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EU votes to mandate climate transition plans for companies

EU Lawmakers have given their approval to new regulations mandating the implementation of climate transition plans by companies.

  • 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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