Press release

Transition plan disclosure a climate and market imperative, not a legal trap, say lawyers 

24 June 2025

  • A new legal opinion alleviates concerns that corporate transition plan disclosure increases legal liability.  

  • Concerns were raised in some quarters following a Labour manifesto pledge to mandate transition planning for UK listed companies and large private companies. 

  • A forthcoming consultation on the policy is expected shortly.  

A new legal opinion commissioned by environmental law charity ClientEarth offers much-needed clarity on liability for transition plan disclosures and helps to correct the narrative that transition plan disclosure is a source of heightened legal risk. 

Some companies are wary that disclosing forward looking transition targets and action plans could invite legal challenge if companies fall short of their climate pledges. But the link between transition planning and legal risk remains – until now – poorly understood and some of these concerns are misplaced.  

Conversely, transition plan disclosure is a critical tool for driving meaningful climate action through corporate strategy and can mitigate some existing legal risks. 

The forthcoming consultation on this policy, expected imminently, will be critical in ensuring the legislation is as robust as possible. 

The opinion, from specialist company law barristers at Erskine Chambers, concludes that: 

  •  A regulatory requirement for companies to disclose a transition plan is not likely to result in materially heightened liability risk for companies or their directors; 
  • There are likely to be legal advantages for directors and companies from disclosing a well-prepared transition plan; 
  • From a liability perspective, there is no need to introduce new legal ‘safe-harbours’ for transition plan disclosure; and 
  • There are clear steps directors and companies can take to minimise the risk of liability in respect of transition plan disclosures. 

Andrew Thompson KC of Erskine Chambers said: “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 many situations, existing legal rules establish a high bar to liability for forward-looking statements made as part of the corporate disclosures that are already required. The same will apply to such statements in Transition Plans. Moreover, in some cases there are likely to be legal benefits for companies and directors in publishing a well-prepared transition plan.”  

“We encourage companies and policymakers to engage with the full conclusions set out in our legal opinion.”  

 

Transition plan disclosure can mitigate legal risk 

Legal experts point to the rising tide of climate litigation worldwide, with more than 2,500 cases filed across 65 jurisdictions, noting that courts are increasingly scrutinising the gap between what companies say and what they do and seeking to hold companies to account for climate inaction. 

 

Closing the 'say-do' gap 

Research highlights a major credibility challenge: it found 80% of UK-listed companies have made net zero pledges, only 5% had published detailed, actionable transition plans to support them. 

Legal experts believe that mandating transition plan disclosure would address this ‘say-do’ gap, improve market integrity, and level the playing field – helping to distinguish pledges backed by credible plans from greenwashing. 

ClientEarth lawyer Robert Clarke said: “Investors, regulators, and the public need to know whether climate pledges are backed by changes in corporate strategy and feasible action plans. Companies with nothing to hide have nothing to fear from more detailed disclosure.” 

 

The opportunity 

Legal experts emphasise that the benefits of transition planning go beyond compliance. Going through the process of developing and disclosing a clear, actionable transition strategy helps companies identify and manage climate risk, identify business opportunities and remain competitive and resilient. There may also be benefits for capital raising and investor confidence. 

For the UK government, the move represents a chance to align with global standards, including the ISSB S2 climate disclosure standard, while sending a strong signal of climate leadership and spurring the private sector contribution to whole-of-economy transition. 

Vanessa Havard-Williams, Chair of the Transition Finance Market Review, said:  

“This legal opinion on how transition plan disclosures sit within English company law applicable to disclosure is timely and clear. The opinion describes existing climate disclosure requirements, explains the generally high bar for liability and shows that transition planning can improve corporate disclosure and reduce risks to companies and their directors.” 

“It is now urgent that the Government consults on proposals to mandate ISSB aligned reporting and transition plans for listed and large companies. High quality disclosure and information is important to investors and a pre-requisite to a flourishing transition finance market centred in the UK.” 

 

Notes to editors:

To get a copy of the legal opinion, please contact Liam Jones (ljones@clientearth.org).

 

About ClientEarth

ClientEarth is a non-profit organisation that uses the law to create systemic change that protects the Earth for – and with – its inhabitants. We are tackling climate change, protecting nature and stopping pollution, with partners and citizens around the globe. We hold industry and governments to account and defend everyone’s right to a healthy world. ClientEarth teams in Europe, Asia and the USA work to shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive together.