CSDDD Article 22 climate transition plans FAQ

Article 22 requires covered companies to adopt and put into effect a transition plan for climate change mitigation. The plan must aim, through best efforts, to make the company's business model and strategy compatible with the transition to a sustainable economy, the 1.5 C Paris Agreement pathway, and the EU climate-neutrality objective under the European Climate Law.

The plan is not only a disclosure label. Its design must include targets, the actions and levers for reaching those targets, the investments and funding that support implementation, and the role of the company's administrative, management, and supervisory bodies.

The plan should include time-bound climate targets for 2030 and then in five-year steps up to 2050. Article 22 says these targets must be based on conclusive scientific evidence.

Where appropriate, the plan should include absolute greenhouse-gas emission reduction targets for Scope 1, Scope 2, and Scope 3 emissions for each significant category. Teams should therefore avoid targets that cannot be traced to a baseline, emissions boundary, target year, and significant emissions category.

Article 22 requires a description of the decarbonisation levers identified and the key actions planned to reach the climate targets. In practice, that means the plan should identify how emissions are expected to fall, who owns each lever, and which operational decision makes the lever real.

The Directive gives examples rather than an exhaustive list: changes in the company's product and service portfolio and adoption of new technologies may be relevant. Other levers should still be documented only where the company's evidence supports them.

Article 22 requires an explanation and quantification of the investments and funding supporting the transition plan. A useful plan should therefore link each material lever to the capital, operating spend, financing, or budget line that makes implementation credible.

The plan also needs to describe the role of administrative, management, and supervisory bodies. That should cover who approves the plan, who monitors progress, who receives escalation when targets or levers are off track, and how updates are reviewed before publication or reporting.

Article 22 creates a limited overlap with the CSRD reporting regime. A company that reports a transition plan for climate change mitigation under Article 19a, 29a, or 40a of Directive 2013/34/EU is deemed to have complied with the CSDDD obligation to adopt a transition plan.

That overlap should not be read as a reason to leave the plan unmanaged. Article 22 separately requires the transition plan to be updated every 12 months and to describe progress towards the plan's climate targets. Subsidiaries included in a parent undertaking's reported transition plan may also rely on that parent plan for the adoption obligation, but the subsidiary should retain evidence that the parent plan was reported and applies to its business model and strategy.

The evidence file should prove that the plan exists, contains the Article 22 elements, is connected to the company's business model and strategy, and is updated every 12 months with progress against targets. It should be readable by sustainability, legal, finance, procurement, and board-support teams without needing oral history from the original preparers.

Avoid evidence files that only store final slides. The useful record connects targets to emissions data, levers to actions, investment to funding, governance to approvals, and annual updates to progress and changed assumptions.