ESRS Standard
ESRS Standard
23. The undertaking shall disclose its climate change targets in accordance with the provisions of ESRS 2 GDR-T.
24. The undertaking shall disclose the GHG emission reduction targets it has set, including:
(a) absolute GHG emission reduction targets for scopes 1, 2 and 3, either separately or combined, and where relevant, in intensity value. The undertaking shall specify, in case of combined GHG emission reduction targets, which GHG emission scopes (1, 2 and/or 3) are covered by the target and the share related to each respective GHG emission scope;
(b) if the scope (geography, GHGs covered, entities included) of the GHG emission reduction target diverges from the scope of the GHG inventory (reported under ESRS E1-8), the percentages for scopes 1, 2 and 3 covered by the target, as well as which GHGs are covered; and
(c) a statement on whether the GHG emission reduction targets are science-based and compatible with limiting global warming to 1.5°C. The undertaking shall state which framework and methodology has been used to determine these targets, including whether they are derived using a sectoral decarbonisation pathway, and the underlying climate and policy scenarios. As part of the critical assumptions used for setting GHG emission reduction targets, the undertaking shall briefly explain how it has considered future developments (e.g. changes in sales volumes, shifts in customer preferences and demand, regulatory factors, and new technologies) and how these will potentially impact both its GHG emissions and emissions reductions.
Application Requirements (AR)
Application Requirements (AR)
AR 11 for para. 23 (Climate change targets)
If the undertaking discloses a net-zero target separately to any GHG emission reduction targets it has set, as per ESRS 2 GDR-T, it shall explain how it intends to permanently neutralise any residual GHG emissions.
AR 12 for para. 24 (GHG emission reduction 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 means of achieving the GHG emission reduction targets. In accordance with ESRS 2 GDR-T, the undertaking shall provide information about the scope and methodologies used to define the target, including the method used to calculate scope 2 GHG emissions (i.e. either the location-based or market-based method).
AR 13 for para. 24 (GHG emission reduction targets)
If the undertaking discloses intensity targets, they shall be formulated as ratios of GHG emissions relative to a unit of physical activity or economic output. In cases where the undertaking has only set a GHG intensity reduction target, it shall disclose the associated absolute values for the target year and interim target year(s) – except for financial institutions scope 3, category 15 emissions, as explained below. This may result in a situation where the undertaking is required to disclose an increase of absolute GHG emissions for the target year and interim target year(s), e.g. because it anticipates the organic growth of its business.
Financial institutions are exempted from disclosing absolute values for their scope 3, category 15 emission intensity targets, provided they:
(a) use physical or financial measures as denominators for intensity targets and disclose absolute financed emissions consistent with the scope of those targets (such as targets for material high-impact sectors); and
(b) provide contextual information in accordance with GDR-M for the targets that have been set, describing the key factors influencing expected changes in absolute financed emissions over time and how they relate to the observed trends in the past 3 to 5 years.
AR 14 for para. 24 (GHG emissions reduction targets)
When applying ESRS 2 GDR-T:
(a) the baseline value and base year are not to be changed unless key changes occur in either the target or reporting boundary; and
(b) the undertaking shall select a recent and representative base year. The base year chosen by the undertaking may be either the currently applied base year for existing targets or the first year of application of the sustainability reporting requirements.
AR 15 for para. 24 (Presentation of targets and actions)
The undertaking may present its GHG emission reduction targets together with its climate change mitigation actions (see paragraph 22) showing the decarbonisation levers and their quantitative contributions to achieve the GHG emission reduction targets as a table (see, e.g., Figure 1) or graphic over time (see, e.g., Figure 2).
Base year (e.g. 2025) | Target for 2030 | Target for 2035 | … | Target by 2050 | |
GHG emissions (in thousand tonnes of CO2e) | 100 | 60 | 40 | ||
Energy efficiency and consumption reduction | - | -10 | -4 | ||
Material efficiency and consumption reduction | - | -5 | - | ||
Fuel switching | - | -2 | - | ||
Electrification | - | - | -10 | ||
Use of renewable energy | - | -10 | -3 | ||
Phase-out, substitution or modification of product | - | -8 | - | ||
Phase-out, substitution or modification of process | - | -5 | -3 | ||
Other | - | - |
Figure 1. ESRS E1 Climate Change – Table 1
Figure 2 of the standard is a graphic in the legal text. It is not shown here. Please refer to the legal text.
AR 16 for para. 24 (GHG emission reduction targets)
The undertaking shall adopt a reporting boundary for targets consistent with the one adopted for E1-8.
AR 17 for para. 24(c) (GHG emission reduction targets compatible with 1.5°C)
When disclosing the information required under paragraph 24(c), the undertaking shall explain how its target value(s) compare with a sector-specific (if available) or a cross-sector emission pathway compatible with limiting global warming to 1.5°C. For this purpose, the undertaking shall calculate a 1.5°C-aligned reference target value for scope 1 and 2, and a separate one for scope 3 if it has scope 3 GHG emission reduction targets, against which its own GHG emission reduction targets or interim targets in the respective scopes can be compared.
The explanation of whether and how the targets are compatible is done by benchmarking the target value against the reference target value. Validation through an independent third party, including information on the third party, the methodology/standard applied and the trajectory used, can be valuable inputs to be considered in this explanation.
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