Guidance for ECAs on Climate Commitments

The European Scientific Advisory Board on Climate Change calls on the European Union to maintain high climate ambition as it revises the European Climate Law to include a 2040 target. In a report published today, the Advisory Board recommends a 90-95% net domestic greenhouse gas emissions reduction by 2040 to support Europe’s long-term interests and reach climate neutrality by 2050. "Rising greenhouse gas emissions have already driven global temperatures up by 1.3–1.4 °C, fuelling extreme climate events and putting Earth systems on the brink of irreversible damage. As the EU prepares to set its 2040 climate target in law, the European Scientific Advisory Board on Climate Change urges policymakers to act on scientific evidence and maintain momentum.... The Advisory Board recommends a 90–95% emissions reduction target for 2040, to be achieved through domestic action. This level of ambition is feasible and increases the fairness of the EU’s contribution to global mitigation. Recent progress in cutting greenhouse gas emissions – including through the rapid deployment of wind and solar energy – shows that the EU is broadly aligned with scenarios supporting the recommended target range. However, uneven progress across sectors and Member States calls for renewed political commitment. A clear and credible 2040 target would provide policy certainty beyond 2030, supporting clean technology deployment – such as electrification, while strengthening energy security by reducing fossil fuel imports, and accelerating innovation and investment across the EU economy. The Advisory Board advises against using international carbon credits to meet the 2040 target, as they risk diverting resources from domestic investments and could undermine environmental integrity." https://lnkd.in/egQ_yEcN

