{"id":84928,"date":"2026-03-02T12:55:49","date_gmt":"2026-03-02T12:55:49","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=news&p=84928"},"modified":"2026-03-24T12:00:25","modified_gmt":"2026-03-24T12:00:25","slug":"how-states-can-overcome-the-challenges-in-regulating-corporate-climate-transition-plans","status":"publish","type":"news","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/news\/how-states-can-overcome-the-challenges-in-regulating-corporate-climate-transition-plans\/","title":{"rendered":"How states can overcome the challenges in regulating corporate climate transition plans"},"content":{"rendered":"\n

As part of a new commentary series focused on translating science into corporate climate obligations, Eoin Jackson, Adrien Rose and Harro van Asselt highlight the urgent need to overcome scientific and practical challenges in implementing and enforcing corporate transitions aligned with a pathway to 1.5°C of warming. <\/p>\n\n\n\n

In December 2025, the European Parliament<\/path><\/svg><\/a> put the final nail in the coffin of what was a <\/a>groundbreaking requirement<\/a> of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD): that a wide range of multinational companies needed to adopt and implement climate transition plans. The loss of this requirement was one of the most notable victims of the recent ‘Omnibus<\/path><\/svg><\/a>‘ process, an initiative to ‘simplify’ EU regulation purportedly to boost the bloc’s competitiveness.<\/p>\n\n\n\n

Whether the EU will achieve this aim is doubtful. The removal of the requirement that multinational companies plan for a 1.5°C-aligned economy means that these companies now face a more uncertain and fragmented regulatory environment<\/path><\/svg><\/a>. Litigation risks for companies may even increase<\/path><\/svg><\/a>.<\/p>\n\n\n\n

While the Omnibus process illustrates the challenges of enforcing corporate climate accountability, the broader issue of how to regulate corporate climate impacts extends far beyond Europe. This regulatory backsliding seems at odds with affirmations by international courts<\/path><\/svg><\/a> that states have a duty to regulate companies to achieve climate goals. To meet their international legal obligations, all states should develop, disclose and enforce regulations requiring companies to decarbonise their activities in alignment with the 1.5°C goal. However, as we outline below, there are significant challenges to overcome.<\/p>\n\n\n\n

Clarifying the international duty on states to regulate corporate climate impacts<\/h2>\n\n\n\n

In its seminal Advisory Opinion on climate change<\/path><\/svg><\/a> from July 2025, the International Court of Justice (ICJ) clarified that states have a duty to regulate the climate impacts of companies within their jurisdiction or effective control. The ICJ added that such regulation needs to be effectively enforced and monitored. Failing to do so may mean that a state can be held responsible under international law.<\/p>\n\n\n\n

While the ICJ did not specify what such regulation should look like, it did offer guidance on states’ obligations that informs the content of the duty to regulate private actors:<\/p>\n\n\n\n