ESRS E1-1: How to Build a Credible Climate Transition Plan Under CSRD
Most companies preparing for CSRD have spent the last two years focused on their GHG inventory - measuring Scope 1, 2, and 3 emissions and building the data pipelines to support them. That work is necessary, but it is not the finish line. The harder question - and the one that investors, auditors, and regulators are increasingly scrutinising - is what you plan to do about those emissions.
That is the territory of ESRS E1-1: Transition plan for climate change mitigation. It is the disclosure requirement that sits at the strategic heart of ESRS E1, and it asks something qualitatively different from the rest of the standard: not just what your emissions are, but how your entire business model and financial plan will change to become compatible with a 1.5°C world.
This guide covers what E1-1 requires, how to structure a compliant plan, the pitfalls that trip companies up, and what the simplified ESRS (ESRS 2.0) changes - and doesn't change - for companies reporting from FY2027.
Why the transition plan is the strategic core of ESRS E1
ESRS E1 contains eleven disclosure requirements in its amended form, covering everything from GHG emissions data to energy consumption to the financial effects of climate risk. But E1-1 is structurally different from all of them.
The objective of ESRS E1 is to enable users of sustainability statements to understand the undertaking's past, current, and future mitigation efforts in line with the Paris Agreement and compatible with limiting global warming to 1.5°C, as well as the plans and capacity of the undertaking to adapt its strategy and business model to contribute to that goal. E1-1 is where that forward-looking, strategic dimension lives.
Companies must disclose whether they have a transition plan for climate change mitigation and how it aligns the business model and strategy with limiting global warming to 1.5°C and achieving climate neutrality by 2050, in line with EU climate objectives.
Critically, this is not a standalone sustainability document. ESRS E1-1 requires disclosure of how the transition plan is embedded in and aligned with the undertaking's overall business strategy and financial planning. A plan that lives only in the sustainability team - disconnected from the CFO's capex budget and the board's strategic agenda - will not meet the standard.
EFRAG's 2025 State of Play report found that 98% of 646 companies analysed mapped ESRS E1 as material, confirming that climate change is material for almost all reporting entities in scope.
EFRAG's 2025 State of Play report shows that 98% of 646 companies analysed mapped ESRS E1 as material, confirming that climate change is material for almost all reporting entities in scope. If climate change is material following your double materiality assessment, E1-1 is not optional.
What a compliant E1-1 disclosure must contain
The standard sets out a specific list of required content. Think of it as six interlocking elements:
1. 1.5°C-aligned GHG reduction targets
E1-1 requires, by reference to GHG emission reduction targets, an explanation of how the undertaking's targets are compatible with limiting global warming to 1.5°C in line with the Paris Agreement, and an explanation of the decarbonisation levers identified and key actions planned, including changes in the undertaking's product and service portfolio and the adoption of new technologies in its own operations, or the upstream and/or downstream value chain.
Targets must be gross targets. The GHG emission reduction targets shall be gross targets, meaning that the undertaking shall not include GHG removals, carbon credits, or avoided emissions as a means of achieving the GHG emission reduction targets. This is a critical distinction: your reduction pathway must show real emission cuts, with carbon credits and removals disclosed separately under E1-9. (For a full breakdown of how gross Scope 1, 2, and 3 emissions are measured and reported, see our Scope 1, 2 and 3 Emissions Under ESRS E1 guide.)
2. Decarbonisation levers and key actions
The plan must explain how you will hit your targets - not just that you will. According to ESRS E1, the transition plan must include emission pathways, measures, investments, governance structures, and dependencies such as technologies, regulation, and supply chain - going well beyond mere targets.
Typical levers include energy efficiency improvements, renewable energy procurement, fleet electrification, process changes, and supply chain engagement. Each lever should be linked to a specific target and a timeline.