𝗡𝗲𝘄 𝗗𝗿𝗮𝗳𝘁 𝗳𝗿𝗼𝗺 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲: "𝗔𝗻𝗻𝗲𝘅 𝗔 – 𝗗𝗿𝗮𝗳𝘁 𝗚𝘂𝗶𝗱𝗮𝗻𝗰𝗲 𝗼𝗻 𝗩𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 𝗖𝗮𝗿𝗯𝗼𝗻 𝗠𝗮𝗿𝗸𝗲𝘁 🔹 𝗥𝗼𝗹𝗲 𝗼𝗳 𝗖𝗮𝗿𝗯𝗼𝗻 𝗖𝗿𝗲𝗱𝗶𝘁𝘀 & 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 Carbon credits equal 1 tonne of CO₂e reduced or removed. Voluntary carbon markets help companies offset unavoidable emissions while financing climate projects that may not happen otherwise. As per the World Bank, carbon markets can cut mitigation costs by up to 32%. 🔹 𝗨𝘀𝗶𝗻𝗴 𝗖𝗿𝗲𝗱𝗶𝘁𝘀 𝗶𝗻 𝗮 𝗖𝗿𝗲𝗱𝗶𝗯𝗹𝗲 𝗪𝗮𝘆 Companies must priorities internal reductions first. Credits should only be used for residual emissions. Tools like abatement cost curves, energy audits, and benchmarking can help identify feasible in-house measures. 🔹 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗻 𝗖𝗼𝗿𝗿𝗲𝘀𝗽𝗼𝗻𝗱𝗶𝗻𝗴 𝗔𝗱𝗷𝘂𝘀𝘁𝗺𝗲𝗻𝘁𝘀 (𝗖𝗔𝘀) CAs are required under Article 6 of the Paris Agreement for international credit transfers between governments (ITMOs). 𝗙𝗼𝗿 𝘃𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗯𝘂𝘆𝗲𝗿𝘀, 𝗖𝗔𝘀 𝗮𝗿𝗲 𝗻𝗼𝘁 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱, but companies must avoid double-counting by ensuring: • Credits 𝗮𝗿𝗲 𝗿𝗲𝘁𝗶𝗿𝗲𝗱 under their name • Credits 𝗮𝗿𝗲 𝗰𝗹𝗮𝗶𝗺𝗲𝗱 𝗼𝗻𝗹𝘆 once across the value chain • Credits come from 𝗿𝗲𝗽𝘂𝘁𝗮𝗯𝗹𝗲 𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗶𝗲𝘀 🔹 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗻 𝗩𝗶𝗻𝘁𝗮𝗴𝗲 "𝗩𝗶𝗻𝘁𝗮𝗴𝗲" refers to the year the emissions reduction occurred. As a best practice, credits should align with the 𝗰𝗼𝗺𝗽𝗮𝗻𝘆’𝘀 𝗰𝗼𝗺𝗺𝗶𝘁𝗺𝗲𝗻𝘁 𝗽𝗲𝗿𝗶𝗼𝗱 (𝗲.𝗴., 𝟮𝟬𝟮𝟭–𝟮𝟬𝟯𝟬 𝗳𝗼𝗿 𝟮𝟬𝟯𝟬 𝘁𝗮𝗿𝗴𝗲𝘁𝘀), ensuring the credits reflect current methodologies and baselines. 🔹 𝗖𝗿𝗲𝗱𝗶𝘁 𝗤𝘂𝗮𝗹𝗶𝘁𝘆 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 Singapore highlights 7 principles for environmental integrity: ✔️ Not double-counted ✔️ Additional ✔️ Real ✔️ Quantified & Verified ✔️ Permanent ✔️ No Leakage ✔️ Do No Harm Use of standards like 𝗜𝗖𝗩𝗖𝗠 𝗮𝗻𝗱 𝗖𝗢𝗥𝗦𝗜𝗔 𝗶𝘀 𝗲𝗻𝗰𝗼𝘂𝗿𝗮𝗴𝗲𝗱. Companies should also 𝗰𝗼𝗻𝗱𝘂𝗰𝘁 𝗱𝘂𝗲 𝗱𝗶𝗹𝗶𝗴𝗲𝗻𝗰𝗲 𝘂𝘀𝗶𝗻𝗴 𝘁𝗵𝗶𝗿𝗱-𝗽𝗮𝗿𝘁𝘆 𝗿𝗮𝘁𝗶𝗻𝗴𝘀 𝗮𝗻𝗱 𝗿𝗶𝘀𝗸 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝘁𝗼𝗼𝗹𝘀 (𝗶𝗻𝗰𝗹𝘂𝗱𝗶𝗻𝗴 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗽𝗿𝗼𝗷𝗲𝗰𝘁 𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗹𝗮𝗯𝗲𝗹𝘀). 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲’𝘀 𝗖𝗮𝗿𝗯𝗼𝗻 𝗧𝗮𝘅 𝗙𝗿𝗮𝗺𝗲𝘄𝗼𝗿𝗸 Since 2024, 𝗰𝗮𝗿𝗯𝗼𝗻 𝘁𝗮𝘅-𝗹𝗶𝗮𝗯𝗹𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗶𝗻 𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲 𝗰𝗮𝗻 𝘂𝘀𝗲 𝗲𝗹𝗶𝗴𝗶𝗯𝗹𝗲 𝗶𝗻𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗰𝗮𝗿𝗯𝗼𝗻 𝗰𝗿𝗲𝗱𝗶𝘁𝘀 (𝗜𝗖𝗖𝘀) 𝘁𝗼 𝗼𝗳𝗳𝘀𝗲𝘁 𝘂𝗽 𝘁𝗼 𝟱% of their taxable emissions. 🔹 𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝘁 𝗗𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲𝘀 Disclosing the volume, source, type, and purpose of carbon credits is crucial. Under 𝗜𝗙𝗥𝗦 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗗𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀, companies must also disclose how credits support their net-zero targets. #𝗖𝗮𝗿𝗯𝗼𝗻𝗖𝗿𝗲𝗱𝗶𝘁𝘀 #𝗩𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆𝗖𝗮𝗿𝗯𝗼𝗻𝗠𝗮𝗿𝗸𝗲𝘁 #𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 #𝗖𝗹𝗶𝗺𝗮𝘁𝗲𝗔𝗰𝘁𝗶𝗼𝗻 #𝗦𝗶𝗻𝗴𝗮𝗽𝗼𝗿𝗲 #𝗡𝗲𝘁𝗭𝗲𝗿𝗼 #𝗗𝗲𝗰𝗮𝗿𝗯𝗼𝗻𝗶𝘀𝗮𝘁𝗶𝗼𝗻

Net Zero Investment Framework: Implementation Guidance for Objectives and Targets | Produced by Institutional Investors Group on Climate Change (IIGCC), supported by Asia Investor Group on Climate Change (AIGCC), Ceres, and Investor Group on Climate Change (IGCC) This report provides detailed implementation guidance for institutional investors seeking to align their portfolios with net zero emissions goals. Developed by the Institutional Investors Group on Climate Change (#IIGCC) with support from global partners #AIGCC, #Ceres, and #IGCC, the framework outlines a practical and science-based approach to setting, executing, and evaluating #decarbonization objectives across all asset classes. It serves as a technical and strategic companion to the broader #NetZeroInvestmentFramework, helping investors transition from high-level commitments to measurable #climateaction. The report outlines four primary target types for investors—portfolio emissions, portfolio coverage, allocation to climate solutions, and engagement intensity—offering clarity on how each can be tailored to organizational mandates and asset-class characteristics. It provides detailed methodologies for setting short-, medium-, and long-term targets in alignment with a 1.5°C pathway and explains how to integrate these targets into #governance, #riskmanagement, and reporting processes. A core insight is the need for a dynamic approach: targets must be adaptable as science evolves, markets shift, and policy landscapes change. It also emphasizes the importance of stewardship, recommending structured engagement strategies to influence portfolio companies and achieve real-world emissions reductions. Case studies from pension funds and asset managers across #, #NorthAmerica, and #AsiaPacific demonstrate how leading institutions are operationalizing the guidance to drive credible #netzero progress. In summary, this report is a pivotal contribution to the global movement for climate-aligned finance, offering institutional investors a unified and actionable playbook for transforming net zero ambition into practical investment strategies. Its significance lies in bridging the gap between intent and execution—translating #climate commitments into robust, transparent, and comparable targets that can guide #capitalflows and catalyze systemic change. As the pressure mounts on #financialinstitutions to demonstrate accountability, this guidance provides both a compass and a benchmark for credible net zero implementation in an era of heightened #climate and fiduciary scrutiny.

