The French financial markets regulator has published a guide on transition plans for climate change mitigation for companies, drawing on input from investors, among others.
The guide anticipates the first publication of transition plans required under the EU’s Corporate Sustainability Reporting Directive (CSRD), with the Autorité des Marchés Financiers (AMF) saying these plans “hold great significance for investors and stakeholders”. France was the first country to transpose the CSRD.
The guide is the work of the AMF’s climate and sustainable finance commission, which set up a working group to “decipher, explain and contextualise” the regulatory provisions of the detailed reporting standard relating to climate transition plans – European Sustainability Reporting Standard (ESRS) E1.
“This report […] is in line with the AMF’s strategic priority of promoting more sustainable finance,” said chair of the AMF, Marie-Anne Barbat-Layani.
“Its aim is to guide companies in implementing the new European standards, which are very ambitious. Support and supervision are the two pillars of the AMF’s work on sustainable finance.”
The guide, which is in French, analyses investors’ expectations, company experiences, and opportunities offered by existing methodologies.
According to an update from the AMF, the guide in particular covers the challenge of reporting on transition plans in relation to climate change mitigation; the importance of short- and medium-term targets; “the presentation of decarbonisation levers”, and transition plan governance and monitoring.
A company’s “decarbonisation levers” represent the heart of a transition plan, according to the AMF’s guide. It states that a qualitiative and quantitative description of them, along with information about the implementation timetable required by the ESRS, go a long way towards helping users understand the ambition level and credibility of a company’s strategy.
Short-term measures are particularly important, as they are the most verifiable and demonstrate concrete action, the guide continues.
It also notes that the credibility of a company’s plan depends on the financial and human resources allocated to it, and that investors expect companies’ board to be closely involved with transition plans, with there also needing to be effective incentive mechanisms.
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