Company Directors’ Duty of Care in the Anthropocene:
The Emerging Concept of Climate Change Due Diligence

An International and Comparative Analysis

Dissertation
der Rechtswissenschaftlichen Fakultät
der Universität Zürich

zur Erlangung der Würde eines Doktors der Rechtswissenschaft

vorgelegt von

Andreas Hösli
von Zürich ZH und Glarus GL

genehmigt auf Antrag von

Prof. Dr. Christine Kaufmann
und
Prof. Dr. Kern Alexander

Die Rechtswissenschaftliche Fakultät gestattet hierdurch die Drucklegung der vorliegenden Dissertation, ohne damit zu den darin ausgesprochenen Anschauungen Stellung zu nehmen.

Zürich, den 22. Oktober 2025

Der Dekan: Prof. Dr. Thomas Gächter

© 2026 – CC BY-NC-ND

Author: Andreas Hösli
Publisher: EIZ Publishing (eizpublishing.ch), Bellerivestrasse 49, 8008 Zürich, eizpublishing@europa-institut.ch
ISBN:
978-3-03994-088-2 (Print – Softcover)
978-3-03994-089-9 (Print – Hardcover)
978-3-03994-090-5 (ePub)
DOI: https://doi.org/10.36862/6GSK-8E1P
Version: 1.03 – 20260424

The open access publication of this book has been published with the support of the Swiss National Science Foundation (SNF).

The dissertation was submitted by Andreas Hösli and adopted by the Faculty of Law of the University of Zurich, represented by Dean Prof. Dr. Thomas Gächter, on October 22, 2025.
It was supervised by Prof. Dr. Christine Kaufmann and Prof. Dr. Kern Alexander.

This work is available in print and various digital formats in OpenAccess. Additional information is available at: https://eizpublishing.com/publikationen/company-directors-duty-of-care-in-​the-​anthropocene/.

1

Acknowledgements

This book marks the culmination of a challenging yet highly rewarding journey that I embarked on in 2019. Many wonderful people supported me along the way. First and foremost, I would like to thank my parents, Christine and Alwin, and my siblings, Corina and Filip.

Special thanks are due to my main supervisor, Prof. Christine Kaufmann, for her trust, support, and guidance throughout the project. I would also like to thank Prof. Beate Kristine Sjåfjell, University of Oslo, for sharing her expertise in corporate sustainability law with me and strongly supporting me, both of which had a significant influence on the project. Further, I thank Prof. Kern Alexander, who provided excellent feedback as second supervisor towards the end of the PhD project despite very short notice. Moreover, I thank Prof. Rolf H. Weber for his continued support and trust, particularly during our collaboration at the University of Zurich’s University Research Priority Programme (URPP) Financial Market Regulation.

My PhD journey greatly benefited from research stays at the Universities of Copenhagen, Oslo, and Bergen. Heartfelt thanks are due to all who made these stays possible and so enriching, including Prof. Beatriz Romera Martínez, Dr. Alessandro Monti, Prof. Beate Kristine Sjåfjell, Prof. Jukka Mähönen, Prof. Ignacio Herrera Anchustegui, Kajsa Anna Margareta Johansson, Kirsten Daae Wiig, Jenny Sandvig, Laura Isabell Blasius, and many more.

I would also like to acknowledge the Swiss National Science Foundation (SNSF) for enabling this research project through a Doc.Mobility research grant as well as for making this work openly accessible.

Further, I thank Isabela Keuschnigg and Vinzenz Fanger for critically reviewing parts of an earlier version of the manuscript and providing valuable feedback. Last but certainly not least, I thank Matthias Gartenmann and Dr. Christian Maduz for sharing many hours and coffees at the library.

Finally, I hope that this research will contribute to an immensely important debate that must continue.

Zurich, March 2026 Andreas Hösli

2

Table of Contents

Acknowledgements

Table of Contents

List of Abbreviations

List of Tables

List of Figures

Bibliography

Introduction

Setting the Scene

Welcome to the Anthropocene

The Carbon Majors

System Transitions

A ‘Super-wicked’ Problem: The Social Dimension

Corporate Environmentalism

The Role of Directors

Research Question, Scope and Methodology

Terminology

Structure

The Regime Complex of Corporate Climate Obligations

The International Law on Climate Change

A Stocktake after Three Decades of State-Centrism

Private Climate Governance

Operationalising the International Law on Climate Change

The Net Zero Concept

A Frame of Reference to Achieve the 1.5°C Target

Net Zero Targets

Indirect Emissions

National Laws and Regulations

International Standards

Enforcement through Litigation

Climate Change Litigation

Public Climate Litigation

Private Climate Litigation

The Role of Corporate Law

Approaches in Corporate Law Towards Climate Change

Climate Change Disclosures

From Voluntary to Mandatory

The Quest for Materiality

Limitations and Challenges

Shareholder Engagement on Climate Change

Directors’ Duties

Interim Conclusions

Directors’ Duty of Care in The Anthropocene

Climate Risks and Impacts in the Context of Business

The Limitations of Conventional Risk Conceptions in Dealing with
Climate Change

Conceptions of Climate Risks and Impacts

Climate Science

Sustainability Science

International Climate Change Law

Financial Risks and Opportunities (TCFD)

Risks to People and the Planet (UNGP and OECD GL)

Physical Risks

Transition Risks

Regulatory Risks

Litigation Risk

Reputational Risk

Technology and Market Risk

Opportunities

Climate Change as a Financial Risk and Opportunity

Financial Risks

Financial Opportunities

The Duty of Care: A Key Legal Norm for Directors Across Legal Systems

The Corporate Board: Functions and Duties

Duty of Care

Origin and Concept

Standard of Care

The Open-Ended Nature of the Duty of Care

Duty Owed to Whom?

Starting Point

Shareholder Primacy v Stakeholderism

The Inadequacy of Shareholder v Stakeholder Thinking in
the Context of Climate Change Mitigation

Duty of Oversight

Standard of Review

The Duty of Care in the Context of Climate Risks and Impacts

Starting Point

Duty to Disclose Climate Risks and Impacts

Duty to Address Climate Risks and Impacts

Case-Law

Corporate-Law Based Climate Litigation

Australia

United Kingdom

United States

Other Jurisdictions

Climate Change Due Diligence

Specifying Directors’ Duty of Care through Climate Change Due Diligence

Due Diligence within the Regime Complex of Corporate Climate Obligations

Towards Climate Change Due Diligence

The Origins and Concept of Risk-based Due Diligence

Applying Due Diligence to Climate Change

Conceptual Issues

Standards in Focus

UN Guiding Principles on Business and Human Rights

Origin and Nature

Climate Change Content

OECD Guidelines for Multinational Enterprises on Responsible
Business Conduct

Origin and Nature

Climate Change Content

TCFD Recommendations

Origin and Nature

Content

Regulatory Developments

Elements of CCDD

Overview

Embed into Policies and Management Systems

In General

Transition Plans and Targets

Identify and Assess

Scenario Analysis

Climate Change Impact Assessment (CCIA)

Concept

Step 1: Identify

Step 2: Assess

Address

In General

Types of Action

Reduce Emissions

Exercise Leverage

Accompanying Measures

Track and Measure Implementation

Communicate

Remedy

Enforcement

Means of Enforcement

Specific Instances before National Contact Points under the OECD GL

UN Special Procedures

Litigation before Courts

Civil Liability

Netherlands: Milieudefensie et al. v Shell

The Decision of the District Court of The Hague

The District Court’s Construction of CCDD

The District Court’s Reduction Order

The Decision of the Court of Appeals of The Hague

Key Cases in Other Jurisdictions

Germany: Lliuya v RWE

France: Cases Brought under the Loi de Vigilance

New Zealand: Smith v Fonterra

Switzerland: Asmania et al. v Holcim

Conclusion

General Remarks

Answering the Research Question

Sub-RQ 1

Sub-RQ 2

Sub-RQ 3

Sub-RQ 4

Sub-RQ 5

Table of Cases

Table of Legislation

Table of Treaties

Table of UN Documents

Table of Community Documents

Table of OECD Documents

Table of TCFD Documents

3

List of Abbreviations

AR

Assessment Report (of the IPCC)

AR4/5/6

Fourth/Fifth/Sixth Assessment Report

BIS

Bank for International Settlements

CCDD

Climate Change Due Diligence

CCIA

Climate Change Impact Assessment

CCLA

Commonwealth Climate and Law Initiative

CC(U)S

Carbon Capture (Utilisation) and Storage

CDP

Carbon Disclosure Project

CDR

Carbon Dioxide Removal

CESCR

Committee on Economic, Social and Cultural Rights

CFCs

Chlorofluorocarbons

CH₄

Methane

COP

Conference of the Parties

CO₂

Carbon Dioxide

CO₂-eq

Carbon Dioxide Equivalent

CSDDD

Corporate Sustainability Due Diligence Directive

CSRD

Corporate Sustainability Reporting Directive

CSO

Civil Society Organisation

ECB

European Central Bank

ECHR

European Convention on Human Rights

ECtHR

European Court of Human Rights

EFRAG

European Financial Reporting Advisory Group

EIA

Environmental Impact Assessment

EMS

Environmental Management System

EU

European Union

FAO

Food and Agriculture Organization of the UN

FSB

Financial Stability Board

GHG

Greenhouse Gas

Gt

Gigatonne (1 million kilograms)

G20

Group of Twenty

HRC

Human Rights Council

HRDD

Human Rights Due Diligence

HREDD

Human Rights and Environmental Due Diligence

IBA

International Bar Association

ICJ

International Court of Justice

IEA

International Energy Agency

IFRS

International Financial Reporting Standards

ILC

International Law Commission

ILO

International Labour Organization

IPCC

Intergovernmental Panel on Climate Change

IOSCO

International Organization of Securities Commissions

ISSB

International Sustainability Standards Board

ITLOS

International Tribunal for the Law of the Sea

MNE

Multinational Enterprise

NCP

National Contact Point

NDC

Nationally Determined Contribution

NGFS

Network of Central Banks and Supervisors for Greening the Financial System

NGO

Non-Governmental Organisation

NSA

Non-State Actor

N₂O

Nitrous Oxide

OECD

Organisation for Economic Co-operation and Development

OECD GL

OECD Guidelines for Multinational Enterprises on RBC

OHCHR

Office of the UN High Commissioner for Human Rights

PCOE

Principles on Climate Obligations of Enterprises

RBC

Responsible Business Conduct

SEC

US Securities and Exchange Commission

SDG

Sustainable Development Goals

SPM

Summary for Policymakers

SR1.5

IPCC Special Report on Global Warming of 1.5°C

SYR

Synthesis Report

TCFD

Task Force on Climate-related Financial Disclosures

TCFDR

Recommendations of the TCFD

TNFD

Taskforce on Nature-related Financial Disclosures

TUAC

Trade Union Advisory Committee to the OECD

UN

United Nations

UNCTC

UN Commission on Transnational Corporations

UNEP

UN Environment Programme

UNEP FI

UNEP Finance Initiative

UNFCCC

UN Framework Convention on Climate Change

UNGP

UN Guiding Principles on Business and Human Rights

UNWG

UN Working Group

WBCSD

World Business Council for Sustainable Development

WG

Working Group

WMO

World Meteorological Organization

WRI

World Resources Institute

4

List of Tables

Table 1: Key measures to achieve systems transitions by economic sector (IPCC)

Table 2: Sub-research questions

Table 3: Emission categories as per GHG Protocol

Table 4: Sub-categories of transition risk

Table 5: Examples of cross-industry climate-related metrics and targets (TCFD)

Table 6: Climate change-related specific instances under the
OECD GL (in chronological order, until end of 2025)

5

List of Figures

Fig. 1: Global and Carbon Major entities’ CO₂ and CH₄ emissions (1850 to 2010)

Fig. 2: Trends in global GHG emissions by sector (IPCC)

Fig. 3: 1.5°C/2°C pathways contrasted with NDCs

Fig. 4: Upstream and downstream GHG emissions (GHG Protocol)

Fig. 5: Scope 1, 2 and 3 emissions by sector

Fig. 6: Total number of climate change cases, US and non-US (1986 to 2024)

Fig. 7: Private climate litigation cases by sector type (2015 to 2024)

Fig. 8: Climate risks and impacts (main interactions and trends), IPCC

Fig. 9: Climate-related risks, opportunities, and financial impact (TCFD)

Fig. 10: Six practical actions of due diligence (OECD Guidance)

Fig. 11: Four areas of climate-related financial disclosures (TCFD)

Fig. 12: Recommended disclosures TCFD (as amended in 2021)

Fig. 13: Addressing adverse impacts (using the example of a bank)

Fig. 14: Rise of CO₂ concentration in the atmosphere from 2019 to 
June 2025 (NASA)

6

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Journal Articles

Adams R, Licht AM and Sagiv L, ‘Shareholders and Stakeholders: How Do Directors Decide?’ (2011) 32 Strategic Mgmt. J 1331

Ameli N, Kothari S, and Grubb M, ‘Misplaced expectations from climate disclosure initiatives’ (2021) Nature Climate Change 917

Andersson M, Bolton P. and Samama F, ‘Hedging Climate Risk’ (2016) 72 Financial Analysts Journal 13

Andonova L, Betsill MM, and Bulkeley H, ‘Transnational Climate Governance’ (2009) 9 Global Environmental Politics 52

Aristova E and Nichols L, ‘Climate Change on the Board: Navigating Directors’ Duties’ (2024) 24 Journal of Corporate Law Studies 479

Aristova E and others, ‘Corporate Climate Change Responsibilities Under the OECD Guidelines for Multinational Enterprises’ (2024) 73 International and Comparative Law Quarterly 505

Armour J, Enriques L, and Wetzer T, ‘Mandatory Corporate Climate Disclosures: Now, but How?’ (2021) 3 Columbia Business Law Review 1085

Armour J, Mayer C, and Polo A, ‘Regulatory Sanctions and Reputational Damage in Financial Markets’ (2017) 52 Journal of Financial and Quantitative Analysis 1429

Arrhenius S, ‘On the Influence of Carbonic Acid in the Air upon the Temperature of the Ground’ (1896) 41 Philosophical Magazine and Journal of Science 237

Aschemann-Witzel J and others, ‘Plant-based food and protein trend from a business perspective: markets, consumers, and the challenges and opportunities in the future’ (2021) 61 Critical Reviews in Food Science and Nutrition 3119

Atamer Y and Wittum P, ‘Von Laissez-faire zu Regulierung: Grundlagen der EU Richtlinie über die Sorgfaltspflichten von Unternehmen im Hinblick auf Nachhaltigkeit (CSDDD)’ (2024) 3 EuZ <https://doi.org/10.36862/eiz-euz2024-09>

Bäckstrand K and others, ‘Non-State Actors in Global Climate Governance: From Copenhagen to Paris and Beyond’ (2017) 26 Environmental Politics 561

Bainbridge S, ‘Director Primacy: The Means and Ends of Corporate Governance’ (2003) 97 Nw. U. L. Rev. 547

Barker S and others, ‘Climate Change and the Fiduciary Duties of Pension Fund Trustees: Lessons from the Australian law’ (2016) 6 Journal of Sustainable Finance & Investment 211

