Every large company will need one; they are supposed to save the world, but almost no one knows what they entail: climate transition plans. Due to new European regulations—the Corporate Sustainability Due Diligence Directive (CSDDD)—companies will soon be required to develop a climate transition plan (CTP) to align their business model with the transition to a sustainable economy and the 1.5°C target of the Paris Agreement. Such a plan must include time-bound reduction targets and a description of the measures and investments the company will make to achieve these targets. This legal instrument against climate change is a breakthrough for combatting climate change, but is also causes profound legal uncertainty for companies and stakeholders.
Clarifying, Embedding, and Enforcing
Never before have companies had a direct, enforceable obligation to align their greenhouse gas emissions with climate targets. This new obligation raises many questions. For example, how can it be determined whether a business model is compatible with the 1.5°C target? What happens with the carbon budget if the company grows, shrinks, or merges? And can a company, instead of reducing emissions, promise to plant more trees? Bleeker's legal research aims to clarify these and other issues related to the requirements of the climate transition plan.
CTPs do not exist in a legal vacuum: they interact with other regimes, and the reduction targets may conflict conflict with other interests, rights, and obligations of companies. For example, climate measures may come at the expense of profitability. Some business models are even inherently incompatible with the 1.5°C target; must the company then reinvent itself? And what if shareholders do not want to approve the climate transition plan? Bleeker aims to integrate CTPs into the business law landscape, and in doing so, providing suggestions for the reconciliation between the company’s reduction targets and rights and obligations.
Not every climate transition plan will meet the CSDDD requirements. A company may, for example, adopt reduction targets that are not realistically aligned with the 1.5°C-target. Additionally, the targets in the transition plan are not always complied with. For instance, a company may omit to actually implement the climate measures promised in the transition plan. Without compliance or enforcement, the CTPs will only lead to greenhouse gas reduction on paper. Therefore, Bleeker also looks into the possible legal responses to CTP-violations under Dutch criminal, administrative, and private law.
Mobilizing companies
When it comes to combating climate change, there is a significant gap between ambitions and actions. Countries repeatedly promised to limit global warming to 1.5°C. Nevertheless, based on implemented policies, we currently on track for 3°C warming. The required emissions reductions for preventing dangerous global warming cannot be achieved by governments alone. Companies emit the largest share of the world’s GHGs and play a key role in shaping the global economy. Therefore, sustaining a liveable planet hinges on companies aligning their actions with climate goals.
With his Veni research, Tim Bleeker aims to provide a clear and practical overview of the legal aspects of corporate climate transition plans. The research potentially benefits a whole array of scientists and stakeholders. For legal scholars it offers a conceptual framework that ties together various strands of law; for the judiciary it facilitates a coherent CTP-evaluation; for directors it provides guidance and it enhances legal certainty; for authorities, NGO’s and victims it sketches liability options; for companies it contributes to a level playing field; and indirectly, though most importantly, this research can help accelerate the transition to a sustainable economy, and with it, contribute to sustaining a liveable planet for us all.
Veni
The Netherlands Organisation for Scientific Research (NWO) has awarded Tim Bleeker a Veni grant, allowing him to further develop his research on climate transition plans over the next three years. The research will be hosted by the Amsterdam Centre for Climate Change and the Law (A4CL).
The NWO Talent Programme gives researchers the freedom to conduct their research driven by creativity and passion. They receive up to €320,000. The programme encourages innovation and curiosity. Free research contributes to and prepares us for the society of tomorrow. Therefore, NWO focuses on a diversity of scientists, domains, and backgrounds. Veni, together with the Vidi and Vici grants, is part of the Talent Programme. NWO selects researchers based on the scientific quality and innovative nature of the research proposal, the scientific and/or societal impact of the proposed project, and the quality of the researcher.