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Transition plans are strategic disclosures that show how companies will meet climate goals like net zero. A new legal opinion finds that publishing such plans doesn’t increase legal liability – and may reduce existing risk. The UK government is now consulting on mandatory requirements to strengthen corporate climate accountability.

A legal opinion confirms transition plan disclosure is vital for climate action, without creating new legal risks for businesses.

<p>A new legal opinion has affirmed that corporate transition plan disclosure is not only legally sound but a climate and market imperative, offering clarity and reassurance to businesses ahead of expected regulatory reforms.</p>
<h2>What is a transition plan?</h2>
<p>A transition plan is a strategic roadmap setting out how a company intends to adapt its business model to align with climate goals – particularly the 1.5°C limit set by the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement" target="_blank" rel="noopener">Paris Agreement</a>. These plans typically include interim emissions targets, changes in investment and operations and timelines for decarbonisation.</p>
<h3>Transition plan disclosure</h3>
<p>‘Transition plan disclosure’ refers to the publication of these plans, allowing investors, regulators and the public to evaluate whether a company’s climate commitments are credible, actionable and aligned with global goals.</p>
<h2>Addressing liability fears</h2>
<p>Commissioned by environmental law charity <a href="https://www.clientearth.org/" target="_blank" rel="noopener">ClientEarth</a>, the new <a href="https://www.clientearth.org/latest/press-office/transition-plan-disclosure-a-climate-and-market-imperative-not-a-legal-trap-say-lawyers/" target="_blank" rel="noopener">legal opinion</a> by leading corporate barristers at Erskine Chambers comes as the government has launched its open consultation on its transition plans policy. Addressing concerns that publishing forward-looking climate plans could expose companies and directors to heightened legal risk, ClientEarth’s press release quotes Andrew Thompson KC of Erskine Chambers as stating: ‘Transition plan disclosure is not a legal trap, and it’s important that the risk of liability for forward looking statements in transition plans isn’t overstated … in some cases there are likely to be legal benefits for companies and directors in publishing a well-prepared transition plan.’</p>
<p>The opinion concludes that:</p>
<ul>
<li>Companies face no materially increased legal risk from disclosing transition plans.</li>
<li>Existing legal protections for forward-looking statements generally apply.</li>
<li>No new legal ‘safe harbours’ are necessary.</li>
<li>There are actionable steps directors can take to mitigate any risks.</li>
</ul>
<p>Vanessa Havard-Williams, Chair of the <a href="https://www.gov.uk/government/publications/transition-finance-market-review" target="_blank" rel="noopener">Transition Finance Market Review</a>, welcomed the clarity: ‘The opinion shows that transition planning can improve corporate disclosure and reduce risks to companies and their directors.’</p>
<h2>Closing the say-do gap</h2>
<p>UK-listed companies are under growing pressure to match climate rhetoric with action. Research suggests that while around 80% have made net-zero pledges, only 5% have published detailed, credible plans to meet them.</p>
<p>Addressing this, ClientEarth reports that its lawyer, Robert Clarke, noted that ‘Companies with nothing to hide have nothing to fear from more detailed disclosure.’</p>
<p>As climate litigation rises globally – over 2,500 cases have been filed across 65 jurisdictions – transition plans may in fact mitigate risk by helping companies proactively address scrutiny and reduce allegations of greenwashing.</p>


Ed Miliband MP

Transition planning will be central to delivering our number one mission on economic growth … High quality disclosure is a pre-requisite to a flourishing transition finance market centred in the UK.

<h2>A market and climate imperative</h2>
<p>The UK government has committed to mandating transition plan disclosure for FTSE 100 companies and regulated financial institutions. A public consultation is imminent and forms part of a broader push to align UK disclosure rules with international standards such as <a href="https://www.ey.com/en_gl/insights/ifrs/what-you-need-to-know-about-new-issb-standard-ifrs-s2" target="_blank" rel="noopener">ISSB S2</a>.</p>
<p>Secretary of State for Energy Security and Net Zero, Ed Miliband MP, said: ‘Transition planning will be central to delivering our number one mission on economic growth … High quality disclosure is a pre-requisite to a flourishing transition finance market centred in the UK.’</p>
<p>Miliband described clean energy as ‘the economic and industrial opportunity of the 21st century’, and called transition planning vital to attracting the investment needed to power that transition.</p>
<p>With net-zero sectors growing three times faster than the wider economy, government officials argue that transparent, credible transition plans are both a climate necessity and a competitive advantage.</p>
<h2>What businesses should do now</h2>
<p>While the legislation is still in development, companies – particularly large corporates and financial institutions – should not wait around. Preparing and disclosing credible transition plans now will help to enhance investor confidence, reduce legal uncertainty and even identify commercial opportunities in the low-carbon economy.</p>
<p>We recommend that businesses begin assessing their climate strategies and disclosure practices in light of the forthcoming consultation and seek legal guidance where needed.</p>
<p>For tailored advice on transition plan disclosure and how best to prepare for incoming regulation, <a href="https://linnearcms.wpenginepowered.com/get-in-touch/">contact a lawyer</a> at Linnear Legal.</p>


Disclosing a credible transition plan can reduce legal risk, attract investment and support compliance. A new legal opinion clarifies that liability fears are overstated.

New legal opinion says transition plan disclosure is a climate and market imperative

Transition plans help firms align with climate goals and manage risk. A new legal opinion confirms disclosure won’t increase liability.

New legal opinion says transition plan disclosure is a climate and market imperative | Linnear Legal

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New legal opinion says transition plan disclosure is a climate and market imperative

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