Guest post by: Moritz Baer, co-founder and CEO of Forward Analytics

The EU’s recent decision to weaken sustainability reporting, and remove obligations for climate transition plans under the Corporate Sustainability Due Diligence Directive has sparked predictable debate.

But this focus on regulation misses a more fundamental shift already underway: thanks to ever more granular data, corporate climate performance is now assessable irrespective of disclosure.

3 key changes in the data environment

This shift is not dependent on one dataset or one disclosure rule, but three underlying conditions, increasingly enabled by advances in AI-driven data collection.

First, emissions are increasingly measurable from outside the firm, including through satellite-based observation and remote sensing.

Second, physical assets and ownership structures are reconstructable at scale, across geographies and complex corporate hierarchies, using improved entity resolution and data-linking techniques.

Third, capital allocation leaves persistent, observable traces, particularly in transition-related investment and expansion decisions, which can now be systematically identified across large universes of firms.

Taken together, this means that even as regulation retreats, accountability is increasing: not because of new rules, but because corporate climate transition performance has become empirically observable.

Evidence trumps disclosure

For years, climate policy assumed that if reporting requirements were relaxed, visibility would diminish. That assumption no longer holds.

Today, it is increasingly possible to assemble coherent, outside-in company transition profiles that bring together emissions, physical assets, ownership links and capital expenditure into a single analytical view, something that until recently was not feasible at scale.

For example, ArcelorMittal, a multinational steel manufacturer, can be resolved across 33 subsidiaries, more than 20 countries, 64 individual industrial assets, and 21 facility-specific transition-related investment plans. This bottom-up picture closely matches disclosed figures yet reveals that the company’s current investment pipeline has locked in only a small share of the emissions-intensity reduction required for 1.5°C alignment by 2030. Faster progress in Europe is offset by expansion elsewhere, leaving a gap between ambition and observable action, even though ArcelorMittal’s asset base remains cleaner than many global peers, such as JSW Steel.

By contrast, ENGIE’s global portfolio spans 51 consolidated and financially controlled subsidiaries, nearly 40 countries, 363 physical assets, and more than 100 facility-level transition-related investment plans. This paints a markedly different picture. Observable investment decisions point to sustained asset turnover, renewables build-out, and thermal retirements, placing the company well ahead of many peers and broadly on track with a below-2°C sector pathway by 2030.

At Forward Analytics, we routinely bring together emissions data, asset inventories, ownership structures, and transition-related capital expenditure at the level of individual companies. Enabled by advances in AI-driven data structuring, we have systematically assembled these profiles for tens of thousands of companies, making them available to financial institutions—and, increasingly, to companies themselves seeking to benchmark and strengthen their transition strategies.

The implications are significant.

As formal transition-plan requirements weaken, scrutiny does not disappear. It migrates to arenas that rely on evidence rather than narrative, notably: courts assessing liability, supervisors evaluating risk, central banks stress-testing portfolios, investors allocating capital, and intermediaries originating transition finance.

In this environment, the absence of a published transition plan does not shield a company from scrutiny. Instead, transition intent is increasingly inferred from what companies actually do: how and where they invest, which assets they expand or retire, and how their emissions and financial profile evolves over time.

Why this matters for markets

For financial institutions, this shift is decisive.

Banks, insurers and asset owners are increasingly exposed to climate transition risks and opportunities not because of what companies say, but because of how their assets and cost structures will perform as technology and policy evolve.

Firms whose capital allocation remains misaligned with plausible transition pathways face higher risks of asset stranding, margin compression and abrupt repricing.

In this context, weakening EU-level transition-plan requirements may reduce short-term compliance costs, but it does little to reduce underlying financial risk. In fact, by increasing legal fragmentation and uncertainty, it may raise it.

A recent open letter signed by more than 50 European legal scholars warns that weakening or removing Article 22 does not eliminate corporate climate obligations. Instead, it risks creating legal incoherence and increasing litigation exposure by shifting enforcement away from coordinated EU-level rules toward courts, supervisors and national legal systems. Recent rulings, including Milieudefensie v Shell, have already made clear that large emitters carry independent responsibilities to align their operations with the goals of the Paris Agreement, irrespective of the precise regulatory framework in place.

The same logic applies to regulators and supervisors. As the legal scholars’ open letter argues, removing coordinated transition-plan obligations risks shifting enforcement into a patchwork of national litigation and supervisory actions. That outcome is not simpler. It is less predictable.

Owning the narrative in an observable world

None of this implies that disclosure is irrelevant. On the contrary, credible transition strategies remain essential.

In a world where operational reality is increasingly observable, disclosure is no longer about revealing information that would otherwise remain hidden.

It is about interpreting, contextualising and explaining evidence that already exists— evidence increasingly assembled through automated data collection, machine-assisted reconciliation and continuous updates rather than periodic reporting cycles.

Companies that engage seriously with this reality can help ensure that their actions are accurately understood by investors, supervisors and courts alike. Companies that do not may find that external data fills the gap, often without nuance.

This is the paradox of the current moment. By stepping back from formal transition-plan requirements, policymakers may inadvertently accelerate a shift toward data-driven accountability, where corporate climate credibility is shaped less by compliance and more by empirical performance.

No more excuses

The debate over EU corporate sustainability disclosure rules is important. But it should not obscure the bigger picture.

Climate transition accountability is no longer anchored primarily in disclosure regimes. It is anchored in observable reality: assets, emissions and investment decisions that leave measurable traces and can now be assembled at scale using modern data and AI technologies.

Regulation can shape how this reality is interpreted and governed. In its absence, markets, courts and supervisors will do so anyway, using the data already at hand.

The era of plausible deniability is ending, not because of new rules, but because new data means there is nowhere left to hide.

 

About the author:

Moritz Baer is co-founder and CEO of Forward Analytics and an Associate Fellow at the Institute for New Economic Thinking, University of Oxford. The views expressed are his own.