In recent years, and with clear acceleration in 2025, the international regulatory framework has been enriched by what are known as Transition Laws: climate regulations introduced to reduce greenhouse gas emissions and achieve the objectives of the Paris Agreement, imposing immediate accounting obligations under IFRS Accounting Standards.
Some Transition Laws are prohibitive, such as bans, carbon taxes, or operational restrictions, while others provide incentives, with many combining both approaches. In nearly all cases, these laws are designed to redirect economic activity from high-emission operations toward low- or net-zero emission alternatives.
The urgency is evident: in June 2025, over 60 leading climate scientists warned that only three years remain to limit warming to 1.5°C, while the International Court of Justice (ICJ) advisory opinion of July 2025 confirmed States' binding obligations to regulate private activities to protect the climate. Concurrently, the International Accounting Standards Board (IASB) has published Illustrative Examples (IEs) clarifying the disclosure requirement for climate uncertainties in financial statements.
Transition Laws impact the economic value of assets, future costs, activity durations, and business model sustainability. Failing to address these effects exposes companies to legal, accounting, and market risks.
General counsel must develop multidisciplinary expertise, understanding not only the regulatory evolution of Transition Laws but also their direct implications for corporate financial statements, including asset impairments and decommissioning provisions. Grasping climate regulatory developments is insufficient if one cannot interpret the consequences these norms have on financial statements and, consequently, on clients' strategic decisions. The ability to analyze financial information has become integral to high-level legal advisory.
Accounting is inherently forward-looking and requires material disclosure on how Transition Laws affect financial statement preparation. The IASB Illustrative Examples, grounded in existing IFRS requirements, compel companies to disclose estimates of asset useful lives, cash flows for impairment testing, and decommissioning costs. Current lack of transparency in financial statements draws criticism from investors and regulators: preparers, auditors, and directors must apply these principles immediately to ensure compliance
The investors' perspective, finally, recalls an essential principle: the financial statement remains the primary information tool for the market. If certain climate assumptions affect a company's value, they must be clearly disclosed. Lack of transparency on these aspects is no longer sustainable in a context where Transition Laws produce concrete and measurable economic effects
Taken together, these three perspectives converge on a central point: climate change and Transition Laws are not peripheral issues but structural factors in corporate law, accounting, and governance. For law firms, advisors, and businesses, the challenge is not predicting every future answer but asking the right questions today, integrating legal, financial, and strategic expertise coherently and informedly.
van Berings assists companies in verifying IFRS compliance related to Transition Laws, assessing regulatory impacts on financial statements, disclosure requirements, and regulatory risks.
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Between May 6 and 7, 2026, the European Parliament and the Council of the EU reached a provisional political agreement on the Digital Omnibus AI legislative package.
In the context of evolving climate-related regulations, compliance with international accounting standards assumes relevance far beyond technical-financial boundaries. The IFRS Accounting Standards represent legal obligations, whose breach can generate significant consequences for companies, their management bodies, and reporting process participants.
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