3. Investments and financial planning integration
E1-1 requires an explanation and quantification of the undertaking's investments and funding supporting the implementation of its transition plan, with a reference to the key performance indicators of taxonomy-aligned CapEx, and where relevant the CapEx plans.
This is where the transition plan becomes a finance document, not just a sustainability one. Taxonomy-aligned capex KPIs, opex commitments, and multi-year investment plans all belong here. If your company has coal, oil, or gas-related activities, you must also disclose significant capex invested in those activities during the reporting period.
4. Board approval
E1-1 requires disclosure of whether the transition plan is approved by the administrative, management and supervisory bodies. This is a governance checkpoint, not a formality. Auditors will look for evidence of board-level sign-off, and the absence of it is a red flag for both assurance providers and investors.
5. Progress in implementing the plan
E1-1 requires an explanation of the undertaking's progress in implementing the transition plan. In the first reporting year, this may be limited. But from year two onwards, companies are expected to show measurable movement against the milestones they have set - which is why those milestones need to be specific and time-bound from the outset.
6. What if you don't have a plan yet?
If no plan is in place, this must be stated, along with whether and when the company expects to adopt one. 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.
Disclosure ≠ having a plan. ESRS E1-1 requires you to disclose your transition plan if you have one. If you don't, you must state that fact and indicate when you expect to adopt one. Silence is not compliant — but neither is a plan that exists only on paper and has no connection to your actual capital allocation.
Interim targets and capex alignment: where most plans fall short
One of the most common weaknesses in early CSRD transition plan disclosures is the absence of credible interim milestones. A distant net-zero pledge for 2050 - with no near-term targets and no capex attached - does not meet the standard.
The transition plan should include time-bound targets for 2030, and then include further targets in five-year increments up to 2050. These interim milestones are not just a reporting formality; they are the mechanism by which the plan becomes verifiable and actionable year by year.
Each milestone should be:
- Quantified - expressed as a percentage reduction against a defined base year, covering Scope 1, 2, and relevant Scope 3 categories
- Tied to capital allocation - linked to specific capex or opex commitments in the financial plan
- Consistent with a recognised pathway - such as a Science Based Targets initiative (SBTi) validated target, which provides external credibility for 1.5°C alignment
ESRS E1 requires companies to justify the alignment of their targets with the 1.5°C trajectory, and validation by SBTi is proof of credibility.
The capex link is particularly important for companies with EU Taxonomy reporting obligations. Taxonomy-aligned capex KPIs are explicitly referenced in E1-1 as a disclosure element, creating a direct bridge between your transition plan and your Taxonomy reporting. If your green capex share is rising year-on-year in line with your decarbonisation levers, that is evidence the plan is real. If it is flat or declining, that is a question your auditor will ask.
The CSRD-CSDDD interplay: one plan, two frameworks
Until recently, companies in scope of both the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) faced a dual obligation: disclose a transition plan under CSRD, and adopt and put into effect a transition plan under CSDDD Article 22.
The Omnibus I Directive, which entered into force on 18 March 2026, changed this picture significantly. The final text removes from the CSDDD the requirement to "adopt and put into effect a transition plan for climate change mitigation" aligned with the 1.5°C temperature goal set by the Paris Agreement and the EU's target of achieving climate neutrality by 2050.
That entire obligation no longer exists under the CSDDD, though companies subject to the CSRD must still disclose transition plans under ESRS E1.
The practical implication: the CSRD/ESRS E1-1 disclosure requirement is now the primary regulatory lever for transition plan transparency in the EU. For companies that were building a single plan to satisfy both frameworks, the ESRS E1-1 requirements remain the relevant benchmark.
What the simplified ESRS (ESRS 2.0) changes - and what it doesn't
The regulatory context for ESRS E1-1 is still evolving. Here is where things stand as of mid-2026.
The process so far:
EFRAG published its draft simplified ESRS (technical advice) on 3 December 2025, following a 60-day public consultation in summer 2025.