Battiston S and others, ‘A Climate Stress-Test of the Financial System’ (2017) 7 Nature Climate Change 283

Baudisch K and Fouquet D, ‘Germany’s Coal Exit Plan – A Legal and Political Outline on How Germany Plans to Phase out Coal Fired Power Stations by 2038’ (2019) 9 Renewable Energy L & Pol’y Rev 45

Baumüller J and Schaffhauser-Linzatti MM, ‘In search of materiality for nonfinancial information-reporting requirements of the Directive 2014/95/EU’ (2018) 26 Sustainability Management Forum 101

Baumüller J and Sopp K, ‘Double materiality and the shift from non-financial to European sustainability reporting: review, outlook and implications’ (2022) 23 Journal of Applied Accounting Research 8

Bebchuk L and Tallarita R, ‘The Illusory Promise of Stakeholder Governance’ (2020) 106 Cornell Law Review 91

Benjamin L, ‘The Responsibilities of Carbon Major Companies: Are They (and Is the Law) Doing Enough?’ (2016) 5 Transnational Environmental Law 353

‘The Duty of Due Consideration in the Anthropocene: Climate Risk and English Directorial Duties’ (2017) 11 Carbon and Climate Law Review 90

‘The Road to Paris Runs Through Delaware: Climate Litigation and Directors’ Duties’ (2020) 2 Utah Law Review 313

Berle A, ‘Corporate Powers as Powers in Trust’ (1931) 44 Harv. L. Rev 1049

Bevacqua E, Schleussner C-F and Zscheischler J, ‘A year above 1.5 °C signals that Earth is most probably within the 20-year period that will reach the Paris Agreement limit’ (2025) Nature Climate Change <https://doi.org/10.1038/s41558-025-02246-9>

Bingler J and Colesanti Senni C, ‘Taming the Green Swan: a criteria-based analysis to improve the understanding of climate-related financial risk assessment tools’ (2022) 22 Climate Policy 356

Bingler J and others, ‘Cheap Talk and Cherry-Picking: What ClimateBert Has to Say on Corporate Climate Risk Disclosures’ (2022) 47 Finance Research Letters 102776

Birchall D, ‘Irremediable Impacts and Unaccountable Contributors: The Possibility of a Trust Fund for Victims to Remedy Large-scale Human Rights Impacts’ (2019) 25 Australian Journal of Human Rights 428

Bjørn A and others, ‘Can Science-Based Targets Make the Private Sector Paris-Aligned? A Review of the Emerging Evidence’ (2022) Curr Clim Change Rep 8

Black J, ‘Decentring Regulation: Understanding the Role of Regulation and Self-Regulation in a “Post-Regulatory” World’ (2001) 54 Current Legal Problems 103

Bodansky D, ‘The Legal Character of the Paris Agreement’ (2016) 25 RECIEL 142

Bonnitcha J and McCorquodale R, ‘The Concept of ‘Due Diligence’ in the UN Guiding Principles on Business and Human Rights’ (2017) 28 EJIL 899

Bookman S, ‘Smith v Fonterra and the Climatisation of Tort Law’ (2024) 284 Modern Law Review 192

Bradford W, ‘Beyond Good and Evil: The Commensurability of Corporate Profits and Human Rights’ (2012) 26 Notre Dame Journal of Law, Ethics and Public Policy 141

Bray D and Poston TM, ‘The Methane Majors: Climate Change and Animal Agriculture in US Courts’ (2024) 49 Columbia Journal of Environmental Law 145

Bright C and Buhmann K, ‘Risk-Based Due Diligence, Climate Change, Human Rights and the Just Transition’ (2021) 13 Sustainability 10454

Brulle R, ‘The Climate Lobby: A Sectoral Analysis of Lobbying Spending on Climate Change in the USA, 2000 to 2016’ (2018) 149

Bueno N and Bright C, ‘Implementing Human Rights Due Diligence through Corporate Civil Liability’ (2020) 69 International and Comparative Law Quarterly 789

Bueno N and Kaufmann C, ‘The Swiss Human Rights Due Diligence Legislation: Between Law and Politics’ (2021) 6 Business and Human Rights Journal 542

Buhmann K, ‘Public Regulators and CSR: The ‘Social License to Operate’ in Recent United Nations Instruments on Business and Human Rights and the Juridification of CSR’ (2016) 136 J Bus Ethics 699

Burger M, Wentz J, Horton R, ‘The Law and Science of Climate Change Attribution’ (2020) 45 Columbia Journal of Environmental Law 57

Burgers L, ‘An Apology Leading to Dystopia: Or, Why Fuelling Climate Change Is Tortious’ (2022) 11 Transnational Environmental Law 419

Burton C, ‘An Inconvenient Risk: Climate Change Disclosure and the Burden of Corporations’ (2010) 62 Administrative Law Review 1287

Cabernard L and others, ‘Growing Environmental Footprint of Plastics Driven by Coal Combustion (2021) 5 Nature Sustainability 139

Caldecott B, ‘Introduction to special issue: Stranded assets and the environment’ (2017) 7 Journal of Sustainable Finance and Investment 1

Cannon A, ‘Twelve months at 1.5 °C signals earlier than expected breach of Paris Agreement threshold’ (2025) Nature Climate Change <https://www.nature.com/ar​ti​cles/s41558-025-02247-8>

Cebriá LH, ‘The Spanish and the European Codification of the Business Judgment Rule’ (2018) 15 European Company and Financial Law Review 41

Chiu I and Donovan A, ‘A new milestone in corporate regulation: procedural legalisation, standards of transnational corporate behaviour and lessons from financial regulation and anti-bribery regulation’ (2017) 17 Journal of Corporate Law Studies 427

Cifci E and Oliver ME, ‘Reassessing the Links between GHG Emissions, Economic Growth, and the UNFCCC: A Difference-in-Differences Approach’ (2018) 10 Sustainability 334

Cîrlig R, ‘Business and Human Rights: From Soft Law to Hard Law?’ (2016) 6 Juridical Tribune 228

Coase R, ‘The Nature of the Firm’ (1937) 4 Economica 386

‘The Problem of Social Cost’ (1960) 3 Journal of Law and Economics 1

Coffee J and Palia D, ‘The Wolf at the Door: The Impact of Hedge Fund Activism on Corporate Governance’ (2016) 41 J. Corp. L. 545

Colombo E, ‘From Bushfires to Misfires: Climate-Related Financial Risk after McVeigh v. Retail Employees Superannuation Trust’ (2022) 11 Transnational Environmental Law 173

Colombo E, ‘Unpacking Corporate Due Diligence in Transnational Climate Litigation: A Planetary Perspective’ (2023) (ex ante Special Issue) 35

Condon M, ‘Corporate Scenarios: Drawing Lessons from History’ (2025) 48 Seattle University Law Review 277

Condon M and others, ‘Mandating Disclosure of Climate-related Financial Risk’ (2020) 23 NYUJ Legis. & Pub. Pol’y 745

Costa C and others, ‘Roadmap for achieving net-zero emissions in global food systems by 2050’ (2022) 12 Sci Rep 15064 <https://doi.org/10.1038/s41598-022-18601-1>

Cottier T, ‘Multilayered Governance, Pluralism, and Moral Conflict’ (2009) 16 Indiana Journal of Global Legal Studies 647

Cox R, ‘A climate change litigation precedent: Urgenda Foundation v The State of the Netherlands’ (2016) 34 Journal of Energy & Natural Resources Law 143

Crona B, Folke C, and Galaz V, ‘The Anthropocene Reality of Financial Risk’ (2021) 4 One Earth 618

Crutzen P, ‘Geology of Mankind’ (2002) 415 Nature 23

Danken T, Dribbisch K and Lange A, ‘Studying Wicked Problems Forty Years On: Towards a Synthesis of a Fragmented Debate’ (2016) 9 der moderne staat – Zeitschrift für Public Policy, Recht und Management 15

Davies P and Hopt KJ, ‘Corporate Boards in Europe – Accountability and Convergence’ (2013) 61 American Journal of Comparative Law 301

Deakin S, ‘The Coming Transformation of Shareholder Value’ (2005) 13 Corp. Governance 11

Deva S, ‘Sustainable Development: What Role for the Company Law?’ (2011) 8 ICCLJ 76

‘Guiding Principles on Business and Human Rights: Implications for Companies’ (2012) 9 European Company Law 101

De Graaf KJ and Jans JH, ‘The Urgenda Decision: Netherlands Liable for Role in Causing Dangerous Global Climate Change’ (2015) 27 Journal of Environmental Law 517

Dietz S and others, ‘“Climate Value at Risk” of Global Financial Assets’ (2016) 6 Nature Climate Change 676

‘How ambitious are oil and gas companies’ climate goals?’ (2021) 374 Science 405

Dine J, ‘Corporate Regulation, Climate Change and Corporate Law: Challenges and Balance in an International and Global World’ (2015) 26 European Business Law Review 173

Dodd E, ‘For Whom are Corporate Managers Trustees?’ (1932) Harv. L. Rev, 45

Donald S, ‘The competence and diligence required of trustees of a 21st century superannuation fund’ (2019) 27 Australian Business Law Review 50

‘Prudential Regulation and Climate Change’ (2023) ex/ante Special Issue 4

Downar B and others, ‘The Impact of Carbon Disclosure Mandates on Emissions and Financial Operating Performance’ (2021) 26 Review of Accounting Studies 1137

Downs S, ‘Civil Liability for Climate Change? The Proposed Tort in Smith v Fonterra with Reference to France and the Netherlands’ (2024) 33 RECIEL 31

Driesen D, ‘The Limits of Pricing Carbon’ (2014) 4 Climate Law 107

Dzhengiz T, Henry LA, and Malik K, ‘The Role of Partnership Portfolios for Sustainability in Addressing the Stability-Change Paradox: Dong/Orsted’s Transition From Fossil Fuels to Renewables’ (2024) 63 Business & Society 1518

Easterbrook F and Fischel DR, ‘The Corporate Contract’ (1989) 89 Columbia Law Review 1416

Eccles R and Krzus MP, ‘Implementing the Task Force on Climate-related Financial Disclosures Recommendations: An Assessment of Corporate Readiness’ (2019) 71 Schmalenbach Bus Rev 292

Eccles R and Youmans T, ‘Materiality in Corporate Governance: The Statement of Significant Audiences and Materiality’ (2016) 28 Journal of Applied Corporate Finance 39

Ekwurzel B and others, ‘The Rise in Global Atmospheric CO₂, Surface Temperature, and Sea Level from Emissions Traced to Major Carbon Producers’ (2017) 144 Climatic Change 579

Enneking L and Veldman J, ‘Towards Responsible Business Conduct in Global Value Chains’ (2019) 4 Erasmus Law Review 4

Erion E, ‘The Stock Market to the Rescue? Carbon Disclosure and the Future of Securities-Related Climate Change Litigation’ (2009) 18 RECIEL 164

Eskander S and Fankhauser S, ‘The Impact of Climate Legislation on Trade-Related Carbon Emissions 1996–2018’ (2023) 85 Environmental and Resource Economics 167

Fankhauser S and others, ‘The Meaning of Net Zero and How to Get It Right’ (2021) 12 Nature Climate Change 15

Fiedler T, ‘Business risk and the emergence of climate analytics’ (2021) 11 Nature Climate Change 87

Fisher E, Scotford E and Barritt E, ‘The Legally Disruptive Nature of Climate Change’ (2017) 80 Modern Law Review 173

Foerster A and Peel J, ‘US fossil fuel companies facing legal action for misleading disclosure of climate risk: could it happen in Australia?’ (2017) 32 Australian Environment Review 56

Frame D and others, ‘The economic costs of Hurricane Harvey attributable to climate change’ (2020) 160 Climatic Change 271

Ganguly G, Setzer J and Heyvaert V, ‘If at First You Don’t Succeed: Suing Corporations for Climate Change’ (2018) 38 Oxford Journal of Legal Studies 841

Gerner-Beuerle C and Schuster EP, ‘The Evolving Structure of Directors’ Duties in Europe’ (2014) 15 European Business Organization Review 191

Glinski C, ‘The Ruggie Principles, Business Human Rights Self-regulation and Tort Law: Increasing Standards through Mutual impact and Learning’ (2017) 15 Nordic Journal of Human Rights 15

Griggs D and others, ‘Policy: Sustainable Development Goals for People and Planet’ (2013) 495 Nature 305

Gunningham N, ‘Divestment, Nonstate Governance, and Climate Change’ (2017) 39 Law & Pol’y 309

Hale T, ‘‘‘All hands on Deck’’: The Paris Agreement and Non-State Climate Action’ (2016) 16 Global Environmental Politics 12

Hale T and others, ‘Assessing the Rapidly-Emerging Landscape of Net Zero Targets’ (2021) 22 Climate Policy 18

Hansmann H and Kraakman R, ‘The End of History for Corporate Law’ (2001) 89 Geo. L.J. 439

Hardman J, ‘The Making of Corporate Legal Concession Theory’ (2024) 44 Oxford Journal of Legal Studies 181

Harnett E, ‘Social and asocial learning about climate change among institutional investors: lessons for stranded assets’ (2016) 7 Journal of Sustainable Finance & Investment 114

Harper Ho V, ‘Modernizing ESG Disclosure’ (2022) 2022 U Ill L Rev 277

Heede R, ‘Tracing Anthropogenic Carbon Dioxide and Methane Emissions to Fossil Fuel and Cement Producers, 1854–2010’ (2014) 122 Climatic Change 229

Heede R and Oreskes N, ‘Potential Emissions of CO₂ and Methane from Proved Reserves of Fossil Fuels: An Alternative Analysis’ (2016) 36 Global Environmental Change 12

Heffron R and McCauley D, ‘The “Just Transition” Threat to our Energy and Climate 2030 Targets’ (2022) 165 Energy Policy 112949

Hertwich E and Wood R, ‘The Growing Importance of Scope 3 Greenhouse Gas Emissions from Industry’ (2018) 13 Environmental Research Letters 53

Hessen R, ‘A New Concept of Corporations: A Contractual and Private Property Model’ (1978) 30 Hastings L. J. 1327

Heyvaert V and Etty T, ‘Introducing Transnational Environmental Law’ (2012) 1 TEL 1

Hickman C and others, ‘Climate anxiety in children and young people and their beliefs about government responses to climate change: a global survey’ (2021) 5 Lancet Planet Health 863

Hinteregger M, ‘Civil Liability and the Challenges of Climate Change: A Functional Analysis’ (2017) 8 Journal of European Tort Law 238

Hoffman A, ‘Climate Change Strategy: The Business Logic behind Voluntary Greenhouse Gas Reductions’ (2005) 47 California Management Review 21

Hoffmann V and Busch T, ‘Corporate Carbon Performance Indicators Carbon Intensity, Dependency, Exposure, and Risk’ (2008) 12 Journal of Industrial Ecology 505

Höhne N and others, ‘Wave of Net Zero Emission Targets Opens Window to Meeting the Paris Agreement’ (2021) 11 Nature Climate Change 820

