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Roadmap to climate resilience: a legal steer on transition planning

Roadmap to climate resilience: a legal steer on transition planning
Published Date
Jun 25 2024
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Businesses operate in a world needing to transition to a net zero economy. It is increasingly necessary to consider the implications of the transition for your organisation’s overall strategy, business model and value chain. To that end, the development of credible, comprehensive and comparable transition plans are widely acknowledged to be critical for achieving an orderly net zero transition.

Mandatory disclosure of information about transition strategies will become the new normal across a growing number of jurisdictions. As those requirements rapidly emerge, global norms for transition plan-related disclosures are crystallising.

In a significant move to harmonise transition plan disclosures, the International Financial Reporting Standards (IFRS) Foundation announced that it will assume responsibility for the disclosure-related materials developed by the UK Transition Plan Taskforce (TPT), including the TPT Disclosure Framework.

To promote standardised best practice in transition plan disclosures internationally, the TPT Disclosure Framework has been crafted for global applicability.  It complements and builds on the requirements of the International Sustainability Standards Board (ISSB) and the Task Force on Climate-related Financial Disclosures (TCFD) and is aligned with the transition plan guidance of the Glasgow Finance Alliance for Net Zero (GFANZ).  It is poised to become an influential gold standard for businesses to disclose robust and credible transition plans in the UK and beyond. 

In this article, we highlight critical developments and key considerations for businesses looking to adopt, update and disclose transition plans. Specifically, we explain: 

  1. the key drivers for developing and disclosing a transition plan; 
  2. the trend towards mandatory adoption and/or disclosure of transition plans; and
  3. key questions to consider when developing a transition plan in view of the TPT Disclosure Framework.

We help businesses with transition planning, including by providing strategic advice on streamlining transition plan disclosures with sustainability reporting, assessing transition plans to mitigate legal risks, as well as pre-empting and managing complex legal risks associated with carbon credits.

To request a copy of our article, please get in touch with one of the authors.

We are delighted to support the Transition Finance Market Review as the Secretariat’s legal advisor. The market-led review, commissioned by the UK government, will issue a final report in autumn 2024 with recommendations for scaling transition finance.

Update on September 11, 2025: Lawmakers are continuing to grapple with the question of how transition plan-related disclosure requirements can yield widespread decision-useful, comparable information while keeping reporting burdens proportionate.

 

UK: The UK government’s consultation on implementation routes for transition plan requirements (June 25, 2025–September 17, 2025) revealed that apart from the possibility of mandating the development and disclosure of transition plans, the government is considering whether to let entities produce transition plans on a voluntary basis and compel those that have not published a plan (or related information) to explain why that is the case. The government is also considering whether to require implementation of transition plans, and whether market mechanisms would be effective to ensure that companies are delivering on their plans. Read more in our bulletin here.

 

EU: While the Corporate Sustainability Reporting Directive does not require the adoption and implementation of a transition plan, the Corporate Sustainability Due Diligence Directive (CS3D) contains a requirement to “adopt and put into effect a transition plan”. Both directives are currently subject to amendment pursuant to the European Commission’s Omnibus I package. Notably, the European Council’s negotiating position involves bolder amendments, for example: introducing a transitional period of two years (July 26, 2029–July 25, 2031) where the adoption of transition plans is optional; and requiring plans that aim for contributions to, rather than compatibility with, the Paris Agreement and the European Climate Law. Trilogue negotiations are expected to start in around November 2025, and political agreement could be achieved early next year.

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