“Transition Plans Are Dead, Long Live Transition Plans?”: The Rise, Fall and Persistence of Climate Transition Plans in the EU

Abstract

Within the debate culminating in the adoption of the Omnibus I Directive, amending the Corporate Sustainability Due Diligence Directive (CSDDD), climate transition plans attracted considerable media and policy attention. These instruments allow companies to set out their trajectory to reduce their greenhouse gas emissions, with a view to progressively aligning their business activities with climate policy goals, like those of the Paris Agreement. They became a focal point of controversy due to concerns that mandating their adoptionwould give rise to excessive compliance costs on companies and enhance legal fragmentation. Ultimately, the Omnibus I Directive removed Article 22 from the CSDDD, eliminating the duty for companies to adopt and implement climate transition plans. In the paper we argue that climate transition plans are nevertheless likely to remain a widespread corporate practice. Their continued use will be driven by reputational considerations, parallel statutory requirements, and the need to secure financing from banks and investors. We first examine the emergence of climate transition plans as a market-driven practice and trace their progressive standardisation through the development of non-binding frameworks. We then analyse their juridification by mapping the legal requirements applicable before and after the Omnibus I reform. Finally, we identify and compare the different forms of climate transition plans that companies are likely to adopt in the future despite the legislative changes. This comparison demonstrates that the fragmentation and compliance burdens associated with climate transition plans will persist and may even be exacerbated by the Omnibus I package. As a result, the reform's stated objectives of simplifying corporate obligations and enhancing competitiveness are unlikely to be realised in practice.