Hösli A, ‘Milieudefensie et al. v. Shell: A Tipping Point in Climate Change Litigation against Corporations?’ (2021) 11 Climate Law 195

Hösli A and Rehmann M, ‘Verein KlimaSeniorinnen Schweiz and Others v. Switzerland: The European Court of Human Rights’ Answer to Climate Change’ (2024) 14 Climate Law 263

Hösli A and Weber RH, ‘Climate Change Reporting and Due Diligence: Frontiers of Corporate Climate Responsibility’ (2021) 6 ECFR 948

Iglesias-Rodríguez P, ‘ClientEarth v Shell plc and the (Un)Suitability of UK Company Law and Litigation to Pursue Climate-Related Goals’ (2023) 35 Journal of Environmental Law 445

Jensen M, ‘Value Maximization, Stakeholder Theory, and the Corporate Objective Function’ (2001) 14 Journal of Applied Corporate Finance 8

Jensen M and Meckling WH, ‘Theory of the firm: Managerial behavior, agency costs and ownership structure’ (1976) 3 Journal of Financial Economics 305

Jordan A and others, ‘Emergence of Polycentric Climate Governance and Its Future Prospects’ (2015) 5 Nature Climate Change 977

Kaufmann C and Weber RH, ‘The Role of Transparency in Financial Regulation’ (2010) 13 Journal of International Economic Law 779

‘Carbon-Related Border Tax Adjustment: Mitigating Climate Change or Restricting International Trade?’ (2011) 10 World Trade Review 497

Keay A ‘The Public Enforcement of Directors’ Duties: A Normative Inquiry’ (2014) 43 Common Law World Review 89

Keeling C ‘The Concentration and Isotopic Abundances of Carbon Dioxide in Rural and Marine Air’ (1961) 24 Geochimica et Cosmochimica Acta 277

Keller H and Heri C, ‘The Future is Now: Climate Cases Before the ECtHR’ (2022) 40 Nordic Journal of Human Rights 153

Kemp L and others, ‘Climate Endgame: Exploring catastrophic climate change scenarios’ (2022) 34 PNAS 1

Kenner D and Heede R, ‘White Knights, or Horsemen of the Apocalypse? Prospects for Big Oil to Align Emissions with a 1.5°C Pathway’ (2021) 79 Energy Research and Social Science 102049

Keohane R and Victor DG, ‘The Regime Complex for Climate Change’ (2011) 9 Perspectives on Politics 7

Keys P and others, ‘Anthropocene Risk’ (2019) 2 Nature Sustainability 667

Kölbel J, Busch T, Jancso LM, ‘How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk’ (2017) 38 Strategic Management Journal 2266

Kolk A and Pinkse J, ‘Market Strategies for Climate Change’ (2004) 22 European Management Journal 304

Koskenniemi M and Leino P, ‘Fragmentation of International Law? Postmodern Anxieties’ (2002) 15 Leiden J. Int’l L. 553

Kosti N, Levi-Faur D, and Mor G, ‘Legislation and Regulation: Three Analytical Distinctions’ (2019) 7 The Theory and Practice of Legislation 169

Kotzé L, ‘Neubauer et al. versus Germany: Planetary Climate Litigation for the Anthropocene?’ (2021) 22 German Law Journal 1423

Krabbe O and others, ‘Aligning corporate greenhouse-gas emissions targets with climate goals’ (2015) 5 Nat. Clim. Change 1057

Krueger P, Sautner Z and Starks LT, ‘The Importance of Climate Risks for Institutional Investors’ (2020) 33 Review of Financial Studies 1067

Kuramochi T and others, ‘Ten Key Short-Term Sectoral Benchmarks to Limit Warming to 1.5°C’ (2018) 18 Climate Policy 287

Lamb W and others, ‘Discourses of Climate Delay’ (2020) 3 Global Sustainability 17

Lash J and Wellington F, ‘Competitive Advantage on a Warming Planet’ (2007) 85 Harvard Business Review 94

Lazarus O, McDermid S and Jacquet J, ‘The Climate Responsibilities of Industrial Meat and Dairy Producers’ (2021) 165 Climatic Change 1

Levin K and others, ‘Overcoming the Tragedy of Super Wicked Problems: Constraining Our Future Selves to Ameliorate Global Climate Change’ (2012) 45 Policy Sciences 123

Light S, ‘The Law of the Corporation as Environmental Law’ (2019) 71 Stanford Law Review 137

Lim E, ‘Judicial Intervention in Directors’ Decision-Making Process: Section 172 of the Companies Act 2006’ (2018) Journal of Business Law 169

Lipton A, ‘What We Talk About When Talk About Shareholder Primacy’ (2019) 69 Case W. Rsrv. L. Rev. 863

Loy L. and Jacquet J, ‘The Animal Agriculture Industry’s Obstruction of Campaigns Promoting Individual Climate Action’ (2025) Climate Policy 1 <https://doi.org/10.1080/14693062.2025.2460603>

Luporini R, ‘Climate Change Litigation before International Human Rights Bodies: Insights from Daniel Billy et al. v. Australia (Torres Strait Islanders Case)’ (2023) 3 The Italian Review of International and Comparative Law 238

Luporini R and Savaresi A, ‘International Human Rights Bodies and Climate Litigation: Don’t Look Up?” (2023) 32 RECIEL 267

Macchi C, ‘The Climate Change Dimension of Business and Human Rights: The Gradual Consolidation of a Concept of “Climate Due Diligence”’ (2021) 6 Business and Human Rights Journal 93

Macchi C and Bernaz N, ‘Business, Human Rights and Climate Due Diligence: Understanding the Responsibility of Banks’ (2021) 13 Sustainability 8391

Macchi C and van Zeben J, ‘Business and human rights implications of climate change litigation: Milieudefensie et al. v Royal Dutch Shell’ (2021) 30 RECIEL 409

Mähönen J, ‘Integrated Reporting and Sustainable Corporate Governance from European Perspective’ (2020) 10 Account Econ Law 20180048

Malaguti M, ‘From Soft to Hard Law and Interpretation: the Case of the OECD Guidelines for Multinational Enterprises and the Role of the National Contact Points’ (2023) 10 Oslo Law Review 1

Mares R, ‘Directors’ Duties During the Green Transition under EU Law’ (2023) 6 Nordic Journal of European Law 75

Marjanac S and Patton L, ‘Extreme Weather Event Attribution Science and Climate Change Litigation: An Essential Step in the Causal Chain?’ (2018) 36 Journal of Energy and Natural Resources Law 265

Mayer B, ‘Obligations of conduct in the international law on climate change: A defence’ (2018) 27 RECIEL 130

‘The State of the Netherlands v. Urgenda Foundation: Ruling of the Court of Appeal of The Hague (9 October 2018)’ (2019) 8 Transnational Environmental Law 167

‘The Duty of Care of Fossil Fuel Producers for Climate Change Mitigation’ (2022) 11 TEL 407

Mayer B and Ding Z, ‘Climate Change Mitigation in the Aviation Sector: A Critical Overview of National and International Initiatives’ (2023) 12 TEL 14

Mayer B and Rajavuori M, ‘National Fossil Fuel Companies and Climate Change Mitigation under International Law’ (2016) 44 Syracuse J Int’l L & Com 55

Mayer C, ‘Shareholderism Versus Stakeholderism – A Misconceived Contradiction: A Comment on “The Illusory Promise of Stakeholder Governance,” By Lucian Bebchuk and Roberto Tallarita’ (2022) 106 Cornell Law Review 1859

McCorquodale R and others, ‘Human Rights Due Diligence in Law and Practice: Good Practices and Challenges for Business Enterprises’ (2017) 2 Business and Human Rights Journal 195

McDonnell B and others, ‘Green Boardrooms?’ (2021) 53 Connecticut Law Review 335

McFarland J, ‘Warming Up to Climate Change Risk Disclosure’ (2009) 14 Fordham Journal of Corporate & Financial Law 281

Mehmetaj L and Brunner K, ‘ESG and Fiduciary Duties of Investment Managers. Theoretical and practical bases for a modern interpretation of fiduciary duty under Swiss law’ (2021) 4 GesKR 441

Meinshausen M and others, ‘Greenhouse-Gas Emission Targets for Limiting Global Warming to 2°C’ (2009) 458 Nature 1158

Mercure J and others, ‘Macroeconomic Impact of Stranded Fossil Fuel Assets’ (2018) 8 Nature Climate Change 588

Millon D, ‘Radical Shareholder Primacy’ (2013) 10 U St Thomas LJ 1013

Minnerop P and Otto F, ‘Climate change and causation: joining law and climate science on the basis of formal logic’ (2020) 27 Buffalo J. Environ. Law 49

Mittwoch A-C and Bremenkamp FL, ‘The German Supply Chain Act – A Sustainable Regulatory Framework for Internationally Active Market Players?’ (2022) 122 Beiträge zum Transnationalen Wirtschaftsrecht 5

Monasterolo I, ‘Climate Change and the Financial System’ (2020) 12 Annual Review of Resource Economics 299

Monasterolo I and de Angelis L, ‘Blind to Carbon Risk? An Analysis of Stock Market Reaction to the Paris Agreement’ (2020) 170

Monciardini D, Mähönen JT and Tsagas G, ‘Rethinking Non-Financial Reporting: A Blueprint for Structural Regulatory Changes’ (2020) 10 Account. Econ. Law 1

Monti A and Martinez Romera B, ‘Fifty Shades of Binding: Appraising the Enforcement Toolkit for the EU’s 2030 Renewable Energy Targets’ (2020) 29 RECIEL 221

Mougeolle P, ‘Current Developments in Carbon & Climate Law Practitioner’s Perspective: A Brief Commentary on the French Total Climate Case’ (2020) 14 Carbon and Climate Law Review 128

Muchlinski P, ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ (2012) 22 Business Ethics Quarterly 145

Muriungi M, ‘Directors’ Duties and Climate Change in Africa: Evidence from Kenya, Nigeria and South Africa’ (2023) ex/ante Special Issue 65

Neder Cerezetti S and de Oliveira Junqueira G, ‘Brazilian Corporate Sustainability Regulation in the Green Transition: Missing the Forest for the Trees’ (2023) ex ante Special Issue 77

Ong D, ‘The Impact of Environmental Law on Corporate Governance: International and Comparative Perspectives’ (2001) 12 EJIL 685

Orts E and Strudler A, ‘The Ethical and Environmental Limits of Stakeholder Theory’ (2002) 12 Business Ethics Quarterly 215

Osofsky H and others, ‘Energy Re-Investment’ (2019) 94 Ind. L.J. 595

Pargendler M, ‘The Rise of International Corporate Law’ (2021) 98 Wash U. L. Rev. 1765

Parker C and Sheedy-Reinhard L, ‘Are Banks Responsible for Animal Welfare and Climate Disruption? A Critical Review of Australian Banks’ Due Diligence Policies for Agribusiness Lending’ (2022) 11 Transnational Environmental Law 603

Pearce P, ‘Duty to Address Climate Change Litigation Risks for Australian Energy Companies – Policy and Governance Issues’ (2021) 14 Energies 7838

Peel J, ‘Issues in Climate Change Litigation’ (2011) 1 Carbon & Climate Law Review 15

Peel J and Osofsky HM, ‘A Rights Turn in Climate Change Litigation?’ (2018) 7 Transnational Environmental Law 37

Peel J and Lin J, ‘Transnational Climate Litigation: The Contribution of the Global South’ (2019) 113 The American Journal of International Law 679

Persson L and others, ‘Outside the Safe Operating Space of the Planetary Boundary for Novel Entities’ (2022) 56 Environ. Sci. Technol. 1510

Quaas J and others, ‘Climate impact of aircraft-induced cirrus assessed from satellite observations before and during COVID-19’ (2021) 16 Environ. Res. Lett. 064051

Rajamani L, ‘The 2015 Paris Agreement: Interplay between Hard, Soft and Non-Obligations’ (2016) 28 Journal of Environmental Law 337

Rajavuori M, Savaresi A, and van Asselt H, ‘Mandatory Due Diligence Laws and Climate Change Litigation: Bridging the Corporate Climate Accountability Gap?’ (2023) 17 Regulation & Governance 944

Ramsay I and Webster M, ‘An Analysis of the use of Stepping Stones Liability against Company Directors and Officers’ (2021) 50 Australian Bar Review 168

Reisinger A and Clark H, ‘How Much Do Direct Livestock Emissions Actually Contribute to Global Warming?’ (2018) 24 Global Change Biology 1749

Ringsmuth K and others, ‘Lessons from COVID-19 for managing transboundary climate risks and building resilience’ (2022) 35 Climate Risk Management 100395

Rockström J and others, ‘A Safe Operating Space for Humanity’ (2009) 461 Nature 472

‘Safe and Just Earth System Boundaries’ (2023) 619 Nature 102

Roe M and Shapira R, ‘The Power of the Narrative in Corporate Lawmaking’ (2021) 11 Harv. Bus. L. Rev. 233

Rosen-Zvi I, ‘You Are Too Soft!: What Can Corporate Social Responsibility Do For Climate Change?’ (2011) 12 Minnesota Journal of Law, Science & Technology 234

Roshaan W, ‘Corporate (Non) Disclosure of Climate Change Information’ (2019) 119 Colum L Rev 1311

Rott P, ‘Directors’ Duties and Corporate Social Responsibility under German Law – Is Tort Law Litigation Changing the Picture?’ (2017) 1 Nordic Journal of Commercial Law 11

Ruggie J and Sherman JF, ‘The Concept of “Due Diligence” in the UN Guiding Principles on Business and Human Rights: A Reply to Jonathan Bonnitcha and Robert McCorquodale’ (2017) 28 European Journal of International Law 921

Ryggvik H, ‘A Short History of the Norwegian Oil Industry: From Protected National Champions to Internationally Competitive Multinationals’ (2015) 89 Business History Review 3

Sakerin S and others, ‘Spatial Distribution of Black Carbon Concentrations in the Atmosphere of the North Atlantic and the European Sector of the Arctic Ocean’ (2021) 12 Atmosphere 949

Salminen J and Rajavuori M, ‘Transnational Sustainability Laws and the Regulation of Global Value Chains: Comparison and a Framework for Analysis’ (2019) 26 Maastricht Journal of European and Comparative Law 602

‘Private International Law, Global Value Chains and the Externalities of Transnational Production: Towards Alignment?’ (2021) 12 Transnational Legal Theory 230

Savaresi A and Setzer J, ‘Rights-based litigation in the climate emergency: mapping the landscape and new knowledge frontiers’ (2022) Journal of Human Rights and the Environment 7

Scheltema M, ‘The Dutch International Responsible Business Conduct Agreements’ (2019) 4 Erasmus Law Review 6

Schulz K and Williamson P, ‘Gaining Competitive Advantage in a Carbon-constrained World: Strategies for European Business’ (2005) 23 European Management Journal 383

Seck S, ‘Climate Change, Corporate Social Responsibility, and the Extractive Industries’ (2018) 31 Journal of Environmental Law and Practice 271

‘A relational analysis of enterprise obligations and carbon majors for climate justice’ (2021) Oñati Socio-Legal Series: Climate Justice in the Anthropocene 11

Semieniuk G and others, ‘Stranded-fossil fuel assets translate to major losses for investors in advanced economies’ (2022) 12 Nature Climate Change 532

Semmelmayer P, ‘Climate Change and the German Law of Torts’ (2021) 22 German Law Journal 1569

Setzer J and Vanhala LC, ‘Climate Change Litigation: A Review of Research on Courts and Litigants in Climate Governance’ (2019) 10 Wiley Interdisciplinary Reviews: Climate Change 1

Sjåfjell B, ‘Internalizing Externalities in EU Law: Why Neither Corporate Governance nor Corporate Social Responsibility Provides the Answers’ (2009) 40 Geo Wash Int’l L Rev 977

‘Why Law Matters: Corporate Social Irresponsibility and the Futility of Voluntary Climate Change Mitigation’ (2011) 8 European Company Law 56

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Greenfield P, ‘Revealed: more than 90% of rainforest carbon offsets by biggest certifier are worthless, analysis shows’ (The Guardian online, 18 January 2023) <https://​www.theguardian.com/environment/2023/jan/18/revealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe>

Greenfield P and Jolly J, ‘BlackRock joins pressure group taking on biggest polluters’ (The Guardian online, 9 January 2020) <https://www.theguardian.com/en​viron​ment/2020/jan/09/blackrock-joins-pressure-group-taking-on-biggest-polluters>

Hodgson C, ‘The money behind the coming wave of climate litigation’ (Financial Times online, 5 June 2023) <https://www.ft.com/content/055e​f9f4-​5fb7-​4746-​bebd-7bfa00b20c82>

Kerber R, ‘BlackRock quits climate group as Wall Street lowers environmental profile’ (Reuters online, 10 January 2025) <https://www.reuters.com/sustainability/blackrock-quits-climate-group-wall-streets-latest-environmental-step-back-​2025-​01-09/>

Philipps M, ‘Exxon’s Board Defeat Signals the Rise of Social-Good Activists’ (NY Times online, 9 June 2021) <https://www.nytimes.com/2021/06/09/business/exxon-mobil-engine-no1-activist.html>

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Toscano N, ‘“Breakthrough moment”: Woodside investors revolt on climate change’ (Sydney Morning Herald online, 30 April 2020) <www.smh.com.au/business/companies/breakthrough-moment-woodside-investors-revolt-on-climate-change-​2020​0429-​p54oe8.​html>

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Volkswagen, ‘Volkswagen’s Supervisory Board asserts claims for damages against Prof. Martin Winterkorn and Rupert Stadler’ (Press Release, 26 March 2021) <https://​www.​volkswagen-newsroom.com/en/press-releases/volkswagens-supervisory-board-asserts-claims-for-damages-against-prof-martin-winter​korn-and-rupert-stadler-6916>

Wintershall Dea, ‘Climate lawsuit against Wintershall Dea withdrawn’ (Press Release, 26 November 2024) <https://wintershalldea.com/en/newsroom/climate-law​suit-against-wintershall-dea-withdrawn>

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WBCSD/WRI, The Greenhouse Gas Protocol. A Corporate Accounting and Reporting Standard (revised ed., 2004)

Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Supplement to the GHG Protocol Corporate Accounting and Reporting Standard (2011)

Other

Barker S, ‘Director’s Duties in the Anthropocene. Liability for Corporate Harm Due to Inaction on Climate Change’ (unpublished, 2013) <http://responsible-investmentbanking.com/wp-content/uploads/2014/11/Directors-Duties-in-the-Anthropocene-December-2013.pdf>

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Briggs C, ‘Climate Security, Risk Assessment and Military Planning’ (2012) 88 International Affairs 1049

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CCLI, ‘Climate Change Litigation – What Does It Mean for Board Directors?’ (2022) <https://commonwealthclimatelaw.org/wp-content/uploads/2022/06/CGI-CCLI-Quarterly-Update-1-Climate-Change-Litigation.pdf>

CDSB, CDSB Framework for reporting environmental and social information (2022) <https://www.ifrs.org/content/dam/ifrs/groups/cdsb/cdsb-framework-​2022.​pdf>

Client Earth, ‘Complaint to the Working Group Working Group on the issue of human rights and transnational corporations and other business enterprises and the Special Rapporteur on the Issue of Human Rights Obligations relating to the Enjoyment of a safe, clean, healthy and sustainable environment and JP Morgan, Citi, HSCB, SMBC, Crédit Agricole, Morgan Stanley, BNP Paribas, Goldman Sachs, Mizuho, Société Générale and EIG Global Energy Partners’ (2021) <https://​www.​client​earth.org/media/l44by31b/clientearth-complaint-concerning-saudi-arabian-oil-company.pdf>

‘Ostrołęka C: Energa’s and Enea’s Board Members’ Fiduciary Duties to the Companies and Shareholders’ (2018) <https://www.clientearth.org/latest/documents/ostroleka-c-energa-s-and-enea-s-board-members-fiduciary-duties-to-the-companies-and-shareholders/>

Danish Committee on Corporate Governance, ‘Danish Recommendations on Corporate Governance’ (2020, English version) <https://corporategovernance.dk/sites/default/files/media/anbefalinger_for_god_selskabsledelse_engelsk.pdf>

Fink L, ‘Letter to CEOs 2020’ (2020) <www.blackrock.com/corporate/investor-re​la​tions/larry-fink-ceo-letter>

Freshfields, ‘Shareholders requesting information about climate lobbying: Volkswagen is facing new kind of ESG-related claims’ (11 January 2023) <https://​sus​tain​abil​ity.freshfields.com/post/102i4xk/shareholders-requesting-information-about-climate-lobbying-volkswagen-is-facing>

GRI, GRI Standards <https://www.globalreporting.org/how-to-use-the-gri-stan​dards/gri-standards-english-language/>

Grimm P and Jan-Erik Schirmer, ‘Success Without Victory: Lliuya v. RWE Decided’ VerfBlog (1 June 2025) <https://verfassungsblog.de/lliuya-rwe-climate-judgment/>

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IFRS, IFRS S2 Climate-related Disclosures <https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-dis​clo​sures/#standard>

ISO, ‘IWA 42:2022: Net zero guidelines’ (2022) <https://www.iso.org/obp/ui/en/​#iso:​std:​iso:iwa:42:ed-1:v1:en>

International Sustainability Standards Board (ISSB), ‘ISSB confirms requirement to use climate-related scenario analysis’ (2022) <https://www.ifrs.org/news-and-events/news/2022/11/issb-confirms-requirement-use-climate-related-sce​nario-analysis/>

Johnston A and others, ‘Corporate Governance for Sustainability Statement’ (Harvard Law School Forum on Corporate Governance, 2019) <https://​corp​gov.​law.​harvard.edu/2020/01/07/corporate-governance-for-sustainability-statement/>

Kaminski I, ‘“Disturbing” rise in just transition lawsuits threatens to derail energy transition, plus news …’ (The Wave, 7 August 2024) <https://www.the-wave.net/disturbing-rise-just-transition-lawsuits-threatens-derail-energy-transition/>

Lehmen A, ‘The rise of ESG Law: In search of lost time’ (2021) Academia Letters <https://doi.org/10.20935/AL1906>

MacWilliams J, La Monaca S, and Kobus J, ‘PG&E: Market and Policy Perspectives on the First Climate Change Bankruptcy’ (2019) <https://energypolicy.columbia.edu/sites/default/files/file-uploads/PG&E-CGEP_Report_081419-3.pdf>

Metter J and Pugh C, ‘The Tipping Point? Climate Change and Directors’ Duties’ (Freshfields Bruckhaus Deringer LLP, 2019) <https://riskandcompliance.freshfields.com/post/102ft5x/the-tipping-point-climate-change-and-directors-duties>

Milieudefensie, ‘Why we’re taking our Shell Climate Case to the Supreme Court’ (11 February 2025) <https://en.milieudefensie.nl/news/why-we2019re-taking-our-shell-climate-case-to-the-supreme-court>

NASA, Carbon Dioxide <https://climate.nasa.gov/vital-signs/carbon-diox​ide/​?​intent​=​121>

NBIM, Exclusion Decisions and decisions to revoke exclusions, 2020 <https://​www.​nbim.no/en/the-fund/news-list/2020/exclusion-decisions-and-decisions-to-revoke-exclusion/>

NGFS, Guide to climate scenario analysis for central banks and supervisors (2020) <https://www.ngfs.net/system/files/import/ngfs/medias/documents/ngfs_​guide_​scenario_analysis_final.pdf>

Nieuwenkamp R, ‘Two secrets concerning a value chain approach to corporate climate change risk-management’ (OECD Insights, 2015) <https://​friends​of​the​oecd​guidelines.wordpress.com/2015/11/30/two-secrets-concerning-a-value-chain-approach-to-corporate-climate-change-risk-management/>

Norwegian Corporate Governance Board, ‘The Norwegian Code of Practice for Corporate Governance’ (2021, English version) <https://​nues.​no/wp-content/uploads/2021/10/2021-10-14-The-Norwegian-Code-of-Practice-for-Corporate-Gov​er​nance.pdf>

OHCHR, <https://spcommreports.ohchr.org/TmSearch/RelCom?code=SAU%203/2023>

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Ruggie J, Comments on Thun Group of Banks Discussion Paper on the Implications of UN Guiding Principles 13 & 17 in a Corporate and Investment Banking Context (Harvard Kennedy School, 2017) <https://media.business-humanrights.org/media/documents/files/documents/Thun_Final.pdf>

SBTi, SBTi Criteria and Recommendations (TWG-INF-002, Version 4.2 of April 2021) <https://sciencebasedtargets.org/resources/files/SBTi-criteria-legacy.pdf>

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Johnston A, ‘Climate-Related Financial Disclosures: What Next for Environmental Sustainability?’ (2018, University of Oslo Faculty of Law Legal Studies Research Paper Series No. 2018-02) <https://papers.ssrn.com/sol3/papers.​cfm?​abstract_​id=​3122​259>

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Miscellaneous

SEC, ‘Commission Guidance Regarding Disclosure Related to Climate Change’, 75 Fed. Reg 6290 (2010)

1

Introduction

Setting the Scene

Welcome to the Anthropocene

‘Nature always strikes back –
and it is already doing so with growing force and fury.’[1]

The ecological state of our planet is deeply alarming, and the projections for the coming decades and centuries are daunting. By not respecting planetary boundaries, we are collectively failing to maintain a safe operating space for ourselves and many other life forms on Earth.[2] One of the most serious consequences of this behaviour is anthropogenic (human-driven) climate change.

Climate change is not a recent discovery. In 1896, Swedish researcher Arrhenius published the first calculation of global warming from human emissions of carbon dioxide (CO₂).[3] High accuracy measurements of CO₂ concentration levels in the atmosphere were pioneered in 1958 by Keeling.[4] In the 1970s, direct atmospheric measurements discovered the increase of two other major greenhouse gases (GHGs), methane and nitrous oxide, as well as several entirely human-made and extremely potent GHGs (synthetic halocarbons), which had been produced by the chemical industry since about the 1930s.[5] By the mid-1980s, if not earlier, scientists reached an international consensus that GHGs play a central role in causing climate change.[6] Unprecedented concentrations of GHGs in the atmosphere are ‘extremely likely’ to have been the dominant cause of the temperature rise observed since the mid-twentieth century.[7] According to the United Nations’ body tasked with assessing the science related to climate change, the Intergovernmental Panel on Climate Change (IPCC), warming of the global climate is ‘unequivocal’ and human influence on the climate system is ‘clear’.[8] The rates of human-driven change at the global level by far exceed natural rates of change driven by geophysical or biospheric forces that have altered the atmosphere in the past.[9] In 2018, the threshold of 1°C of global warming above pre-industrial levels due to human activities was crossed.[10] At the beginning of the 2020s, the international scientific community acknowledged that 1.1°C of human-induced warming had been reached, causing ‘alarm and utmost concern’ as ‘impacts are already being felt in every region’.[11] 2024 was announced as the first year above 1.5°C relative to pre-industrial levels.[12] The overwhelming empirical evidence of the global scale and unprecedented rate of human impact on the Earth system suggests that we are currently leaving the current, stable geological epoch, the Holocene, and entering a new, unstable epoch: the Anthropocene.[13]

In the concept of the Anthropocene, climate change is only the tip of the iceberg: in addition to altering the carbon cycle,[14] humanity is significantly affecting other cycles fundamental to life on Earth such as the nitrogen, phosphorus, sulphur and water cycles and likely causing the sixth major species extinction event in Earth’s history.[15] The human species has become so large and active that it is competing with some of the great forces of nature, thus affecting the functioning of the Earth’s system.[16] The stability of the climate system is determined not only by the level of GHG emissions, but by a complex set of interactions between human activities and large-scale biological, geological and physical processes.[17] Further, terrestrial and marine carbon sinks that absorb and sequester CO₂ emissions (oceans, forests, wetlands, permafrost, etc) are essential for stabilising the climate system.[18]

Anthropogenic climate change is causing widespread adverse impacts on nature and people, disproportionately affecting vulnerable communities that have historically contributed the least to climate change.[19] With each increment of global warming, the risks and expected adverse impacts as well as related losses and damages caused by climate change escalate.[20] If climate change persists, large parts of the world are likely to become uninhabitable for many species, including humans, triggering mass migration.[21] Further, according to climate science, the effects of anthropogenic climate change are partly irreversible. Even if human-caused GHG emissions were to cease immediately, warming is projected to continue for centuries to millennia, locking in long-term changes in the climate system.[22] ‘Deep, rapid, and sustained’ reductions in GHG emissions are required for a discernible slowing of global warming within about two decades, thereby limiting (not fully reversing) the adverse impacts of anthropogenic climate change.[23] In in its sixth Assessment Report published in 2023, the IPCC reiterated the urgency of near-term action, stating that ‘(t)here is a rapidly closing window of opportunity to secure a liveable and sustainable future for all’.[24] Accordingly, it is still possible to avoid the worst possible scenarios of climate change, but only if decisive action is taken in the short term at multiple levels.

The Carbon Majors

Since its inception in the early 1990s, international climate change law and policy has focused on the rights and obligations of states, rather than those of private actors (below, II.A). However, GHG-emitting activities are typically conducted through the corporate form.[25] In fact, most GHGs do not result directly from the actions of states, but from the activities of companies (including state-controlled companies).[26]

The discovery and exploitation of fossil fuels as an energy-rich, transportable, and accessible source of energy played a key role in building industrialised markets.[27] But GHGs result from a broad spectrum of human activities, including deforestation, land use, agriculture, fertilisation, waste management, industrial processes, and fossil fuel extraction and combustion.[28] Notwithstanding the pervasiveness of relevant sources, it is feasible to identify a relatively limited number of corporate activities that emit at levels significantly above average. In a pioneering study published in 2014, Heede undertook a comprehensive quantification of the major share of industrial carbon dioxide (CO₂) and methane (CH₄) emissions produced since the onset of the Industrial Revolution.[29] The study traced these emissions to the leading producers of crude oil, natural gas, coal and cement. Based on an analysis of historical production data, the study shows that nearly two-thirds (63 per cent) of industrial CO₂ and CH₄ emissions from fossil fuel combustion and other sources (including flaring, venting, own fuel use and cement) produced between 1751 and 2010 can be attributed to as few as 90 entities, which Heede refers to as Carbon Majors.[30] During this period (1751 and 2010), these entities collectively emitted a total of 914 Gt of CO₂ equivalent (CO₂-eq).[31] Of the 90 Carbon Majors, 56 are crude oil and natural gas producers, 37 are coal extractors, and seven are cement producers.[32] Fifty of the Carbon Majors are ‘investor-owned’ entities[33] (responsible for 21.7 per cent of cumulative global industrial CO₂ and CH₄ emissions since 1751), 31 are ‘state-owned’ entities[34] (19.8 per cent), and nine are ‘nation-state entities’[35] (21.5 per cent).[36] Strikingly, half of all industrial CO₂ and methane emissions from fossil fuel combustion and cement production between 1751 and 2010 occurred after 1984; this steep increase coincided with the surge in emissions attributed to the Carbon Majors since the mid-1980s (below, Fig. 1).[37] Building on Heede’s research, a study published in 2017 estimated that the CO₂ and CH₄ emissions attributable to the 90 Carbon Majors contributed to roughly half of global surface temperature rise and about one-third of global sea level rise.[38]

[picture]

Fig. 1: Global and Carbon Major entities’ CO₂ and CH₄ emissions, 1850 to 2010[39]

It is evident that states play a significant role as investors in numerous fossil fuel companies, often assuming a position of control.[40] State control was a pivotal factor in the substantial expansion of coal, oil and gas throughout the twentieth century.[41] In fact, the vast majority of fossil fuel reserves and production are held by non-listed, state-controlled entities.[42] Not only because of their proven reserves, but more importantly because of their capacity and expressed intention to explore new sources of fossil fuels, investment decisions taken by fossil fuel companies (both private- and state-controlled) are crucial to the prospects for global efforts to limit climate change.[43] Nevertheless, while a significant proportion of industrial GHG emissions can be attributed to Carbon Majors, it is evident that other sectors which heavily rely on the utilisation of fossil fuels or otherwise generate substantial amounts of GHG emissions, such as through deforestation, contribute significantly to climate change as well (below, I.A.3).

Heede’s analysis of the entities responsible for production, encompassing both private and state-controlled entities, offers a novel perspective on the issue of responsibility for climate change. It constitutes an alternative to the conventional approach in the realm of international climate change law and policy, which has historically placed a predominant (if not exclusive) emphasis on states as consumers (below, II.A.1).[44] Given that most GHG-intensive activities are conducted through the corporate form, Heede’s approach is arguably a more accurate reflection of the way global business is conducted.

System Transitions

Accounting for about a third (~34 per cent) of all anthropogenic GHG emissions and with significant remaining fossil fuel reserves and expressed intention to exploit them, the (fossil fuel) energy sector plays a key role both in terms of historical contribution to as well as future climate change mitigation potential (above, I.A.2; below, Fig. 2). However, the other major producing sectors including industry (~24 per cent) agriculture, forestry, and other land use (AFOLU, ~22 per cent), transport (~15 per cent), and buildings (~6 per cent), all account for a substantial share of total GHG emissions (below, Fig. 2).

[picture]

Fig. 2: Trends in global GHG emissions by sector (IPCC)[45]

Research points to the mitigation potential within certain key sub-sectors, for instance, plastics production (accounting for ~4.5 per cent of total anthropogenic GHG emissions)[46] and animal agriculture (~14.5 per cent).[47] A 2021 study traced and quantified GHG emissions from industrial meat and dairy producers and found that in many countries these emissions account for a significant proportion of the country’s total GHG emissions.[48]

Adopted in 2015, the Paris Agreement sets a long-term temperature rise target of ‘well-below’ 2°C, or 1.5°C, respectively, recognising that achieving this target would significantly reduce the risks and impacts of climate change (Article 2(1)(a) Paris Agreement; below, II.A.1).[49] Translated to concrete action, the Paris Agreement’s temperature target requires reduction of global GHG emissions to net zero by around 2050 (below, II.B). To achieve the global transition to a global net zero economy, every major sector of the global economy must undergo a ‘rapid and far-reaching’ transformation.[50] These system transitions are ‘unprecedented in terms of scale, but not necessarily in terms of speed’.[51] In 2022, the IPCC stressed that in order to have a fair chance of meeting the Paris Agreement’s temperature target, immediate action is needed, including ‘rapid and deep and, in most cases, immediate GHG emission reductions in all sectors this decade’ (ie until 2030).[52] In addition to significant and rapid emission reductions and halting the destruction of carbon sinks, achieving climate change goals depends on the large-scale deployment of carbon dioxide removal (CDR).[53] Put simply, to avoid the most catastrophic climate change scenarios, humanity faces a massive collective task: the complete ‘decarbonisation’[54] of all major economic sectors within a generation.[55]

For each of the system transitions required to transform all major producing sectors of the economy, the IPCC identifies key actions:

Table 1: Key measures to achieve systems transitions by economic sector (IPCC)[58]

System | Key measures

Energy
Substantial reduction in overall fossil fuel use, use of carbon capture and storage (CCS)[56] for remaining fossil fuel use, use of low-emission energy sources, widespread electrification of the energy system, switch to alternative energy carriers, low-emission hydrogen, energy efficiency and conservation

Industry | Coordinated measures across value chains to promote all mitigation options including demand management, energy and materials efficiency, circular material flows, abatement technologies, CCS, changes in production processes
AFOLU | Changes to agricultural land management, afforestation and reforestation, intensification of land use practices, restoration of ecosystems, plant-based diets, reduction of food waste[57]
Transport | Electric vehicles powered by low-emission electricity, alternative fuels (eg sustainable biofuels, low-emission hydrogen)
Buildings | Construction and retrofitting of buildings with low-GHG design, implementation of sufficiency, efficiency, and renewable energy measures

While Table 1 is focused on the producing sectors, the financial sector also plays a key role in climate change mitigation. Aligning public and private financial flows with a low-GHG policy agenda is essential to achieving global climate targets, which is one of the three objectives of the Paris Agreement (Article 2(1)(c) Paris Agreement; below, II.A.1).[59] According to the IPCC, ‘(n)ear-term actions to shift the financial system over the next decade are critically important’, requiring ‘fast action … to ensure the readiness of the financial sector as an enabler of the transition’.[60]

A plethora of measures need to be taken at multiple levels and across all sectors (Table 1). And yet, achieving global temperature rise targets critically depends on the non-exploitation of large parts of currently proven fossil fuel reserves.[61] A pathway that offers a reasonable chance of achieving a 1.5°C temperature increase would require significant proportions of fossil fuel reserves to remain untapped; this would necessitate the retirement of fossil fuel infrastructure before the end of its technical lifetime.[62] In 2021, the IEA stressed that a key measure in the net zero trajectory is that no new unabated[63] coal power plants, no new oil and gas fields, and no new coal mines or mine expansions are approved for development.[64]

The reality contrasts sharply with the pathways needed to ensure that systemic change is achieved at the required pace. In the early 2020s, the world’s governments, in aggregate, planned to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting global temperature rise to 1.5°C.[65] Many states have pledged to reduce their GHG emissions and have set net-zero targets to achieve this goal (below, II.B.1.2), but none of the major producer countries have presented plans to reduce (or phase out) the production of fossil fuels.[66] In fact, based on current government plans, the production of coal, oil, and gas will further increase, peaking in 2030 for coal, and in 2050 for oil and gas (sic!).[67]

A ‘Super-wicked’ Problem: The Social Dimension

In social scientific research, climate change is described as a ‘super wicked’ policy problem that defies linear solutions.[68] Common wicked problems include security, healthcare, or poverty; in the literature on wicked problems, around 40 per cent of all contributions deal with climate change and environmental resource management.[69] The super-wickedness of climate change is caused by four exacerbating features: (i) time is running out to ‘solve’ it; (ii) the actors in a position to address the problem are also causing it; (iii) there is a lack of centralised governance; and (iv) irrational discounting (the phenomenon whereby future problems, however serious, are given much less attention than current problems, even if the latter are insignificant by comparison).[70]

It is widely accepted that humanity’s failure to adequately address climate change is one of the most serious global risks.[71] However, what should be done about climate change, by whom, how and when depends on the rationale for such action, which, depending on one’s view, can be based on climate science as well as economic or moral perspectives.[72] The level of climate change that is ‘acceptable’ is informed by climate science, but it is still a societal choice.[73]

The growing frustration in large parts of society with the general lack of ambition to mitigate climate change is reflected in global protest movements such as Fridays for Future and Extinction Rebellion.[74] Climate change is a major concern for most European citizens, especially for the younger generations.[75] What appears to be a growing collective will to take meaningful action to mitigate climate change is countered by strong resistance from influential political actors and industry.[76] Pushback against stronger action on climate change has gradually shifted from systematically casting doubt over climate science to the more subtle tactic of using ‘discourses of delay’. These discourses accept climate change as a fact but argue for inaction or minimal effort or action by others, while emphasising the negative social impacts of climate policy.[77] Furthermore, the narrative that action on climate change places a disproportionate burden on the economically weaker sections of society, as expressed in the ‘just transition’ debate, can be misused to undermine efforts to mitigate climate change.[78]

Corporate Environmentalism

Many large companies contribute significantly to environmental problems through their commercial activities, but they also have immense potential to help protect and restore the environment.[79] The salience of global environmental problems, not least that of climate change, has made business actors ‘increasingly hard to ignore’.[80] And yet, in a ‘fog of complexity’, it is easy for corporations, or rather for the individuals acting on their behalf, in particular company directors, to feel little personal responsibility.[81]

Corporations have been criticised for causing environmental problems since the 1960s.[82] Responding to this criticism, businesses began to engage with environmental challenges through corporate environmentalism.[83] This term refers to a rhetoric that promotes the ability of business to achieve both economic growth and ecological rationality, with an emphasis on voluntary control of environmental impacts beyond compliance with environmental laws and regulations.[84] Through corporate environmentalism, companies promote their environmental awareness with reference to typically ill-defined terms and labels (such as, in the context of climate change, carbon neutral, or climate friendly), voluntary initiatives and other, often mostly symbolic, acts of ‘good corporate citizenship’.[85] The phenomenon is evident in strategic marketing and public relations. For example, in 2018, the Norwegian state-controlled fossil fuel company Statoil was rebranded to ‘Equinor’ as part of a strategy to develop into a ‘broad energy company’ that would be ‘competitive also in a low-carbon future’.[86]

There are two different approaches to corporate environmentalism. The first argues that companies can improve their (financial) performance while mitigating environmental problems (‘win-win’).[87] The second argues that the corporate world generally fails to respect the natural environment except for situations where there is an immediate profit motive (or ‘business case’), leading to the conclusion that ultimately, companies cannot resolve the fundamental tensions within the market-environment conflict.[88] The second approach posits that through corporate initiatives, companies often portray themselves as environmentally responsible (when in fact they are not) in order to placate consumer concerns – a phenomenon referred to as ‘greenwashing’ – while at the same time seeking to prevent or delay the strengthening of environmental regulation through lobbying.[89] From this point of view, business practices that incorporate criticism by promoting voluntary activities can be seen as a distraction from the behavioural changes needed to address existential crises such as climate change.[90] Overall, while corporate environmentalism may have led to certain incremental changes such as increased sensitivity to environmental issues, narratives informed by cost–benefit driven business-as-usual narratives tend to prevail, suggesting significant gaps between corporate rhetoric and actual decision making.[91]

Corporate environmentalism is particularly apparent when it comes to complex environmental challenges with long-time horizons, such as climate change.[92] Through initiatives such as the Global Climate Coalition or the American Petroleum Institute, large corporations and trade associations long denied the existence of climate change.[93] Fossil fuel companies actively downplayed the growing evidence of climate change, despite having understood the impact of fossil fuels on the climate for some 50 years.[94] Similarly, the animal agriculture industry has obstructed efforts to encourage individual dietary changes.[95] In the 1990s, in parallel with efforts to address climate change at the level of international law, the concept of private climate governance emerged as an expression of predominantly voluntary efforts to address climate change (below, II.A). Arguably, corporate narratives of shifting to low-GHG technologies ‘have been a distraction from the central question of whether (carbon majors) will phase out exploration for, and extraction of, oil and gas’.[96] Today, many companies recognise the importance of addressing climate change in general terms, but typically link it to business success narratives.[97] Further, corporate strategies often fail to identify how, if at all, their climate change strategies will lead to actual reductions in GHG emissions.[98] Wright and Nyberg argue that this phenomenon is closely linked to how companies treat climate change as a business issue. An empirical study of five major Australian companies in different sectors over a ten-year period (2005–2015) found that companies initially framed climate change in broad terms and announced strong commitments, but through continuous critique of competing claims and reassessment, climate change concerns were eventually diluted and translated to fit dominant market discourses of ‘business as usual’ and the narrow profit motive.[99] This pattern is reminiscent of the case of British Petroleum (BP), which was criticised for returning to a business-as-usual ethos soon after rebranding as ‘Beyond Petroleum’ in 2000.[100]

Overall, given the dominance of short-term goals, the reliance on economic growth, as well as the lack of progress in reducing GHG emissions, companies appear ill-equipped to address climate change through voluntary corporate environmentalism.[101] For decades, environmental protection beyond mere compliance with technical environmental regulations has been framed in corporate narratives as being a matter of voluntary good corporate citizenship, thus separate from legal responsibility. In line with this narrative, climate change has long been downplayed in dominant legal and economic discourses as an ‘externality’ or ‘non-financial’ issue (below, II.B.2). However, in recent years, it has become widely acknowledged that climate change not ‘only’ entails a plethora of risks for people and the planet, but also foreseeable, material risks for corporations and even financial stability (below, III.A). This paradigm shift has implications for corporate environmentalism in that it challenges the concept of market-environment conflict. Moreover, regulation (below, II.B.2), investor scrutiny (below, II.C.3) and climate change litigation (below, II.B.4) are making it increasingly difficult, if not impossible, to view climate change as a matter of voluntary corporate environmentalism.

The Role of Directors

Given that most economic activity takes place through the corporate form, businesses play a crucial role both in the context of (collectively) causing and (collectively) mitigating climate change (above, I.A.3, I.A.5). This raises the question of which legal norms influence the decisions of companies and, crucially, the individuals acting on their behalf, and how these norms relate to climate change mitigation. This study is based on the hypothesis that the duty of care, a key legal norm governing the behaviour of corporate directors (below, I.C, III.B), potentially plays a crucial role in this context. Across jurisdictions, the board of directors is ultimately responsible for steering the company by setting its strategy and overseeing its operations with reasonableness and foresight in order to discharge the duty of care (below, III.B). Specific obligations for directors to address climate change being largely absent, the duty of care provides an ‘intermediary’ norm through which the goals of international climate change law may be incorporated into the core duties of the company board.

