The argument for climate-related disclosures has always been that an increase in climate information will naturally lead to a decrease in emissions. The idea is that climate risks manifest as financial risks, and investors will favor companies less exposed to those risks. That reality hasn’t fully manifested, but there is some promising movement. A recent report from Sustainable Fitch indicates that investors are placing significant focus on transition plans. Particularly in the EU and UK:
“Transition plans are playing a key role supporting investors’ engagement and stewardship activities. In a 2025 survey of 30 European investors that oversee a combined EUR8.5 trillion in assets under management, Natixis found that all respondents expect investee companies to develop transition plans, while 85% of respondents actively use the plans to engage in dialogue with portfolio companies.”
The focus on transition planning shows that investors are moving from a measurement-focused approach to an action-based one. It is no longer sufficient for companies to just report on their emissions. Investors now expect companies to plan and take steps towards emissions reductions. However, while transition planning is gaining more attention, the plans themselves are lacking key information. Scope 3 emissions have largely been neglected as companies make plans and set targets. The report states:
“Target setting is weaker for value chain-related (Scope 3) emissions targets. Around a quarter of the sample does not include Scope 3 in their net-zero targets, while 40% of them have not set interim targets addressing their Scope 3 emissions. For some sectors, this is a material omission, notably oil and gas, where Scope 3 emissions accounts for over 85% of the carbon footprint of the typical entity.”
Scope 3 emissions are the most difficult to calculate and mitigate, but are also arguably the most important scoping metric in many cases. We’ll see how regulators and investors approach scope 3 as engagement on transition planning continues to evolve.
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