What EU Corporate Sustainability Due Diligence Directive (EU) 2024/1760 - Article 16: Adoption and Implementation of Climate Transition Plan requires
Article 16 of the EU Corporate Sustainability Due Diligence Directive (CSDDD, 2024/1760) requires in-scope companies to adopt and put into effect a climate transition plan. The transition plan must be designed to ensure, through best efforts, that the company's business model and strategy are compatible with the transition to a sustainable economy, limiting global warming to 1.5 degrees Celsius in line with the Paris Agreement, and achieving EU climate neutrality by 2050. The plan must include: (a) time-bound targets for reducing greenhouse gas emissions for 2030 and, where relevant, for intermediate steps including 2035, 2040, 2045; (b) a description of decarbonisation levers the company intends to use to meet its targets; (c) an explanation of the role of carbon offsets and removals; (d) an investment and financing plan for the implementation of the transition plan; and (e) an explanation of how executive remuneration is linked to the transition plan. The plan must be updated annually. Where the company reports a climate transition plan under CSRD, it satisfies the Article 16 adoption obligation. Article 16 does not require companies to guarantee the transition plan will be achieved, but requires best efforts and genuine implementation. Director liability applies if the board fails to adopt a transition plan without objective justification.
Pillar: Sustainability & ESG · Authority: European Parliament and the Council of the European Union · Version: 2.0.0 · Last updated:
Primary source: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32024L1760
SHA-256 integrity: 4b58dd69ec1e1da2633fde45a1286aeffe3ac0644f17ec64b804de8579f1484b
Primary Citations — 8 traced to source
- Article 16 — EU CSDDD Directive (EU) 2024/1760 - Article 16: Climate Transition Plan
- Article 25 (director liability for failure to adopt transition plan) — EU CSDDD Directive (EU) 2024/1760 - Article 25: Directors' Duty of Care
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