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Climate and financial risks go hand in hand
Climate and natural risks top global risk assessments, World Economic Forum's Global Risks Report 2025.
Banks and investment funds are responding by incorporating these risks into their decision-making bases and are increasingly demanding companies with credible climate transition plans.
They will know how you reduce your carbon emissions, how you work with climate risks, and what implications climate risks have for your strategy and business model.
Companies that can demonstrate reduction targets and a realistic path to that end are stronger in the competition for capital.
European Central Bank (ECB) It is clear that climate risks are financial risks. Climate change is already being felt directly on companies' balance sheets today. And that development will only accelerate as the consequences of climate change intensify.
From 2026, a climate factor will be introduced into the ECB's collateral assessment, meaning that corporate bonds and other assets will be assessed in the future based on industry risk, transformation plan, maturity and climate exposure.
A credible and detailed climate transition plan is key to accessing finance, better borrowing conditions and greater investor confidence.
More companies are working on transition plans
The demands from investors have prompted several companies to work on their transition plan.
EFRAG published in July 2025 their State of Play 2025 Rapport, which analyzes the first sustainability statements under the CSRD. The report shows that over half of reporting companies already have a climate transition plan in place. In Denmark, the share is 69%.
At the same time, it is highlighted that many transition plans continue to lack detail and standardization, leaving significant room for improvement in the work ahead.
The good news, though, is that most are already well underway.
Documentation and legal requirements
The demand for a climate transition plan does not just come from investors. The legislation also requires companies to be able to document the concrete steps in their green transformation of the business.
From next year, the EU directive will come into force Empowering Consumers for the Green Transition (ECGT) in effect. The directive requires companies communicating about future greenhouse gas reductions to be able to refer to a documented and publicly available climate transition plan.
Therefore, one objective is no longer enough, companies have to show, how they will achieve the goal if they want to avoid accusations of greenwashing and strengthen confidence in consumers, who today are increasingly skeptical of companies' green statements.
CSRD also requires companies to report on their transition plan or when they plan to establish one if they have not prepared one.
Also in CSDDD, at least in its current form, a transition plan is one of the requirements. Omnibus negotiations may, however, continue to affect CSRD and CSDDD, unlike the ECGT Directive, which is not part of omnibus negotiations and has already been adopted in Danish law under the Marketing Act.
The ECGT will come into force in September next year while the omnibus package remains under negotiation.
Strategic Competitiveness and Business Opportunities
A good transition plan can be used for more than compliance.
According to the Industry Foundation's report on green competitive power (2023) companies that make an early transition to low-carbon solutions and integrate green transformation into their core business will gain a significant competitive advantage.
The report highlights that green transition is a competitive parameter.
The companies that work the most with green initiatives find that their work benefits not only nature, but also the competitiveness of the company.
A strong transition plan links the ESG strategy directly to the business and clarifies both strategic opportunities and potential for growth and resilience.
It shows the concrete steps towards a net-zero future and identifies new business opportunities along the way.
It is in the strategic link with the business that the climate transition plan becomes more than documentation. It becomes a management tool that ensures your company a place in the future low-carbon market characterized by climate risks.
Those who actively work with climate risks, and understand how they affect the business both today and tomorrow, are the strongest in the market.
So what about you guys? Will you be content to set goals or take concrete steps with a climate transition plan that will stand at a distance for both investors and your customers?
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