CSRD Transition Plans: How to Set and Report Credible Climate Targets

Climate targets without a plan are just marketing. That's essentially the message behind one of the most scrutinised parts of the CSRD: the requirement to disclose a climate transition plan under ESRS E1 (Climate Change).

Unlike earlier voluntary pledges — "net zero by 2050" with no detail — the CSRD demands specifics. How will you get there? What levers will you pull? How much will it cost? And if you don't have a plan yet, you need to say that too.

This guide walks through what ESRS E1 actually requires, how to build a credible transition plan, and the mistakes that trip companies up.

What Is a Climate Transition Plan Under the CSRD?

A climate transition plan is a documented strategy showing how your company will align its business model and operations with the goal of limiting global warming to 1.5°C — consistent with the Paris Agreement.

Under ESRS E1, the transition plan isn't a standalone document you file separately. It's embedded in your sustainability statement as a set of specific disclosures, covering:

GHG reduction targets (Scope 1, 2, and — where material — Scope 3)
Decarbonisation levers you'll use (energy efficiency, fuel switching, electrification, procurement changes)
Financial resources allocated to the transition
Dependencies and locked-in emissions (e.g., long-lived assets tied to fossil fuels)
A timeline with milestones (typically 2030 and 2050 benchmarks)

If your company has no transition plan, ESRS E1 requires you to disclose whether and when you intend to adopt one. Silence isn't an option.

Why Transition Plans Matter More Than Ever

Transition plans have moved from "nice to have" to regulatory and financial imperative for several reasons:

Regulatory Pressure

The CSRD itself is just one layer. The EU's Corporate Sustainability Due Diligence Directive (CSDDD) also requires qualifying companies to adopt Paris-aligned transition plans. National regulators are paying attention, and the European Securities and Markets Authority (ESMA) is reviewing how transition plans are reported in practice.

Investor Scrutiny

Institutional investors increasingly use transition plan quality as a proxy for management competence. If your plan is vague or missing, expect follow-up questions — or capital allocation consequences.

Greenwashing Risk

Europe's Green Claims Directive is tightening the rules on environmental marketing. A transition plan that doesn't match your actions creates legal exposure, not just reputational risk. This is where the connection to your double materiality assessment becomes crucial — your climate risks and impacts should directly feed into your transition plan.

What ESRS E1 Requires: The Key Disclosures

Let's break down the specific disclosure requirements relevant to transition plans:

E1-1: Transition Plan for Climate Change Mitigation

This is the core disclosure. You must explain:

GHG emission reduction targets — covering at minimum Scope 1 and Scope 2, with Scope 3 where material
How targets were set — are they science-based? Aligned with SBTi? Derived from sector pathways?
Decarbonisation actions — concrete levers, not aspirations
CapEx and OpEx associated with the plan
The role of carbon credits — if you're relying on offsets, explain the type, volume, and how they complement (not replace) actual reductions

Your targets need to be:

Time-bound — short-term (≤5 years), medium-term, and long-term
Quantitative — absolute or intensity-based, in tCO₂e
Baseline-referenced — with a clearly stated base year
Scope-specific — broken out by Scope 1, 2, and 3 categories

E1-3: Actions and Resources

For each material decarbonisation action, disclose:

What the action is and when it will be implemented
Expected GHG reduction from that action
Financial resources committed

This is where transition plans either gain credibility or fall apart. Targets without allocated budget are just wishes.

How to Build a Credible Transition Plan: Step by Step

Step 1: Get Your Baseline Right

You can't plan a transition without knowing where you start. This means a complete GHG inventory — Scope 1, 2, and material Scope 3 categories. If your data collection is patchy, prioritise the biggest emission sources first and improve granularity over time.

Step 2: Set Science-Based Targets

The gold standard is validation through the Science Based Targets initiative (SBTi), but ESRS doesn't mandate SBTi specifically. What it does require is that your targets are consistent with limiting warming to 1.5°C.

Practically, this means:

Scope 1 + 2: aim for 42% reduction by 2030 (from a recent base year) — aligned with the SBTi near-term threshold
Scope 3: if material, at least a 25% reduction over the same period
Long-term: net zero by 2050 at the latest, with at least 90% absolute reductions before any residual offsets

Step 3: Identify Decarbonisation Levers

Map your emissions to actionable levers. Common ones include:

Emission Source	Lever	Typical Impact
Purchased electricity	Switch to renewable PPAs	Eliminates Scope 2 market-based
Company vehicles	Fleet electrification	60–80% reduction per vehicle
Industrial heat	Fuel switching (gas → electric/hydrogen)	40–90% depending on process
Business travel	Travel policy + virtual-first	30–50% reduction
Purchased goods	Supplier engagement + procurement criteria	Variable, 10–30%
Buildings	Energy efficiency retrofits	20–40% per building

Don't forget: levers for Scope 3 often depend on value chain engagement, which takes longer and requires different skills than operational decarbonisation.

Step 4: Assign Financial Resources

For each lever, estimate:

CapEx needed (e.g., EV fleet purchase, renewable energy infrastructure)
OpEx changes (e.g., renewable energy premiums, carbon credit costs)
Savings or revenue from the transition (e.g., energy cost reduction, green product premiums)

The financial dimension is what separates a credible plan from a slide deck. If the numbers don't add up, revisit the levers.

Step 5: Address Locked-In Emissions

ESRS E1 specifically asks about locked-in GHG emissions — emissions that are practically unavoidable due to existing assets (factories, equipment, long-term contracts). Be honest about these. A credible plan acknowledges constraints rather than pretending everything can change overnight.

Step 6: Build Governance Around It

Your transition plan needs board-level oversight. Disclose:

Who is responsible for the plan
How progress is monitored
How executive compensation connects to climate targets (if applicable)

This links to the broader governance disclosures under ESRS 2, and it's something auditors will examine closely.

Common Mistakes to Avoid

Relying Heavily on Carbon Offsets

ESRS E1 requires you to separate actual emission reductions from offsets. If your "path to net zero" is mostly credits, auditors and investors will flag it. Offsets should cover hard-to-abate residual emissions — not the first 50%.

Vague Scope 3 Commitments

Saying "we'll engage suppliers" without specifying which suppliers, what the ask is, and what the timeline looks like won't pass muster. Use your industry context to identify which Scope 3 categories matter most for your sector.

Disconnected Targets and Budget

A common pattern: ambitious targets in the sustainability report, zero mention in the financial statements. ESRS requires consistency across your sustainability and financial reporting. If you're planning €50M in decarbonisation CapEx, it should be visible in both.

Ignoring Adaptation

Transition plans focus on mitigation (reducing emissions), but ESRS E1 also covers climate adaptation — how your company is preparing for physical climate risks. Don't neglect this. Flooding, heat stress, water scarcity — these affect operations and should be part of your planning.

Setting Targets Without Data Infrastructure

Targets you can't measure are targets you can't report on. Make sure your data collection systems can actually track progress against the targets you set. This is especially true for Scope 3, where data quality improves gradually.

What If You Don't Have a Transition Plan Yet?

Not every company reporting under the CSRD will have a transition plan on day one. That's acknowledged in the standards. But you still need to disclose:

Whether you intend to adopt a transition plan
If so, by when
Why you don't have one yet

This "comply or explain" approach gives companies time, but the window is narrowing. Investors and regulators increasingly view the absence of a plan as a red flag. If you're in this position, working with a CSRD consultant to develop at least a high-level roadmap is a practical first step.

The Role of External Frameworks

Several external frameworks can help structure your transition plan:

SBTi — for validated, science-aligned targets
TPT (Transition Plan Taskforce) — UK-originated framework gaining EU traction, with detailed sector guidance
ACT (Assessing low-Carbon Transition) — methodology developed by ADEME and CDP for benchmarking transition plans
ISSB S2 / TCFD — while distinct from ESRS, these frameworks share many transition plan elements and can help with international reporting

Using one or more of these frameworks doesn't replace ESRS compliance, but it can accelerate your work and add credibility.

How Transition Plans Will Be Audited

Under the CSRD, transition plans are subject to limited assurance — and eventually, reasonable assurance. Auditors will check:

Are targets internally consistent? (Do Scope 1 + 2 + 3 targets add up to the overall ambition?)
Are actions linked to measurable outcomes?
Is there evidence of financial commitment?
Does the plan reflect actual business decisions (CapEx plans, contracts, board minutes)?

The bar is rising. Prepare your supporting documentation now, not during audit season.

Getting Started: A Practical Checklist

If you're beginning your transition plan today, focus on these steps:

☐ Complete your GHG baseline (at least Scope 1 and 2)
☐ Identify your top 3–5 emission sources
☐ Set near-term targets (2030) aligned with 1.5°C pathways
☐ Map at least one decarbonisation lever per major source
☐ Estimate the CapEx/OpEx for each lever
☐ Assign board-level ownership
☐ Document what you don't yet have and your timeline to close gaps
☐ Engage your auditor or consultant early for feedback on plan structure

Climate transition planning is complex, but it doesn't have to be paralysing. Start with what you know, be transparent about what you don't, and build credibility through specifics — not slogans.

Need help developing your CSRD transition plan? Find a specialist consultant through our directory, or get in touch to discuss your reporting needs.

CSRD Transition Plans: How to Set and Report Credible Climate Targets

What Is a Climate Transition Plan Under the CSRD?