EFRAG completed this simplification exercise at the end of November and published the draft amended ESRS on 3 December 2025, after extensive input gathered through 60 days of public consultation in the summer.
On 6 May 2026, the European Commission published a draft delegated act containing the simplified European Sustainability Reporting Standards (revised ESRS) and opened a four-week period for comment. The draft delegated acts were available for comment until 3 June 2026.
What happens next:
The Commission aims to formally adopt the delegated act with the final version of ESRS 2.0 in late June or early July 2026. This timeline is largely driven by the subsequent scrutiny period of up to four months by the Parliament and the Council. Assuming the ESRS 2.0 pass this scrutiny, they will be published in the Official Journal of the EU and enter into force, applying to CSRD reporting for financial years starting on or after January 1, 2027 - including reporting by so-called "Wave 2" companies.
Undertakings that are already subject to sustainability reporting under the existing regime for financial year 2026 may opt to apply the revised ESRS for that financial year instead, which could allow early adopters to benefit from the simplifications a year earlier.
The draft revised ESRS reduces mandatory datapoints by more than 60% and total datapoints (including voluntary) by more than 70%, compared to the original ESRS adopted in July 2023.
The draft reduces mandatory datapoints by more than 60% and total datapoints (including voluntary) by more than 70%, compared to the original ESRS adopted in July 2023.
What this means for E1-1 specifically:
The Amended ESRS E1 is more proportional and clearer about what matters in climate reporting. It cuts unnecessary datapoints, refocuses expectations around transition planning, climate risk analysis, and emissions data, and gives companies more flexibility where value chain data is hard to obtain. At the same time, it does not lower the bar on substance. If climate change is material, companies still need a credible transition plan, defensible targets, and a clear connection to financial decision-making.
The transition plan requirement is retained, not removed. The simplification exercise trimmed peripheral datapoints; it did not touch the core obligation to disclose a 1.5°C-aligned plan with targets, levers, financial integration, and board approval.
Final legal text is still pending. The delegated act containing ESRS 2.0 had not been published in the Official Journal as of the date of this post. Companies should not rely on the draft standards as final. Monitor the Official Journal and EFRAG's website for the confirmed text before finalising your FY2027 reporting approach.
Three common pitfalls - and how to avoid them
Pitfall 1: Vague targets with no interim milestones
A net-zero pledge for 2050 without near-term milestones is not a transition plan - it is a statement of intent. Climate targets without a plan are just marketing. That is essentially the message behind one of the most scrutinised parts of the CSRD: the requirement to disclose a climate transition plan under ESRS E1. Unlike earlier voluntary pledges - "net zero by 2050" with no detail - the CSRD demands specifics.
Set targets for 2030 (and ideally 2025 or 2027 as a near-term checkpoint), broken down by Scope 1, 2, and material Scope 3 categories. Each target should have a base year, a methodology, and a named decarbonisation lever attached to it.
Pitfall 2: Using carbon credits to inflate the reduction pathway
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%.
Carbon credits and removals are disclosed separately under E1-9. They are not a substitute for a genuine decarbonisation pathway. A plan that relies heavily on offsets to show progress will face scrutiny from both assurance providers and financial market participants.
Pitfall 3: A plan disconnected from finance
Involve finance teams early. These disclosures rely on asset registers, revenue segmentation, and valuation assumptions that typically sit outside sustainability teams, and late alignment is one of the most common causes of reporting gaps.
The transition plan must be embedded in financial planning - not appended to it. That means the capex budget, the opex forecast, and the multi-year investment plan all need to reflect the decarbonisation commitments in the sustainability statement. If the numbers don't match, the plan isn't credible.
Practical build checklist for your E1-1 disclosure
Use this as a working checklist when drafting or reviewing your transition plan disclosure:
Set gross GHG reduction targets for Scope 1, 2, and material Scope 3 categories. Validate against a recognised science-based pathway (e.g. SBTi). Define a base year and interim milestones at 2030 and every five years to 2050. Confirm targets are gross — no offsets or removals netted against the reduction pathway.
