Corporate transition plans and legal liability

ClientEarth argues that the 'recklessness standard' in English law already protects companies from liability for honest but incorrect forward-looking statements in transition plans. It contends that detailed transition planning reduces risks related to greenwashing, breach of duty, and human rights harms, and opposes the introduction of 'safe-harbours' which would undermine market integrity.

• Corporate concerns that disclosing forward-looking information in transition plans increases legal liability are overstated because English law generally does not hold companies liable for such statements unless they meet a high evidentiary threshold.
• Under the 'recklessness standard' in the UK, a listed company is only liable for misleading statements if directors knew the statement was untrue or were reckless as to its truth, meaning they lacked an honest belief in its truth regardless of how unreasonable that belief was.
• Rigorous transition planning and disclosure can mitigate several types of existing legal risks, including breach of duty for failing to manage climate risk, greenwashing claims, and litigation regarding contributions to climate and human rights harms.
• The document opposes the implementation of 'safe-harbours' or liability holidays for climate disclosures, arguing they would extend impunity to business strategy, undermine the integrity of disclosures, and reduce incentives for companies to plan for transition.
• The UK government is planning to consult in H1 2025 on how to deliver a manifesto commitment to mandate FTSE 100 companies and regulated financial institutions to implement transition plans aligned with the 1.5°C goal of the Paris Agreement.

APA

ClientEarth (2025). Corporate transition plans and legal liability. https://www.clientearth.org/media/ah4gqewz/corporate-transition-plans-and-legal-liability.pdf

Chicago

ClientEarth. Corporate transition plans and legal liability. 2025. https://www.clientearth.org/media/ah4gqewz/corporate-transition-plans-and-legal-liability.pdf.

Wikipedia

{{cite press release |author=ClientEarth |title=Corporate transition plans and legal liability |date=February 2025 |url=https://www.clientearth.org/media/ah4gqewz/corporate-transition-plans-and-legal-liability.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{clientearth2025corporate, author = {{ClientEarth}}, title = {{Corporate transition plans and legal liability}}, publisher = {ClientEarth}, year = {2025}, month = feb, url = {https://www.clientearth.org/media/ah4gqewz/corporate-transition-plans-and-legal-liability.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }