ECCJ, alongside 15 other NGOs, publishes a joint statement raising concerns about the European Financial Reporting Advisory Group (EFRAG)’s climate transition plan guidance and its undefined term which can have a significant impact on how EU companies will have to reduce their emissions.

The recent release of the Climate Transition Plan Guidance by EFRAG has raised concerns over the clarity and robustness of corporate climate commitments under the Corporate Sustainability Reporting Directive (CSRD). Designed to support companies in aligning their business strategies with the Paris Agreement’s 1.5°C goal, the guidance introduces critical reporting requirements, including the assessment of emission reduction targets’ “compatibility” with climate benchmarks.

However, ambiguity around the term “compatibility” leaves the door open for potential greenwashing. A coalition of NGOs, including ECCJ, has highlighted that without precise definitions and parameters, the guidance risks allowing companies to align with scenarios as high as 3°C while claiming compliance with EU legislation. This undermines not only the CSRD’s objectives but also those of interconnected laws, such as the Corporate Sustainability Due Diligence Directive (CSDDD).

The CSDDD strengthens climate accountability by requiring companies to design and implement climate transition plans addressing their full value chains. These plans must set clear, time-bound emission reduction targets for Scope 1 to 3 emissions and ensure alignment with the EU’s climate neutrality pledge by 2050. Yet, the effectiveness of such plans depends heavily on harmonized and stringent standards, as envisioned in the CSRD.

We are calling on EFRAG to close this loophole and ensure that corporate climate strategies align with scientifically robust benchmarks.