Accountability for the Green Transition: The (Non)Role of Transition Plans

Purpose
This paper aims to examine how European Sustainability Reporting Standards (ESRS) require green-transition reporting, in particular how the concepts of time and space/place are mobilized and connected with directions (targets), responses (actions and resources) and impacts and how changes in ESRS or sustainability-reporting practice may catalyze decarbonization.

Design/methodology/approach
This paper regards target-setting and transition plans as sustainability frames shaped by temporal markers connected to material effects (externalities) and emphasize that mechanisms connecting time and space/place, and thus constituting traces, are promising routes toward accountability for externalities.

Findings
This paper highlights shortcomings in the traces offered by ESRS in response to climate-change challenges. These shortcomings are related predominantly to the scant focus on understanding how challenges can be addressed through future responses. These shortcomings will most likely persist following the forthcoming ESRS revision. This paper suggests other ways of linking material responses with material impacts over time to establish and thus incentivize short-term actions taken in response to grand challenges.

Practical implications
Disclosing the feasibility (uncertainty) of future decarbonization responses and explaining the speed of decarbonization through decarbonization curves and cumulated emissions over time would provide a stronger basis than the current regime does for holding companies accountable.

Social implications
The European sustainability-reporting regime requires effort from regulators, preparers and stakeholders. This study identifies critical shortcomings in this endeavor.

Originality/value
Previous studies have focused on European Union and European Financial Reporting Advisory Group efforts regarding the standardization of overarching principles. This study focuses on ESRS and sustainability-reporting content and their potential for driving the green transition.