Research Question, Scope and Methodology

This section introduces the research question, which consists of an overarching research question (RQ) divided into five sub-RQs, defines the scope of the study, and explains the methodology used.

RQ: From a comparative and international perspective, does the duty of care in company law require company directors to address climate change risks and impacts?

The sub-RQs are as follows:

Table 2: Sub-Research Questions

Sub-RQ |  | See Chapter
1 | What is the normative regime governing the legal responsibilities of companies in relation to climate change and how is it operationalised? Which role does corporate law play in this context? | II
2 | How can the risks and impacts of climate change, as identified by climate science, be conceptualised in the context of corporate law? | III.A
3 | From a functional comparative corporate law perspective, what is the concept and content of the duty of care owed by directors? | III.B
4 | From a functional comparative corporate law perspective, what does the duty of care owed by directors entail specifically with respect to addressing climate change risks and impacts? | III.B, III.C

5
From an international perspective, expressed by three established standards (the UN Guiding Principles on Business and Human Rights, the OECD Guidelines on Multinational Enterprises on Responsible Business Conduct, and the TCFD Recommendations), what is the scope and content of climate change due diligence with respect to addressing climate change risks and impacts?
IV

| Summary of the Answers to the Sub-RQs | II.D (sub-RQ 1), V (sub-RQs 2–5)

The study explores an interdisciplinary and emerging area of research. It contributes to filling fundamental research gaps at the intersection of international climate change law, corporate law and the field of Responsible Business Conduct (RBC; below, I.C). Despite the obvious importance of business in both contributing to and mitigating climate change (above, I.A.2, I.A.3), the climate change-related obligations of companies have rarely been examined systematically in these three fields. In international climate change law, most of the academic legal research has focused on the responsibilities of states rather than those of corporations. In corporate law scholarship, climate change has been treated as a niche topic until recently.[102] Similarly, in the field of RBC, climate change has rarely been the subject of in-depth discussion.[103] Overall, it appears that international climate change law, corporate law and RBC have developed in their respective silos, and that academia has by and large neglected cross-cutting questions of corporate responsibility in relation to climate change. Indeed, ‘there has been little jurisprudence, litigation, or academic investigation of the overlaps among these three regimes’.[104] As a result, ‘the dynamics and the legal ramifications of corporate climate governance remain poorly understood’.[105]

Seeking to overcome silo thinking, this study is situated within the broader debate on establishing a sustainability-related analysis of corporate law as one of the ‘most dynamic and significant areas of law and policy in light of the convergence of crises that we as a global society face’.[106] Given the complexity of the subject matter and the many interrelationships between different relevant areas of law and legal systems, the study takes a comparative and international approach. The comparative dimension refers to the functional comparative method used in the core corporate law parts of the study (below, Ch. III.B, III.C). The international dimension refers to the contextualisation of the duty of care (as a key norm of corporate law) within the global ‘regime complex’ of climate change obligations (Ch. II) and the analysis of the duty of care from an international perspective, as expressed in this study by the UN Guiding Principles on Business and Human Rights (UNGP),[107] the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD GL)[108] and the Recommendations of the Task Force for Climate-related Financial Disclosures (TCFDR)[109] (Ch. IV).

The duty of care owed by directors is seen in this thesis as the legal norm through which the goals of climate change law can be linked to corporate law. The term ‘duty of care’ does not refer to a specific legal norm in any particular legal system, but rather to a legal concept that exists in a similar form across jurisdictions (below, III.B). Rather than focusing on a particular sector of the economy, the study adopts a sector-agnostic perspective. This choice is based on the fact that every major sector of the economy contributes substantially to anthropogenic climate change and requires a rapid system transition (above, I.A.3). In addition, the duty of care is a fundamental norm of company law that generally applies to directors of companies in all sectors. The responsibility of state-controlled enterprises (above, I.A.2) and their directors is not specifically addressed in this study.[110] Suffice it to say that the duty of care in national company is generally applicable also to directors of state-controlled companies.[111]

The main methodology used in this study is doctrinal analysis. Doctrinal analysis seeks to systematise and rationalise the law using the technique of deductive reasoning and argument by analogy.[112] The core company law parts of the study (III.B, III.C) use the specific method of functional comparison, as explained below in this section. In terms of the materials, the study draws on a wide range of legal resources and selectively uses non-legal literature from climate change science, climate change policy, business management and economics.

Sub-RQ 1: What is the normative regime governing the legal responsibilities of companies in relation to climate change and how is it operationalised? Which role does corporate law play in this context?

In order to analyse the duty of care in the context of climate change from a comparative and international perspective, it is first necessary to identify the broader normative regime. International climate change law does not provide for specific legal obligations directly applicable to companies or their directors. The duties of a company and its directors are therefore, at least prima facie, determined exclusively by national law and, in the case of directors, specifically by company law. However, in a highly interconnected global economy governed by complex normative structures that extend beyond the confines of state-based laws and regulations, the duties of companies and directors are influenced by a range of legal norms outside of domestic corporate law. These norms are dispersed throughout a fragmented regulatory landscape consisting of multiple levels of governance.

There is no comprehensive and coherent legal framework for corporate climate obligations. Instead, these obligations must be derived from a loosely coupled set of norms of varying legal nature, embodied at multiple levels of governance – national or international, public or private, ‘hard’ or ‘soft’.[113] The response to sub-RQ 1 will furnish a general overview of the ‘regime complex’ of corporate climate obligations, without focusing on any particular jurisdiction. This contextualisation serves to discern the broader normative network that informs the duty of care.

Sub-RQ 2: How can the risks and impacts of climate change, as identified by climate science, be conceptualised in the context of corporate law?

There is no universally applicable conceptualisation of climate risks and impacts. Climate change science has identified a wide range of climate change-related risks and impacts (meaning realised risks). However, the framing of climate risks and impacts in climate science is not congruent with the traditional notion of risk in corporate law, which focuses on risks to the company (outside-in perspective) rather than the impacts of corporate activities on people and the planet (inside-out perspective). Despite being informed by conventional conceptions of corporate risk, which are arguably ill-suited to deal with the unprecedented nature of climate change risks, the TCFDR provide a useful categorisation of climate change-related risks to, but also opportunities for, companies. In contrast, the UNGP and the OECD GL are focused on the impacts of a company’s activities on people and the planet (inside-out).

Sub-RQ 3: From a functional comparative corporate law perspective, what is the concept and content of the duty of care owed by directors?

Within the company, the company board, a central body that exists, in variations, in all modern legal systems, is chiefly responsible for setting the company’s strategy and overseeing its operations. A fundamental guiding norm for directors is the duty of care. Using the method of functional comparison, the answer to sub-RQ3 offers an evaluation of the concept and content of directors’ duty of care across jurisdictions.

Functional comparison is a specific type of comparative corporate law.[114] Rather than an exact method, functional comparison is a reasonably flexible methodical rule of thumb that allows the scholar plenty of creativity.[115] It is commonly based on the assumption that certain issues (eg, conflicts of interest) arise in any modern company law system and that, albeit expressed in different provisions, institutions and terminology, different company law systems have found similar ways to address these issues.[116] And yet, functional comparison does not inherently presuppose similarity, nor does it aim at harmonisation or unification; consequently, it allows the study of both similarities and differences.[117]

In lieu of conducting a ‘fully-fledged’ comparison between a given number of selected jurisdictions, the study examines functional equivalences. It does so by exploring how the duty of care is delineated in different legal systems, seeking to determine whether there is a common level of understanding.[118] The main resource used for this comparison is comparative corporate law literature. Jurisdictions that feature prominently in the body of literature identified are France, Germany, the UK, and the US (Delaware law is often used as a proxy for the US, as most large US companies are incorporated in that state),[119] but many other countries are also included.[120] To complement the comparative analysis, the study draws on the G20/OECD Principles of Corporate Governance,[121] which are regarded as expressing a common denominator across a broad range of jurisdictions.[122] Further, for the sake of argument or illustration, the study selectively uses country-specific literature (without providing a comprehensive account of the duty of care in any specific legal system).

This study generally avoids deference to broad and binary classifications of legal systems such as ‘the corporate law of common law countries’ versus that of civil law countries, countries with a one-tier board structure versus countries with a two-tier board structure, countries considered favourable to shareholder primacy versus those with a ‘pluralist stakeholder approach’, or Anglo-Saxon versus continental European corporate governance models.[123] Such classifications are problematic for functional comparisons because they overemphasise differences between categories and underemphasise differences within them.[124]

Functional comparison has inherent challenges and limitations. First, examining the duty of care from a comparative perspective is ‘particularly challenging’ due to terminological, linguistic, and conceptual differences between jurisdictions in the framing and formulation of directors’ duties.[125] Second, as in any comparative endeavour, the author may be biased towards those jurisdictions with which he is reasonably familiar (personal bias). Third, there is a risk of bias towards legal systems that are more prevalent in the body of literature considered (geographical bias).[126] In order to limit the influence of personal and geographical bias, this study relies on a substantial body of comparative research which, as a whole, covers a broad spectrum of jurisdictions. In addition, during the writing process, the author engaged with scholars from various jurisdictions to test the robustness of his hypotheses.

Sub-RQ 4: From a functional comparative corporate law perspective, what does the duty of care owed by directors entail specifically with respect to addressing climate change risks and impacts?

For the same reasons and with the same limitations as for sub-RQ 3, the methodological approach adopted to answer sub-RQ 4 is functional comparison. The assessment is primarily based on the (limited number of) existing comparative analyses of the issue of directors’ duties in the context of climate change. The comparative analyses considered included both bilateral[127] and multilateral[128] studies. The most frequently selected jurisdictions for comparison in these analyses were the US, the UK and Australia. To complement the limited amount of comparative research, the study draws on international guidance, namely the G20/OECD Principles of Corporate Governance, as well as, for the sake of argument or illustration, country-specific literature, which is (again) largely concentrated on the US,[129] the UK[130] and Australia.[131] Moreover, the study maps the limited body of case law pertaining to the interpretation of directors’ duties of care in the context of addressing climate risks and impacts, placing particular emphasis on the jurisdictions where such cases have already been brought at the time of writing (again, primarily the US, UK and Australia).

Sub-RQ 5: From an international perspective, expressed by three established standards (the UN Guiding Principles on Business and Human Rights, the OECD Guidelines on Multinational Enterprises on Responsible Business Conduct, and the TCFD Recommendations), what is the scope and content of climate change due diligence with respect to addressing climate change risks and impacts?

A comprehensive analysis of the duty of care in the context of the transboundary problem of climate change must reasonably include an international perspective. However, international law does not provide for specific climate change-related obligations for companies, arguably creating a regulatory gap. This gap could be addressed by applying the concept of risk-based due diligence, as set out in the UNGP and the OECD GL, to climate change. This approach underpins the emerging concept of climate change due diligence (CCDD).

There is now a broad international recognition that companies should bear responsibility for their adverse impacts on the climate. But the precise nature and content of this responsibility remain ambiguous and fraught with conceptual difficulties. As Kaufmann aptly puts it, ‘unanimity on business responsibility to respect fundamental moral and ethical values does not imply an agreement on its concrete content’.[132] The conceptual development of due diligence obligations in relation to climate change is an area of research that is still in its infancy.[133] Building on the concept of risk-based due diligence as established by the UNGP and the OECD GL, and further drawing on the TCFDR, this study advances the discourse on CCDD. It contends that the three selected standards, when considered collectively, offer substantial authority for the specification of corporate responsibility with regard to climate change. Ultimately, the aim of delineating the emerging contours of CCDD based on international guidance is to clarify what the duty of care of directors requires in the context of climate change.

This study does not provide a comprehensive account of the history of each of the three selected standards. Nor will it discuss their precise legal nature.[134] Rather, the study posits that the three standards are legitimate and persuasive sources providing the foundation upon which CCDD can be developed. In terms of materials, answering Sub-RQ 5 involves an analysis of the text of the three standards, supporting materials such as authoritative guidance documents and reports, and the specialised literature. Furthermore, the analysis draws on the emerging body of climate change litigation relevant to determining the contours of CCDD.

Terminology

This section sets out how certain key terms are used throughout this thesis.

(Anthropogenic) Climate Change: The IPCC defines climate change as the ‘change in the state of the climate that can be identified (eg by using statistical tests) by changes in the mean and/or the variability of its properties and that persists for an extended period, typically decades or longer’.[135] Climate change may be ‘due to natural internal processes or external forcings such as modulations of the solar cycles, volcanic eruptions and persistent anthropogenic changes in the composition of the atmosphere or in land use’.[136] Anthropogenic means ‘resulting from or produced by human activities’.[137] In comparison, Article 1 of the UN Framework Convention on Climate Change (UNFCCC)[138] defines climate change as the change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods.

Climate Change Mitigation: According to the IPCC, climate change mitigation is the human intervention to reduce GHG emissions or enhance sinks of GHGs.[139] A (carbon) sink is ‘(a)ny process, activity or mechanism which removes a (GHG), an aerosol or a precursor of a (GHG) from the atmosphere’.[140] Climate change mitigation mirrors the main causes of anthropogenic climate change: GHG emissions and the reduction of carbon sinks such as forests and wetlands.

Climate Change Risks and Impacts: See below, III.A.

Company/Corporation: The terms company and corporation are used interchangeably in this thesis, referring to the dominant legal form of conducting business characterised by the following four features: legal personality separate from shareholders, limited liability, transferable shares, and delegated management and decision-making under a board structure.[141] Some commentators add shared ‘ownership’ by contributors of equity capital as a fifth element.[142] Others convincingly reject the designation of shareholders as being the ‘owners’ of a corporation, arguing that shareholders merely ‘own’ a contract with the corporation, a share of stock, which carries (limited) rights.[143] Unless specified otherwise, the terms company and corporation are used interchangeably and understood in a broad sense, encompassing all business entities regardless of their structure, size, or composition of shareholders (private, state, or mixed).[144] With respect to the term Multinational Enterprise (MNE), see IV.A.3.2.1.

Corporate Board/Board of Directors: While terminology varies across jurisdictions, this study uses the terms ‘corporate board’ and ‘board of directors’ (or simply ‘board’) interchangeably to refer to the body of elected members entrusted with directing and overseeing the affairs of the company. Terms referring to the individual members of the board, including ‘members of the corporate board’, ‘directors’, and ‘company directors’, are considered equivalent and are used interchangeably (see below, III.B.1).[145]

Corporate Governance: There is no uniform definition of corporate governance, which is not a legal term in most jurisdictions.[146] The often-cited 1992 Cadbury Report describes corporate governance as ‘the system by which companies are directed and controlled’.[147] Direction and control are thus the two cornerstones of the corporate governance system.[148]

Corporate Responsibility (and Accountability): While there is no generally accepted definition of these terms, corporate responsibility commonly refers to the expectation that businesses consider the needs of the society in which they operate on the basis of internationally recognised values.[149] The related notion of corporate accountability generally refers to the way in which companies are responsive to stakeholder demands.[150] In the context of human rights, UN Special Representative on Business and Human Rights Ruggie defined corporate responsibility as ‘the legal, social, or moral obligations imposed on companies’, and accountability as ‘the mechanisms holding them to these obligations’.[151] While used inconsistently, the term ‘responsibility’ is prominently used in the concepts of Responsible Business Conduct (RBC) – a term commonly used by the OECD, encompassing both a social and an environmental dimension[152] – and Corporate Social Responsibility (CSR).[153] Views on the relationship between RBC and CSR differ.[154] In any case, corporate responsibility and accountability are commonly used in a sense that goes beyond legal responsibility stricto sensu, but may include it.

