CLIENTEARTH OPINION ON POTENTIAL LIABILITY FOR CLIMATE-RELATED TRANSITION PLAN DISCLOSURES

The document concludes that mandatory CRTP disclosures, based on IFRS S2 and the TPT Disclosure Framework, are unlikely to materially increase liability risks for companies and directors due to existing legal protections and the high evidentiary hurdle of proving dishonesty. It argues that such disclosures may actually reduce overall legal risk by promoting better compliance with existing duties and mitigating greenwashing claims.

• A mandatory requirement for companies to disclose a climate-related transition plan (CRTP) is unlikely to significantly increase liability risks for companies and directors.
• Existing legal protections, specifically section 463 of the Companies Act 2006 and Schedule 10A of the Financial Services and Markets Act 2000 (FSMA), provide sufficient 'safe harbours' that no additional specific regime is necessary for CRTPs.
• The process of preparing a CRTP according to the TPT Disclosure Framework may reduce legal risks by improving compliance with existing disclosure obligations and substantiating claims to prevent greenwashing allegations.
• Liability for forward-looking statements in CRTPs (such as targets and expectations) is generally difficult to establish because it typically requires a 'dishonesty standard'—proving the representor knew the statement was false or was reckless.
• Disclosures regarding Scope 3 emissions, while inherently uncertain, do not materially heighten liability risks if companies use established methodologies (such as the Greenhouse Gas Protocol) and include appropriate caveats.
• Directors can mitigate liability by implementing robust production processes, including delegating to skilled staff, supervising the process, seeking external expert advice, and maintaining detailed records of their oversight.
• Liability does not arise simply because a good-faith transition plan fails or because targets are not met; it only arises if a factual statement made at the time of disclosure was wrong and made dishonestly.

APA

KC, A. T., MORRISON, P., & CHURCH, L. (2025). CLIENTEARTH OPINION ON POTENTIAL LIABILITY FOR CLIMATE-RELATED TRANSITION PLAN DISCLOSURES. ClientEarth. https://www.clientearth.org/media/tp2ha4jj/pdf-200625-legal-opinion-on-transition-plan-disclosures.pdf

Chicago

KC, ANDREW THOMPSON, PHILIP MORRISON, and LILY CHURCH. CLIENTEARTH OPINION ON POTENTIAL LIABILITY FOR CLIMATE-RELATED TRANSITION PLAN DISCLOSURES. ClientEarth, 2025. https://www.clientearth.org/media/tp2ha4jj/pdf-200625-legal-opinion-on-transition-plan-disclosures.pdf.

Wikipedia

{{cite report |last1=KC |first1=ANDREW THOMPSON |last2=MORRISON |first2=PHILIP |last3=CHURCH |first3=LILY |title=CLIENTEARTH OPINION ON POTENTIAL LIABILITY FOR CLIMATE-RELATED TRANSITION PLAN DISCLOSURES |publisher=ClientEarth |date=20 June 2025 |url=https://www.clientearth.org/media/tp2ha4jj/pdf-200625-legal-opinion-on-transition-plan-disclosures.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kc2025clientearth, author = {KC, ANDREW THOMPSON and MORRISON, PHILIP and CHURCH, LILY}, title = {{CLIENTEARTH OPINION ON POTENTIAL LIABILITY FOR CLIMATE-RELATED TRANSITION PLAN DISCLOSURES}}, institution = {ClientEarth}, year = {2025}, month = jun, url = {https://www.clientearth.org/media/tp2ha4jj/pdf-200625-legal-opinion-on-transition-plan-disclosures.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }