[HOW] ESRS E1-1: Strategy: Transition Plan for Climate Change Mitigation

ESRS E1: Transition Plan for Climate Change Mitigation

1. Introduction

As the world focuses on combating climate change, businesses are increasingly required to align their strategies with global sustainability goals. ESRS E1 mandates that companies disclose their plans for mitigating climate change, aligning their strategies and business models with the Paris Agreement's goal of limiting global warming to 1.5°C. This article will provide a detailed, step-by-step approach to developing a comprehensive transition plan, covering emission reduction targets, decarbonization strategies, investment details, and resilience analyses.

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2. Strategy

Simply said, strategy is a plan of action designed to achieve long-term or overall goals. It's about making decisions and allocating resources to reach desired outcomes, often considering various internal and external factors that might affect success. In the context of the ESRS, strategy involves how companies integrate sustainability into their business models and operations.

Transition Plan for Climate Change Mitigation

The transition plan for climate change mitigation consists of six distinct components, which will be discussed here.

1. GHG Emission Reduction Targets

The first component is the GHG emission reduction targets. This section should mention the targets, which are detailed in the separate disclosure requirement E1-4 targets. Alongside the reference, an explanation should be provided on how these targets are compatible with limiting global warming to 1.5°C in line with the Paris Agreement.

One should include the following:

• Specific targets: Refer to Disclosure Requirement E1-4 for detailed GHG emission reduction targets.

• Alignment with Paris Agreement: Explain how these targets are aligned with limiting global warming to 1.5°C in accordance with the Paris Agreement.

• Strategy and business model: Provide a high-level overview of how the company’s strategy and business model will evolve to support the transition to a sustainable economy.

Regarding the explanation of how these targets are aligned, guidance from the Science Based Targets initiative. can be used. Generally, a company should aim to reduce its emissions by 50% by 2030 and by at least 90% by 2050. This can be achieved by using established sectoral decarbonisation pathways or economy-wide scenarios as benchmarks to ensure targets are in line with the 1.5°C goal. If sector-specific pathways are not available, economy-wide scenarios should be used as a reference, acknowledging their limitations. In the article about targets we will cover this in more depth.

Example

Our company has committed to reducing GHG emissions by 50% by 2030, with the ultimate goal of achieving net-zero emissions by 2050. These targets are in line with the Paris Agreement's objective to limit global warming to 1.5°C. Our targets are benchmarked against the Science Based Targets initiative (SBTi) pathway for the energy sector, which aligns with the 1.5°C goal. To align with the 1.5°C target, we are transitioning 80% of our energy consumption to renewable sources by 2030, and investing in green technology to reduce operational emissions. Detailed targets can be found in ……………., as per Disclosure Requirement E1-4.