The global landscape is dominated by growing geopolitical instability and regulatory uncertainty, challenges intensified by interventions such as US protectionist trade policies. These dynamics have raised operational and strategic concerns across supply chains and cast doubt on future investment decisions. In this climate, European companies are faced with the need to reinforce the credibility of their industrial and financial strategies to attract capital and ensure medium to long-term operational sustainability.
Transition Plans (TPs) are emerging as essential tools for ensuring coherence, credibility and innovation in corporate strategy amid mounting regulatory and geopolitical uncertainty. This is because they enable investors to assess exposure to climate and transition risks and guide capital allocation decisions, which is particularly important in the context of the ongoing energy transition. TPs also play a key role in the macroeconomic monitoring of transition and physical risks, both in the financial system and in the real economy. For businesses, TPs are critical for defining competitive, resilient and responsible strategies that meet the growing demands of stakeholders, regulators and markets alike.
In this scenario, the European Union must remain committed to the path set by the Green Deal, strengthening its regulatory framework to provide certainty and ensure competitiveness across the economic system. However, the effectiveness and credibility of TPs are currently being undermined by conflicting regulatory developments, most notably the Omnibus I proposal introduced by the European Commission itself.
Weakening the role of TPs within the sustainable finance framework would expose Europe’s financial and industrial systems to increased uncertainty, undermine the ability to distinguish between robust strategies and structural risks, and compromise efforts to effectively monitor systemic risks linked to climate change.
TPs remain among the most effective tools for directing investment toward companies with credible strategies that are aligned with climate targets. Their absence or weakness would leave markets without a compass, heightening the risk of financial instability, delays in the energy transition and misalignment with international climate scenarios.
To be truly effective, TPs must move beyond declarations of intent; they must be credible. This credibility should be based on transparency requirements, internal consistency of objectives, feasibility of planned actions, thorough climate risk management, alignment with international climate goals and geographical dependence. A genuinely credible TP should be based on mature, economically viable technologies that can tangibly reduce emissions in both the short and long-term.
Currently, oil and gas companies benefit from financial guarantees and well-established regulatory systems that risk funnelling resources into strategies and technologies (the main ones being the ongoing reliance on gas, CCS technology, biofuels, hydrogen and offsets) that are, in practice, risky, immature and not materially effective for decarbonisation. As such, they lack credibility. The risk is twofold: slowing the economic transition in countries where these companies operate and exert their influence, and failing to adapt to potential shifts in market conditions or a faster-than-expected transition.
In this context, the TPs published by Italy’s leading oil and gas companies (Eni and Snam) exhibit significant shortcomings, particularly in the quantitative analysis of risks, the planned reduction in hydrocarbon production, and transparency around geographic and regulatory dependencies. For these plans to be credible, they must go beyond simple reporting, incorporating rigorous analysis and a clear governance strategy that reduces uncertainty and decisively channels investment toward truly sustainable solutions.
Read the policy briefing “Transition Plans, a tool for risk protection: the credibility of Oil&Gas plans”
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