ESG: The acronym ESG stands for ‘environmental, social and governance’ issues. It was popularised, in a financial market context, by two UN-related reports published in 2004/2005.[155] Rather than a clear concept, ESG can generally be described as the idea that environmental, social and governance issues are a central element to the viability of a company, should be incorporated into its operations and considered in its investment decisions.[156]

Greenhouse Gases (GHGs): According to the IPCC, GHGs are ‘(g)aseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at specific wavelengths within the spectrum of radiation emitted by the Earth’s surface, by the atmosphere itself, and by clouds’, thereby causing the greenhouse effect.[157] The primary GHGs in the atmosphere are water vapour (H₂O), carbon dioxide (CO₂), nitrous oxide (N₂O), methane (CH₄) and ozone (O₃).[158] In addition, anthropogenic GHGs include sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs), chlorofluorocarbons (CFCs) and perfluorocarbons (PFCs).[159] Notably, several other substances contribute to the Earth’s greenhouse effect as well, for instance black carbon.[160] The potency of anthropogenic GHGs varies greatly, which is commonly accounted for by using the metric CO₂-equivalent (CO₂-eq).[161]

Structure

The structure of the remainder of the thesis is as follows.

Chapter II delineates the fragmented regime complex of corporate climate obligations. It begins by taking stock of the current state of international climate change law three decades after its inception (II.A.1). Next, it outlines the limitations of the state-centric approach in achieving tangible progress in climate change mitigation at the level of individual states and explains how this approach has effectively absolved corporations of their responsibilities within the global climate governance framework (II.A.2). The chapter proceeds to evaluate how international climate change law is implemented: through the concept of net zero as a reference point for state and non-state actors (II.B.1); national legislation and regulations (II.B.2); international standards (II.B.3); and litigation against states and companies (II.B.4). Against this backdrop, the chapter analyses the role of corporate law within the complex of corporate climate obligations, outlining the various approaches to climate change issues in corporate law scholarship, the importance of climate change reporting and the phenomenon of shareholder engagement on climate issues (II.C).

Chapter III undertakes a functional comparative analysis of the duty of care owed by directors in the context of climate change. First, the chapter provides an overview of the different conceptions of climate risk and impacts in various relevant domains, including climate science, international climate change law, enterprise risk management and RBC standards. Subsequently, it assesses the basic concept and content of the duty of care across jurisdictions, identifying its key elements in relation to addressing climate change risks and impacts (III.B). The chapter concludes with an examination of whether failure to adequately address the risks and impacts of climate change may amount to a breach of the duty of care, including a discussion of the emerging body of case law (III.C).

Chapter IV explores the emerging concept of Climate Change Due Diligence (CCDD), framing it as a key mechanism for defining the duty of care in climate-related contexts from an international perspective. The first section traces the origins of risk-based due diligence and examines its relevance to climate change (IV.A). The central part of the chapter analyses the six constitutive elements of CCDD (IV.B). Finally, the chapter assesses the avenues through which CCDD may be enforced, both through judicial mechanisms and extra-judicial processes (IV.C).

Chapter V concludes by summarising the key findings of the thesis.

António Guterres, ‘Secretary-General’s Address’ (Columbia University, New York, 2 December 2020) <https://www.un.org/sg/en/content/sg/statement/2020-12-02/sec​re​tary-generals-address-columbia-university-the-state-of-the-planet-scroll-down-for-language-versions>. All weblinks in this thesis were last accessed on 30 June 2024.

Johan Rockström and others, ‘A Safe Operating Space for Humanity’ (2009) 461 Nature 472 (identifying the following nine planetary boundaries: climate change, rate of biodiversity loss, interference with nitrogen and phosphorus cycles, stratospheric ozone depletion, ocean acidification, global freshwater use, land use changes, chemical pollution, and atmospheric aerosol loading). Many of these systems react in nonlinear ways and are particularly sensitive to certain threshold levels, which, if transgressed, could have ‘deleterious or potentially even disastrous consequences for humans’ (ibid). See also Will Steffen and others, ‘Planetary Boundaries: Guiding Human Development on a Changing Planet’ (2015) 347 Science 736 (finding that in 2015, humanity had already transgressed four planetary boundaries including climate change); Linn Persson and others, ‘Outside the Safe Operating Space of the Planetary Boundary for Novel Entities’ (2022) 56 Environ. Sci. Technol. 1510 (describing the transgression of a fifth planetary boundary, novel entities, which had been referred to as chemical pollution by Rockström and others). In 2023, Rockström and others found that seven of the eight ‘safe and just Earth system boundaries’ had already been exceeded (Rockström and others, ‘Safe and Just Earth System Boundaries’ (2023) 619 Nature 102).

Svante Arrhenius, ‘On the Influence of Carbonic Acid in the Air upon the Temperature of the Ground’ (1896) 41 Philosophical Magazine and Journal of Science 237.

Charles D. Keeling ‘The concentration and isotopic abundances of carbon dioxide in rural and marine air’ (1961) 24 Geochim. Cosmochim. Acta 277. These records enable scientists to separate fossil fuel emissions from those occurring in the natural annual cycle in the biosphere (IPCC, AR4. WG I (2007) 93, 100). Data needed to place concentrations of CO₂ and other GHGs before the late 1950ies into long-term perspective comes from analysis of the composition of air enclosed in bubbles in ice from Greenland and Antarctica, and air trapped in snowpack (ibid).

IPCC, AR4. WG I (2007) 93, 100.

Spencer R. Weart, The Discovery of Global Warming (Harvard University Press 2008, revised and expanded edn) 112–49.

IPCC, AR5. SYR: SPM (2014) 4–6. ‘Extremely likely’ means a likelihood of 95–100 per cent (ibid, 2).

ibid, 2. See also ibid, AR6. SYR: SPM (2023) 4; John Cook and others, ‘Consensus on Consensus: A Synthesis of Consensus Estimates on Human-caused Global Warming’ (2016) Environ. Res. Lett. 11 048002 <doi:10.1088/1748-9326/11/4/048002>.

IPCC, AR5. SYR: SPM (2014) 4; ibid, SR1.5 (2018) 54.

ibid, SR1.5. SPM (2018) 4. Pre-industrial refers to the period before large-scale industrial activity began around 1750. The IPCC’s reference period to approximate pre-industrial levels is 1850–1900 (ibid, SR1.5. Annex I: Glossary (2018) 556; ibid, AR6. SYR. Annex I: Glossary (2023) 124).

UNFCCC, Decision 1/CMA.3, Report of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement on its third session, held in Glasgow from 31 October to 13 November 2021. Addendum Part two: Action taken by the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement at its third session (8 March 2022), FCCC/PA/CMA/2021/10/Add.1 (Glasgow Climate Pact), recital 3. See also IPCC, AR6. SYR: SPM (2023) 4 (‘Human activities, principally through emissions of [GHGs], have unequivocally caused global warming, with global surface temperature reaching 1.1°C above 1850–1900 in 2011–2020’).

Emanuele Bevacqua, Carl-Friedrich Schleussner and Jakob Zscheischler, ‘A year above 1.5 °C signals that Earth is most probably within the 20-year period that will reach the Paris Agreement limit’ (2025) Nature Climate Change <https://doi.org/10.1038/s41558-025-02246-9>.

Paul J. Crutzen, ‘Geology of Mankind’ (2002) 415 Nature 23; see also IPCC, SR1.5 (2018) 54.

That is, ‘the flow of carbon (in various forms, for instance, as CO₂, carbon in biomass, and carbon dissolved in the ocean as carbonate and bicarbonate) through the atmosphere, hydrosphere, terrestrial and marine biosphere and lithosphere’ (IPCC, SR1.5. Annex I: Glossary (2018) 544).

Will Steffen and others, ‘The Anthropocene: Conceptual and Historical Perspectives’ (2011) 369 Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences 842, 843.

ibid.

Beatrice Crona, Carl Folke and Victor Galaz, ‘The Anthropocene Reality of Financial Risk’ (2021) 4 One Earth 618, 619.

ibid.

IPCC, AR6. SYR: SPM (2023) 15–16.

ibid, 14.

Chi Xu and others, ‘Future of the Human Climate Niche’ (2020) 117 PNAS 11350.

IPCC, SR1.5. SPM (2018) 5.

ibid, AR6. SYR: SPM (2023) 12–18.

ibid, 24.

Mikko Rajavuori, ‘The Role of Non-State Actors in Climate Law’, in Benoit Mayer and Alexander Zahar (eds), Debating Climate Law (CUP 2021) 379, 383–84.

Benoit Mayer and Mikko Rajavuori, ‘National Fossil Fuel Companies and Climate Change Mitigation under International Law’ (2016) 44 Syracuse J Int'l L & Com 55, 56.

Steffen and others, The Anthropocene (n 15) 848.

IPCC, SR1.5. Annex I: Glossary (2018) 541, 543.

Richard Heede, ‘Carbon Majors: Accounting for carbon and methane emissions 1854–2010. Methods & Results Report’ (Climate Accountability Institute 2014) <https://​climate​ac​countability.org/publications.html> (‘Carbon Majors Report’; using data retrieved from annual reports, company websites, and other publicly available sources dating from as early as 1854 to 2010); ibid, ‘Tracing Anthropogenic Carbon Dioxide and Methane Emissions to Fossil Fuel and Cement Producers, 1854–2010’ (2014) 122 Climatic Change 229, 231. See further ibid, ‘Carbon Majors: Updating activity data, adding entities & calculating emissions: A Training Manual’ (Climate Accountability Institute 2019) <https://​climate​ac​countability.org/pdf/TrainingManual CAI 30Sep19lores.pdf>.

ibid. Instead of ‘Carbon Majors’ but referring to largely the same type of corporate emitters, some authors use equivalent terms such as ‘fossil-fuel companies’ (Mayer and Rajavuori, National Fossil Fuel Companies (n 26) or ‘Systematically Important Carbon Emitters’ (SICEs) (John Armour, Luca Enriques, and Thom Wetzer, ‘Mandatory Corporate Climate Disclosures: Now, but How?’ (2021) 3 Columbia Business Law Review 1085, 1139).

Heede, Tracing Anthropogenic Emissions (n 29) 231, 238.

ibid, 231 (meaning that some entities fall within more than one category). Mergers and acquisitions of carbon major entities were accounted for by attributing past emissions to the respective (new or further existing) entity (Heede, Carbon Majors Report (n 29) 5).

For example, Chevron, ExxonMobil, BP, Royal Dutch Shell, Total, RWE, Rio Tinto, BHP Billiton. Note that referring to shareholders as being the ‘owners’ of a company is incorrect as a matter of corporate law and thus misleading (below, I.C).

For example, Saudi Aramco, Gazprom, National Iranian Oil Company, Pemex, British Coal and Statoil (today Equinor).

For example, the former Soviet Union, China and Poland.

Heede, Tracing Anthropogenic Emissions (n 29) 231–33 (explaining that due to various conservatisms and caveats, including that not all relevant data was publicly available or accurate, the study ‘underreports fossil fuels and cement production compared to the actual history of production by nearly all of the carbon majors’); Heede, ‘Carbon Majors Report’ (n 29) 29–33.

Heede, Tracing Anthropogenic Emissions (n 29) 234; ibid, Carbon Majors Report (n 29) 7.

Brenda Ekwurzel and others, ‘The Rise in Global Atmospheric CO₂, Surface Temperature, and Sea Level from Emissions Traced to Major Carbon Producers’ (2017) 144 Climatic Change 579, 585–6.

Heede, Tracing Anthropogenic Emissions (n 29) 234.

Mayer and Rajavuori, National Fossil Fuel Companies (n 26).

ibid, 58; see also Richard Heede and Naomi Oreskes, ‘Potential Emissions of CO₂ and Methane from Proved Reserves of Fossil Fuels: An Alternative Analysis’ (2016) 36 Global Environmental Change 12. See, for instance, the history of the state-controlled company Equinor (previously Statoil) in Norway (Helge Ryggvik, ‘A Short History of the Norwegian Oil Industry: From Protected National Champions to Internationally Competitive Multinationals’ (2015) 89 Business History Review 3).

In 2013, only 7.1 per cent of oil reserves and 6.6 per cent of natural gas reserves were held by ‘investor-owned’ enterprises (Heede and Oreskes, Potential Emissions (n 41) 19).

ibid. Heede goes as far as to say that ‘together with profit motives and tax and regulatory incentives to discover and produce new fossil fuel reserves, (carbon majors) hold the key to future fossil fuel production and emissions … and thus, arguably, the future of the planetary climate system’ (Heede, Tracing Anthropogenic Emissions (n 29) 238).

Heede, Tracing Anthropogenic Emissions (n 29) 231 (suggesting that ‘some degree of responsibility for both cause and remedy for climate change rests with ‘carbon majors’, that is, those entities that have extracted, refined, and marketed the preponderance of the historic carbon fuels’). See further, ibid, ‘The Evolution of Corporate Accountability for Climate Change’ in César Rodríguez-Garavito (ed), Litigating the Climate Emergency: How Human Rights, Courts, and Legal Mobilization Can Bolster Climate Action (CUP 2022) 239.

IPCC, AR6. WG III (2022) 238.

Livia Cabernard and others, ‘Growing Environmental Footprint of Plastics Driven by Coal Combustion’ (2021) 5 Nature Sustainability 139.

Pierre Gerber and others, ‘Tackling climate change through livestock: A global assessment of missions and mitigation opportunities. Food and Agriculture Organization’ (FAO 2013) <http://www.fao.org/docrep/018/i3437e/i3437e.pdf> 15. According to a 2018 study, direct livestock emissions account for 23 per cent of global warming (Andy Reisinger and Harry Clark, ‘How Much Do Direct Livestock Emissions Actually Contribute to Global Warming?’ (2018) 24 Global Change Biology 1749). See further, Oliver Lazarus, Sonali McDermid and Jennifer Jacquet, ‘The Climate Responsibilities of Industrial Meat and Dairy Producers’ (2021) 165 Climatic Change 1; Daina Bray and Thomas M. Poston, ‘The Methane Majors: Climate Change and Animal Agriculture in US Courts’ (2024) 49 Columbia Journal of Environmental Law 145.

Lazarus, McDermid, and Jacquet (n 47) 30 (eg Brazil (27.8 per cent), Denmark (68.3 per cent), France (11.3 per cent), the Netherlands (17.4 per cent), New Zealand (74.3 per cent), or Switzerland (48.5 per cent)).

Paris Agreement, 12 December 2015, in force 4 November 2016, 330 UNTS 3; . The Paris Agreement was ratified rapidly by a sufficient number of parties (55) accounting for a sufficient part of global GHG emissions (more than 55%) and entered into force on 4 November 2016 (Article 21(1) Paris Agreement).

