Climate Transition Plan Disclosure Rises to 69% Among EU Companies

European companies are disclosing climate transition plans at a significantly higher rate, according to the latest assessment of sustainability statements prepared under the European Sustainability Reporting Standards.

EFRAG’s 2026 State of Play report found that 69% of companies disclosed a climate transition plan for the 2025 financial year. This represents an increase of 14 percentage points from the 55% recorded for FY2024.

The increase was also recorded when EFRAG compared the same companies across both reporting years, indicating that the change was not solely caused by differences in the composition of the two samples.

The findings point to growing integration of climate considerations into corporate strategy. However, EFRAG also identified substantial differences between companies, industries and countries, as well as a continuing gap between identifying sustainability priorities and establishing measurable targets.

More Companies are Publishing Transition Plans

EFRAG analysed 905 sustainability statements prepared for FY2025, compared with 656 in its previous study. The reports were collected by 20 April 2026 and had been subject to third-party assurance in accordance with the Corporate Sustainability Reporting Directive, or CSRD.

The sample included 87 companies headquartered outside the European Union. EFRAG noted that the dataset may underrepresent some countries because reports issued after the collection deadline were excluded. Only 554 companies appeared in both the FY2024 and FY2025 datasets.

Climate transition plans are intended to explain how a company expects to change its strategy, operations and business model to support the transition towards a climate-neutral economy. Under the ESRS, companies may disclose information on emissions reduction targets, decarbonization levers, investment requirements, locked-in emissions and the compatibility of their strategy with climate objectives.

Spain recorded the highest national adoption rate, with 89% of companies reporting a climate transition plan. France followed at 85%, while Denmark reached 81%.

There were also significant differences between industries. Real estate recorded the highest sectoral adoption rate at 95%, followed by administrative and support services at 82%. Transportation and storage, together with construction, each reached 76%.

Among financial institutions, banks led with a disclosure rate of 78%.

These variations may reflect differences in regulatory exposure, investor scrutiny, access to emissions data and the maturity of sector-specific decarbonization pathways. Real estate companies, for example, increasingly face requirements to address building energy performance, operational emissions and the long-term risk of carbon-intensive assets.

Alignment with 1.5°C Remains Less Common

Although 69% of companies reported having a transition plan, only 57% disclosed both near-term and long-term decarbonization targets described as compatible with limiting global warming to 1.5°C.

The 12-percentage-point difference suggests that some companies are publishing transition plans without explicitly linking their targets to a science-based climate pathway.

EFRAG’s FY2025 assessment expanded the scope of its analysis to include Scope 3 emissions and all companies in the sample, rather than focusing only on businesses that had already disclosed a transition plan. This limits direct comparison with the previous year’s target-alignment figure, which covered near-term Scope 1 and Scope 2 targets among companies with plans.

Spain again led at national level, with 78% of companies reporting near-term and long-term targets compatible with 1.5°C. Sweden followed at 72%, while Finland and Denmark each recorded 67%.

Real estate achieved the highest sectoral rate at 86%. Wholesale and retail reached 66%, followed by information and communication at 59%. Banks led the financial sector at 60%.

Companies referred more frequently to established frameworks such as the International Energy Agency’s Net-Zero by 2050 scenario, Intergovernmental Panel on Climate Change scenarios, the Science Based Targets initiative, the Network for Greening the Financial System and the Carbon Risk Real Estate Monitor. EFRAG found very limited use of the European Commission’s sector transition pathways.

Target-Setting Trails Materiality Assessments

The study also found a broader gap between the sustainability matters companies consider important and the subjects covered by measurable targets.

Companies identified an average of 6.4 material ESRS topics but established quantitative targets for only 3.3. In practice, this means that companies had measurable targets for approximately half of the sustainability issues identified through their materiality assessments.

Climate change was the most common area for target-setting. Among companies that considered the issue material, 98% reported at least one climate-related target. Own workforce issues followed at 82%.

The findings are particularly relevant for investors and lenders assessing whether sustainability reporting is connected to operational planning and capital allocation. Declaring a topic material indicates that it could create significant impacts, risks or opportunities, but without time-bound targets it can be difficult to evaluate progress or management accountability.

EFRAG found that 63% of companies linked sustainability targets to executive incentive schemes. Spain had the highest rate at 92%, followed by France at 90% and Germany at 84%.

Manufacturing led at sector level, with 74% of companies incorporating sustainability measures into executive incentives. Electricity, gas, steam and air-conditioning businesses reached 69%, while mining and quarrying recorded 68%. Financial institutions averaged 52%, compared with 66% for non-financial companies.

Reporting Becomes Shorter but Remains Extensive

EFRAG found that corporate sustainability statements became shorter on average. Comparing the complete annual samples, the average length fell from 115 pages for FY2024 to 95 pages for FY2025.

Among the companies included in both studies, the reduction was more modest, from 108 to 103 pages. Sustainability disclosures still accounted for an average of 34% of total annual report length, while only 6% of companies provided a dedicated executive summary.

The shorter reports may indicate that companies are becoming more familiar with the ESRS and more selective in structuring their disclosures. However, report length alone does not demonstrate higher quality. Investors and other stakeholders will continue to focus on whether transition plans include credible targets, implementation measures, financial resources and evidence of progress.

EFRAG’s findings show that climate transition planning is becoming more common across European corporate reporting. The next challenge is converting disclosure into measurable and financed implementation, particularly among companies whose plans are not yet explicitly aligned with a 1.5°C pathway.

Source: https://esgnews.com/efrag-finds-eu-climate-plan-adoption-reaches-69/