EU Lawmakers have given their approval to new regulations mandating the implementation of climate transition plans by companies.
Read more here: https://www.esgtoday.com/eu-parliament-votes-to-require-companies-to-implement-climate-transition-plans/
Companies must identify and address the impact of their activities on human rights and the environment.
The rules apply to companies with over 500 employees and revenues above €150 million, later extending to companies with over 250 employees and €40 million revenue.
Non-EU companies with earnings above the EU thresholds are also required to comply.
Climate transition plans must align with the Paris Agreement's goal of limiting global warming to 1.5°C, including addressing Scope 1, 2, and 3 emissions.
Companies with more than 1,000 employees will have directors' variable compensation tied to the plan's targets.
Sanctions and supervisory mechanisms, such as fines up to 5% of global revenues or bans from EU public procurement, will be imposed on non-compliant companies.
The inclusion of the climate transition plan requirement is seen as groundbreaking.
Financial services providers, including asset managers and investors, will also be included in the rules.
The goal is to shift towards companies that prioritize people and the environment, rather than those that profit from environmental damage and exploitation.
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