📢 Transition plans just got serious—and standardised. The IFRS Foundation has just published a new guidance document under the ISSB (International Sustainability Standards Board) to support companies in disclosing credible climate transition plans under IFRS S2. Why does this matter? Because for too long, "net zero by 2050" has been more slogan than strategy. Now, with this detailed roadmap, transition plans move from glossy PDFs to verifiable, investor-relevant disclosures. 📘 Key takeaways from the guidance: -Clear definitions of transition plans in alignment with IFRS S2 and TCFD framework -Guidance on disclosing targets, pathways, assumptions, and dependencies -Emphasis on governance, execution strategy, and financial implications -Interoperability with other frameworks (EU CSRD/ESRS, SEC, and TPT UK) -Real examples from companies that have already begun implementing these disclosures This is a huge step forward in ESG maturity. Vague commitments are no longer enough. If you’re a business leader, investor, or sustainability consultant—this guidance: ✅ Clarifies what credible climate ambition looks like ✅ Enables decision-useful, auditable disclosures ✅ Helps businesses avoid greenwashing by anchoring plans in financial and operational strategy At Constructivist, this is music to our ears. Our work with clients increasingly involves: Translating climate goals into transition-aligned business models Mapping risk and opportunity pathways with data-backed decision tools Embedding these strategies into internal ESG reports and external investor disclosures #IFRSS2 #ClimateDisclosure #TransitionPlans #SustainabilityReporting #ESG #NetZero #ISSB #Constructivist #ClimateStrategy #GreenFinance #TCFD #CSRD #Decarbonisation #ClimateRisk #SustainabilityLeadership #IFRS #BusinessForGood

Guidance on Climate Transition Plans under ESRS For organisations navigating climate reporting and sustainability compliance, the new guidance on implementing climate transition plans under the European Sustainability Reporting Standards (ESRS) provides valuable support! The guidance provides an approach for organisations to meet the ESRS requirements by detailing disclosure obligations that align with key EU regulations, such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy. This alignment helps ensure climate transition activities and sustainability disclosures meet broader European compliance standards, reinforcing their commitment to responsible and sustainable practices in line with EU legislation. 1️⃣ Purpose: Offers non-binding guidance to help organizations create effective transition plans for climate change mitigation. 2️⃣ Compliance: Maps out how ESRS aligns with EU laws like the Corporate Sustainability Due Diligence Directive (CSDDD) and EU Taxonomy, ensuring regulatory alignment 3️⃣ Structure: Covers all aspects of climate disclosure—from European frameworks and disclosure requirements to international standards 4️⃣ Paris Agreement Alignment: Organizations must disclose targets that align with the 1.5°C goal, showing commitment to global climate efforts 5️⃣ Decarbonization: Outlines required emissions reduction actions, including operational changes and product modifications. Organisations are required to outline specific actions, known as "decarbonization levers," which may include operational adjustments, product changes, and other emissions reduction initiatives 6️⃣ Investments: Specifies the need for transparent reporting on investments, including EU Taxonomy-aligned CapEx for sustainable projects 7️⃣ Disclosures: Companies involved in EU Taxonomy activities must show their alignment with taxonomy criteria for sustainable finance 8️⃣ Governance: Transition plans should be embedded within overall corporate strategy, backed by governance bodies to ensure alignment with broader goals 9️⃣ Progress: Regular updates on implementation are required, measuring action effectiveness toward emissions targets 🔟 IROs from climate change mitigation: The guidance stresses the need for organisations to assess and disclose social and environmental impacts, risks, and opportunities linked to their climate transition plans The guidance emphasises that climate transition plans should be fully embedded within a company's overarching strategy and be actively supported by governance bodies. This integration ensures that climate goals are not treated as standalone objectives but are interwoven with long-term corporate planning. By doing so, organisations can align their climate ambitions with their overall business objectives, securing strategic and governance-level commitment to climate action.