For each target, identify the specific actions that will deliver the reduction: energy efficiency, renewable energy, electrification, process changes, supply chain engagement. Quantify the expected emission reduction contribution of each lever and assign a timeline.
Quantify the capex and opex required to implement each lever. Reference EU Taxonomy-aligned capex KPIs where applicable. Ensure the investment figures in the sustainability statement are consistent with the financial statements and multi-year capital plans.
Obtain formal approval of the transition plan from the administrative, management, and supervisory bodies. Document the approval process and date. Consider whether climate-related considerations are linked to executive remuneration (a separate but related disclosure under ESRS E1).
Be transparent about assets or contracts that create unavoidable near-term emissions. A credible plan acknowledges constraints rather than assuming everything can change overnight. Disclose coal, oil, and gas-related capex if applicable.
From year two onwards, you must show measurable progress against your milestones. Build the data collection and tracking systems now so that progress reporting is based on real data, not estimates. This is especially important for Scope 3 categories where data quality improves gradually.
The bottom line
ESRS E1-1 is not a box-ticking exercise. It is a structured demand for companies to show - in public, with assurance - that their strategy, their capital allocation, and their governance are genuinely aligned with a 1.5°C future. The simplified ESRS has trimmed the peripheral datapoints, but the core obligation is unchanged: if climate change is material, you need a credible plan, and you need to disclose it.
The companies that will navigate this well are the ones that treat the transition plan as a strategic document first and a reporting document second - built collaboratively by sustainability, finance, and the board, with interim milestones that are specific enough to be held accountable against.
The final ESRS 2.0 text is still pending publication in the Official Journal. But the direction is clear, and the time to build is now.
Is ESRS E1-1 mandatory if climate change is material?
Yes. If your double materiality assessment concludes that climate change is material — which is the case for the vast majority of CSRD-reporting companies — you must disclose your transition plan under E1-1. If you do not yet have a plan, you must state that fact and indicate whether and when you expect to adopt one.
Can we use carbon credits to meet our E1-1 reduction targets?
No. GHG reduction targets under ESRS E1 must be gross targets — carbon credits, removals, and avoided emissions cannot be included in the reduction pathway. Carbon credits are disclosed separately under E1-9 (GHG removals and GHG mitigation projects financed through carbon credits). Offsets are appropriate for covering hard-to-abate residual emissions, not for substituting real emission reductions.
What is the difference between the CSRD transition plan disclosure and the CSDDD obligation?
Under the original CSDDD, large companies were required to adopt and put into effect a 1.5°C-aligned transition plan. The Omnibus I Directive (in force March 2026) removed that obligation from the CSDDD entirely. Companies subject to the CSRD must still disclose their transition plan under ESRS E1-1. The CSRD disclosure requirement is now the primary regulatory lever for transition plan transparency in the EU.
When does the simplified ESRS (ESRS 2.0) apply?
The revised ESRS are expected to apply mandatorily for financial years beginning on or after 1 January 2027 (Wave 2 companies). Wave 1 companies already reporting under the current ESRS may opt to apply the revised standards voluntarily for FY2026, once the delegated act is published in the Official Journal. The final text had not been published as of mid-2026 — monitor EFRAG and the Official Journal for confirmation.
Does the simplified ESRS remove the transition plan requirement?
No. The transition plan requirement is retained in the amended ESRS E1. The simplification exercise cut mandatory datapoints across the ESRS by more than 60%, but the core E1-1 obligation — disclosing a 1.5°C-aligned transition plan with targets, decarbonisation levers, financial integration, and board approval — is unchanged.
Does the transition plan need to be approved by the board?
Yes. ESRS E1-1 explicitly requires disclosure of whether the transition plan is approved by the administrative, management, and supervisory bodies. Board approval is a required disclosure element, not an optional governance best practice.
