Risks: No company can navigate its transformation alone. CTPs are designed to clarify which external factors influence success—from technological developments (e.g., hydrogen) to regulatory requirements (e.g., ETS, Carbon Border Adjustment Mechanism) and supply chain dependencies.
Typical real-world challenges: A medium-sized mechanical engineering company prepared its first CTP in 2024. However, it lacked reliable Scope 3 data. The approach: Close collaboration with suppliers, implementation of a data tool, and validation of climate targets by the SBTi. Result: A credible plan that now serves as the basis for credit negotiations.
Climate Transition Plan in the Context of SBTi, CDP, and IFRS S2
A Climate Transition Plan (CTP) in accordance with ESRS E1 is not merely an EU-specific reporting requirement, but part of a global reporting landscape. Companies that want to present their climate strategy credibly must understand how the ESRS CTP interfaces with established frameworks—in particular with the Science Based Targets Initiative (SBTi), the Carbon Disclosure Project (CDP), and the IFRS Sustainability Standards (IFRS S2). Each of these three frameworks has different priorities:
In this way, they complement each other—and an ESRS-compliant CTP provides the common thread linking objectives, disclosure, and financial reporting.
The Revised ESRS E1 Draft: Relevant Changes for CTPs
On July 31, 2025, EFRAG published a revised draft of ESRS E1 on behalf of the European Commission. This step is a direct result of the omnibus proposal, through which the Commission aims to “streamline” the CSRD. Goal:Quality over quantity. The draft is open for public consultation until September 30, 2025. The changes are significant: Approximately 35% of the previous data points (exclusively) are being eliminated, particularly those with a high level of detail or that are difficult to implement. At the same time, new qualitative requirements are being introduced that demand more explanations from companies but less purely tabular work.
While the overview highlights which disclosure requirements are particularly relevant to the Climate Transition Plan, what really matters for companies in practice is the strategic interpretation. The condensed overview shows which ESRS E1 requirements truly matter for CTPs. However, the strategic context is what matters most: How are governance, the target framework, and financial integration changing—and what does that mean in practical terms for your Climate Transition Plan?
The following matrix compares the current situation, the new draft (July 2025), and the implications for your CTP.
The following table directly compares the current requirements, the new draft regulations, and their practical implications for CTPs.
In summary, it can be said that the revised draft of ESRS E1 simplifies the formal reporting process but shifts the focus to strategic coherence, qualitative plausibility, and integration into corporate governance. For companies, this means that the CTP is becoming less of a “checklist” and more of a strategic credibility document.
Strategic Implications for Companies in Implementing CTP in Accordance with ESRS E1
The revised ESRS E1 reduces the formal scope of reporting, but the requirements in terms of content are increasing. The focus is shifting from the mere provision of data to strategic consistency and credibility. As a result, the Climate Transition Plan (CTP) has become a litmus test for the sincerity of the transformation.
A real-world example: A medium-sized automotive supplier with 3,000 employees developed its first Climate Transition Plan in 2024. While Scope 1 and 2 emissions were relatively easy to track, the company quickly ran into difficulties with Scope 3 emissions (e.g., purchased materials, logistics): Suppliers were unable to provide consistent data, so estimates based on industry benchmarks were the only option.
Four key implications:
- Less work – greater responsibility
- Fewer mandatory disclosures simplify the process, but capital markets, banks, and customers do not accept superficial reports.
- Without a complete corporate carbon footprint (including Scope 3 emissions), no CTP can be credible.
- Companies must demonstrate that their data is robust and consistent with the GHG Protocol.
- More flexibility, more risk
- The elimination of the five-year rule allows for customized interim goals.
- However, flexibility without a transparent rationale opens the door to accusations of greenwashing.
- It is crucial that climate goals are integrated into the specific business context and supported by clear, transparent reasoning.
- Qualitative data will serve as a benchmark
- Tables are becoming less important, while narratives are taking center stage.
- But a narrative without data is worthless: scenario analyses, SBTi-validated targets, and investment plans must underpin the story.
- Investors expect concrete plans—not just statements of intent.
- Alignment with global standards
- By aligning more closely with the GHG Protocol, CDP, IFRS S2, and TCFD, companies can reduce the number of reports they produce.
- Those who structure their CTP in accordance with these standards create a consistent foundation for all stakeholders —from regulatory authorities to international investors.
With the revised ESRS E1 draft (July 2025), the pressure is mounting: Companies must explicitly identify qualitative dependencies and uncertainties in the CTP. For suppliers, this means making assumptions and data gaps transparent—while simultaneously implementing measures such as a supplier program for data collection or the integration of Scope 3 criteria into procurement contracts.
Conclusion & Recommendations for Businesses
The revised ESRS E1 (EFRAG, July 2025) removes bureaucratic hurdles but raises expectations regarding strategic depth and credibility. The Climate Transition Plan thus becomes the strategic calling card of the transformation.
Five steps for businesses:
- Ensure a solid data foundation: Without complete and consistent emissions data (Scope 1–3), no CTP can be reliable. Scope 3 emissions, in particular, must be systematically collected, validated, and documented in accordance with the GHG Protocol.
- Validating climate targets: External validation by the SBTi or equivalent standards builds credibility and reduces the risk that targets will be perceived as purely marketing-driven.
- Developing and Integrating a CTP: The plan must include a clear roadmap: actions, investment paths, scenarios, and milestones. It is important to align it with financial and business planning —otherwise, the CTP will remain a paper tiger.
- Assessing Risks & Dependencies: Transformation plans are only as strong as their assumptions. Technologies, energy prices, or regulatory developments can either accelerate or jeopardize the path forward. These factors should be described in qualitative terms and reviewed regularly.
- Embedding governance: A credible CTP is a top priority. It must be embedded within the Executive Board and Supervisory Board and operationalized through clear responsibilities, incentives, and control processes.
In short: The ESRS E1 makes the Climate Transition Plan the litmus test of the transition. Companies that develop robust CTPs now will not only ensure compliance but also gain competitive advantages, minimize risk—and build trust in the capital markets
What happens next?
The revised draft ESRS standards are currently open for public consultation (until September 30, 2025). Following this, EFRAG will evaluate the feedback and submit a final proposal to the European Commission. The revised standards are expected to be adopted in early 2026.
For companies, this means that the coming months offer an opportunity to prepare for the new requirements early on, adjust their transition plans, and address any gaps. Those who start now can gain a decisive edge over the expected standards in the market and among investors.