Allow me to share that the United Nations Sustainable Stock Exchanges Initiative (UN SSE) initiative has officially launched the UN SSE Model Guidance on Climate Transition Plans. This milestone was announced in conjunction with the opening of the World Climate Investment Summit, held in London on 26 June 2025, and co-hosted by the London Stock Exchange Group (LSEG), SGX Group (SGX Group), and the World Climate Foundation (WCF) The guidance is designed to support stock exchanges globally in guiding their listed companies to develop, implement, and disclose credible climate transition plans. These plans serve as time-bound, strategic roadmaps outlining how businesses will align their operations with a low-greenhouse gas (GHG), climate-resilient economy. The guidance promotes a globally consistent yet locally adaptable approach, encouraging engagement across all levels of a company, from the board of directors to operational teams, while also involving external stakeholders such as investors, regulators, and communities. Structured around a four-step approach (Prepare, Align, Implement, Communicate) the guidance emphasizes the need for transparent, actionable plans aligned with international climate goals. Stock exchanges are seen as key enablers in this transition, linking issuers with financial markets to mobilize capital and promote sustainable investment. Climate transition plans are not only becoming critical for accessing transition finance, but also for managing climate risks and meeting rising expectations from investors and regulators. Full details can be found in the official publication here: https://lnkd.in/gcX73YiV

The European Financial Reporting Advisory Group (EFRAG) has released new draft guidance for the European Sustainability Reporting Standards (ESRS), which outlines essential requirements for climate transition plans across sectors. This guidance aims to standardize how companies disclose climate-related commitments and progress, providing clear benchmarks for aligning business strategies with the EU’s climate goals; building on guidance from TPT. Some key points to note: 💡 Clear Emission Reduction Targets: Companies must set transparent, science-based targets, especially for Scope 3 emissions, to meet EU standards. 💡 Alignment with 1.5°C Pathway: Transition plans must be aligned with the Paris Agreement's 1.5°C target, demonstrating alignment with a net-zero pathway or otherwise providing transparency on alignment. 💡 Implementation Roadmaps: Companies should provide a detailed roadmap, including milestones and timelines, for meeting their climate commitments. 💡 Governance and Accountability: Strong governance is crucial, with clear accountability measures to oversee transition plans. These requirements signal moving towards a new era of accountability, pushing companies to integrate robust climate action into their core strategy - with the lens of dual materiality. #ClimateTransition #SustainableFinance #ClimateRisk #NetZero #ESG #ClimateDisclosure https://lnkd.in/gKwcj9h8

Energy Security and Decarbonization in the Europe and Central Asia by 2060 This summary outlines the key challenges, strategies, and benefits of transitioning to net zero energy in the Europe and Central Asia (ECA) by 2060, as presented in the World Bank report. The ECA region needs to substantially increase climate ambitions and investments in low-carbon technologies to achieve energy security and decarbonization. The World Bank developed a model to project least-cost pathways for ECA to reach net zero energy by 2060. Short-Term Energy Outlook: -The region is vulnerable to seasonal demand and supply shocks, especially in natural gas. -Diversification of energy sources and improved efficiency are crucial for addressing these challenges. Long-Term Net Zero 2060 Scenario: -Power systems must be net zero by 2040. -Commercial buildings must be carbon neutral by 2050. -Residential buildings must be carbon neutral by 2055. -Transport and industry will rely on carbon removal technologies even in 2060. Key Technologies and Strategies: -Renewables for power sector decarbonization. -Electric vehicles for transport. -Heat pumps for buildings. -Energy efficiency measures across sectors. Phasing Down Fossil Fuels: -Coal use to decline rapidly, with 90% of existing capacity phased out by 2030. -Natural gas to play a transitional role, declining from 40% to 16% of primary energy supply by 2060. -Oil use to peak by 2035, dropping to 9% of transport fuels by 2060. Investment Needs: -Total regional investment of $4.7 trillion needed between 2023-2060. -Additional $872 billion required compared to the reference scenario. -Power sector requires the largest share of additional investment. Policy Recommendations: -National decarbonization programs. -Sectoral strategies with net zero targets. -Bans and phase-outs of fossil technologies. -Targets for renewable energy, hydrogen, and carbon capture. -Reforms of subsidies, tariffs, and electricity markets. Benefits of Decarbonization: -Enhanced energy security. -Improved competitiveness through efficiency and innovation. -Stable energy bills. -Job creation in green markets. Reference: World Bank and ESMAP. 2024. "Net Zero Energy by 2060: Charting the Path of Europe and Central Asia toward a Secure and Sustainable Energy Future." by Szilvia Doczi, Washington, DC: World Bank. https://lnkd.in/d8ycXaFX. #netzero #green #co2reduction #sustainability #netzero2060 #cleanenergy #ECAregion #energytransition #renewableenergy #climateaction #sustainableenergy #worldbank #greeninvestment #decarbonizationstrategy