IPCC, SR1.5. SPM (2018) 15, 17.

ibid, 15. Swift energy transitions have been achieved in the past, yet only during short periods and in selected countries, for instance in the Netherlands (for natural gas) and Denmark (for wind power), see Vaclav Smil, ‘Examining Energy Transitions: A Dozen Insights Based on Performance’ (2016) 22 Energy Research and Social Science 194.

IPCC, AR6. SYR: SPM (2023), 20 (emphasis added).

ibid, AR6. WGIII: SPM, 36. CDR are ‘(a)nthropogenic activities removing [CO₂] from the atmosphere and durably storing it in geological, terrestrial, or ocean reservoirs, or in products’ (IPCC, AR6. SYR. Annex I: Glossary (2023), 121).

The term ‘carbon’ is misleading in this context, because not all GHG emissions contain carbon (below, I.C).

In 2019, the European Commission described ‘tackling’ climate and environmental-related challenges as ‘this generation’s defining task’ (The European Green Deal (11 December 2019) COM(2019) 640 final, 2).

Defined as the ‘process in which a relatively pure stream of [CO₂] from industrial and energy-related sources is separated (captured), conditioned, compressed and transported to a storage location for long-term isolation from the atmosphere’ (IPCC, AR6. SYR. Annex I: Glossary (2023), 121)

See Ciniro Costa Jr and others, ‘Roadmap for achieving net-zero emissions in global food systems by 2050’ (2022) 12 Sci Rep 15064 <https://doi.org/10.1038/s41598-022-18601-1>. An IPCC report of 2019 states that ‘(b)alanced diets, featuring plant-based foods, such as those based on coarse grains, legumes, fruits and vegetables, nuts and seeds … present major opportunities for adaptation and mitigation while generating significant co-benefits in terms of human health’ (IPCC, Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems: SPM (2019), B.6.2).

IPCC, SR1.5. SPM (2018), 15-16; ibid, AR6, WG III: SPM (2023), 32–38.

Article 2(1)(c) Paris Agreement sets the objective of making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. On the role of the financial sectors, see Irene Monasterolo, ‘Climate Change and the Financial System’ (2020) 12 Annual Review of Resource Economics 299, 300; Florian Manuel Egli, ‘The role of finance in mitigating climate change: Insights for public policy’ (ETH Zurich 2020) <https://doi.org/10.3929/ethz-b-000424913>.

IPCC, AR6. WG III (2022) 1579.

See Malte Meinshausen and others, ‘Greenhouse-Gas Emission Targets for Limiting Global Warming to 2°C’ (2009) 458 Nature 1158; Harro van Asselt, ‘Governing Fossil Fuel Production in the Age of Climate Disruption: Towards an International Law of “Leaving It in the Ground”’ (2021) 9 Earth System Governance 100118; Carbon Tracker Initiative, ‘Unburnable Carbon – Are the World’s Financial Markets Carrying a Carbon Bubble?’ (2011) <https://carbontracker.org/reports/carbon-bubble/> 2.

Dan Welsby and others, ‘Unextractable Fossil Fuels in a 1.5°C World’ (2021) 597 Nature 230 (estimating that a 50 per cent probability to achieve the 1.5°C target requires that 58 per cent of oil, 59 per cent of fossil methane gas and 89 per cent of coal reserves must not be exploited by 2050); Thomas Spencer and others, ‘The 1.5°C Target and Coal Sector Transition: At the Limits of Societal Feasibility’ (2018) 18 Climate Policy 335.

That is, consumption of fossil fuels in facilities not equipped with CCUS (carbon capture, utilisation and storage).

IEA, ‘Net Zero by 2050: A Roadmap for the Global Energy Sector’ (IEA, 2021) <www.iea.org/reports/net-zero-by-2050> 20, 23. In 2012, the International Energy Agency (IEA) stated that without widespread deployment of CCS technology, no more than one-third of proven fossil fuel reserves can be used by 2050 to stay below 2°C of global warming, leaving two-thirds unexploited (IEA, World Energy Outlook (IEA, 2012)).

Stockholm Environment Institute and others, ‘The Production Gap: Phasing down or phasing up? Top fossil fuel producers plan even more extraction despite climate promises’ (2023) <https://doi.org/10.51414/sei2023.050> 2.

ibid.

ibid, 4–5.

Eg Kelly Levin and others, ‘Overcoming the Tragedy of Super Wicked Problems: Constraining Our Future Selves to Ameliorate Global Climate Change’ (2012) 45 Policy Sciences 123.

Thomas Danken, Katrin Dribbisch and Anne Lange, ‘Studying Wicked Problems Forty Years On: Towards a Synthesis of a Fragmented Debate’ (2016) 9 der moderne staat – Zeitschrift für Public Policy, Recht und Management 15, 20).

Levin and others (n 68) 127–29.

Eg World Economic Forum (WEF), The Global Risks Report 2024 (19th edn, WEF 2024) <https://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2024.pdf>.

See Benoit Mayer, The International Law on Climate Change (CUP 2018) 19–31. Moral perspectives include the concepts of corrective justice (the principle that a person has a duty to remedy harm caused to others, as reflected in law in criminal responsibility and tort, or the customary international law of state responsibility), distributive justice (relating to the distribution of goods among individuals and states), intergenerational justice (relating to the duties of present generations to future generations), and environmental justice (relating to humanity’s relationship with the environment and other forms of life as well as whole ecosystems, which are seen as having not only an instrumental but also an intrinsic value worthy of protection (ibid, 27–31).

Sam Fankhauser and others, ‘The Meaning of Net Zero and How to Get It Right’ (2021) 12 Nature Climate Change 15.

Eg Luke Kemp and others, ‘Climate Endgame: Exploring catastrophic climate change scenarios’ (2022) 34 PNAS 1 <https://doi.org/10.1073/pnas.2108146119>.

European Commission, ‘Special Eurobarometer 513. Climate Change’ (2021) <https://​europa.​eu/eurobarometer/surveys/detail/2273> 7); Caroline Hickman and others, ‘Climate anxiety in children and young people and their beliefs about government responses to climate change: a global survey’ (2021) 5 Lancet Planet Health 863.

Eg Axel Michaelowa, Myles Allen, and Fu Sha, ‘Policy Instruments for Limiting Global Temperature Rise to 1.5°C – Can Humanity Rise to the Challenge?’ (2018) 18 Climate Policy 275, 277; Naomi Oreskes and Erik M. Conway, Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming (Bloomsbury 2010).

William F. Lamb and others, ‘Discourses of Climate Delay’ (2020) 3 Global Sustainability 17.

Raphael J. Heffron and Darren McCauley, ‘The “Just Transition” Threat to our Energy and Climate 2030 Targets’ (2022) 165 Energy Policy 112949.

Elisa Morgera, Corporate Environmental Accountability in International Law (2nd edn, OUP 2020) 3.

Liliana B. Andonova, Michele M. Betsill, and Harriet Bulkeley, ‘Transnational Climate Governance’ (2009) 9 Global Environmental Politics 52, 54.

A. Larry Elliot and Richard J. Schroth, How Companies Lie: Why Enron is Just the Tip of the Iceberg (Nicholas Brealey Publishing 2002).

Andrew J. Hoffman, From Heresy to Dogma – An Institutional History of Corporate Environmentalism (Stanford University Press 2002).

See eg Christopher Wright and Daniel Nyberg, ‘An Inconvenient Truth: How Organizations Translate Climate Change into Business as Usual’ (2017) 60 The Academy of Management Journal 1633, 1634. Benjamin distinguishes between a first (1972–1992) and a second phase (1992–2015) of corporate environmentalism (Lisa Benjamin, Companies and Climate Change. Theory and Law in the United Kingdom (CUP 2021) 82–87).

See Wright and Nyberg, Inconvenient Truth (n 83) 1635, with further reference.

Frances Bowen, After Greenwashing: Symbolic Corporate Environmentalism and Society (CUP 2010) 3.

Equinor, ‘Statoil to change name to Equinor’ (Press Release, 2018) <https://​www.​equinor.​com/news/archive/15mar2018-statoil>. See Beate Sjåfjell, ‘Sustainable Value Creation in the Land of Oil and Honey? The Corporate Governance Role of the Norwegian State’ in Beate Sjåfjell and Jukka Mähönen (eds), Nordic Company Law: Broadening the Horizon (Scandinavian University Press 2023) 241.

See Wright and Nyberg, Inconvenient Truth (n 83) 1635–36, with further reference.

ibid 1636, with further reference; Rory Sullivan and Andy Gouldson, ‘The Governance of Corporate Responses to Climate Change: An International Comparison’ (2017) 26 Bus. Strat. Env. 413 (stating that ‘specific actions that are taken by companies – in particular those that require significant capital investments – are constrained by the ‘business case’ … companies will generally only invest capital in situations when there is a clear financial case … for action’).

Wright and Nyberg, Inconvenient Truth (n 83) 1636; see also Beate Sjåfjell, ‘Why Law Matters: Corporate Social Irresponsibility and the Futility of Voluntary Climate Change Mitigation’ (2011) 8 European Company Law 56, 59; Robert J. Brulle, ‘The Climate Lobby: A Sectoral Analysis of Lobbying Spending on Climate Change in the USA, 2000 to 2016’ (2018) 149 Climatic Change 289; IPCC, AR6. WG III (2023), para. 5.4.3.

Wright and Nyberg, Inconvenient Truth (n 83) 1636.

See Morgera (n 79) 7.

Wright and Nyberg, Inconvenient Truth (n 83) 1634.

Report of the Special Rapporteur on extreme poverty and human rights, Climate change and poverty, A/HRC/41/39 (22 October 2019), paras 34–36.

Eg Kathy Mulvey and Seth Shulman, ‘The Climate Deception Dossiers. Internal Fossil Fuel Industry Memos Reveal Decades of Corporate Disinformation’ (Union of Concerned Scientists 2015) <https://www.ucsusa.org/sites/default/files/attach/2015/07/The-Climate-Deception-Dossiers.pdf>; Geoffrey Supran and Naomi Oreskes, ‘Assessing ExxonMobil’s Climate Change Communications’ (2017) 12 Environmental Research Letters 084019.

Loredana Loy and Jennifer Jacquet, ‘The Animal Agriculture Industry’s Obstruction of Campaigns Promoting Individual Climate Action’ (2025) Climate Policy 1 <https://doi.org/10.1080/14693062.2025.2460603>.

Dario Kenner and Richard Heede, ‘White Knights, or Horsemen of the Apocalypse? Prospects for Big Oil to Align Emissions with a 1.5°C Pathway’ (2021) 79 Energy Research and Social Science 102049, 1.

Lisa Benjamin, ‘The Responsibilities of Carbon Major Companies: Are They (and Is the Law) Doing Enough?’ (2016) 5 Transnational Environmental Law 353, 375.

ibid 373 (stating that ‘[t]here seems to be no concrete connection between CSR initiatives and activities which might direct, or cause, GHG emissions’).

Wright and Nyberg, Inconvenient Truth (n 83) 1634.

Christopher Wright and Daniel Nyberg, Climate Change, Capitalism, and Corporations. Processes of Creative Self-Destruction (CUP 2015) 50–51.

Wright and Nyberg, Inconvenient Truth (n 83) 1634; Kenner and Heede, White Knights (n 96) 1 (arguing that ‘it is unlikely that executives and directors at [carbon majors] will decide to proactively decarbonise in line with climate science’).

One of the most important exceptions to this is Benjamin (Benjamin, Companies and Climate Change (n 83)). On the relationship between sustainability and company law more broadly, see the multi-jurisdictional comparative analysis in Beate Sjåfjell and others, ‘Shareholder Primacy: The Main Barrier to Sustainable Companies’ in Beate Sjåfjell and Benjamin J. Richardson (eds), Company Law and Sustainability: Legal Barriers and Opportunities (CUP 2015) 79, and other work by Sjåfjell cited in this thesis.

Eg Surya Deva, ‘From “Business or Human Rights” to “Business and Human Rights”: What Next?’ in Surya Deva and David Birchall (eds), Research Handbook on Human Rights and Business (Edward Elgar 2020) 1, 21. Among the few exceptions, see, Sara L. Seck, ‘Climate Change, Corporate Social Responsibility, and the Extractive Industries’ (2018) 31 Journal of Environmental Law and Practice 271, and other work by this author cited in this thesis.

Benjamin, Companies and Climate Change (n 83) 171.

Rajavuori, The Role of Non-State Actors (n 25) 387–88.

Beate Sjåfjell and Christopher M. Bruner, ‘Corporations and Sustainability’ in Beate Sjåfjell and Christopher M. Bruner (eds), The Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (CUP 2020) 3. Sjåfjell and Bruner define sustainability as ‘a state where the needs of the present generation are met while safeguarding Earth’s life-support system, on which the welfare of current and future generations depends’ (ibid, 4, with reference to David Griggs and others, ‘Policy: Sustainable Development Goals for People and Planet’ (2013) 495 Nature 305–307). See generally Beate Sjåfjell, Towards a Sustainable European Company Law. A Normative Analysis of the Objectives of EU Law, with the Takeover Directive as a Test Case (Wolters Kluwer 2009); Beate Sjåfjell, Sarah Cornell, and Tiina Häyhä, ‘Sustainability and Agenda’ (2023, University of Oslo Faculty of Law Research Paper No. 2023-05, Nordic & European Company Law Working Paper No. 23-08) <https://ssrn.com/abstract=4533509>.

Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’, Annex to UNHRC, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie, A/ HRC/17/31 (21 March 2011) (‘UNGP’).

OECD Guidelines for Multinational Enterprises, contained in OECD Declaration on International Investment and Multinational Enterprises, C(76)99/FINAL (21 June 1976).

Task Force on Climate-related Financial Disclosures (TCFD), ‘Final Report – Recommendations of the Task Force on Climate-related Financial Disclosures’ (2017) <https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Report-062817.pdf> (TCFD, Final Report).

On the role of state control in global climate governance, see the work of Rajavuori (cited in this study).

Arguably, there is even a direct emphasis on to serving the public interest (and thus the public interest in limiting climate change) for directors of state-controlled companies. See eg OECD, OECD Business and Finance Outlook 2020: Sustainable and Resilient Finance (OECD Publishing 2020) <https://www.oecd.org/en/publications/oecd-business-and-finance-outlook-2020_eb61fd29-en.html> 148. See also below, IV.C.3.

Caroline Morris and Cian Murphy, Getting a PhD in Law (Hart 2011) 30–31.

See Rajavuori, The Role of Non-State Actors (n 25) 383.

Mathias Siems, ‘The Methods of Comparative Corporate Law’ in Roman Tomasic (ed), Routledge Handbook of Corporate Law (Routledge 2017) 13, 23–24; Jaako Husa, Introduction to Comparative Law (2nd edn, Hart 2023) 122–32.

Husa (n 114) 129. Husa further states that functional comparison is a ‘rough methodological perception model for a study setting and nothing else … (s)lavish and straightforward implementation of functionalism involves serious risk’ (ibid, 130).

See John Armour and others, ‘What is Corporate Law?’ in Reinier Kraakman and others (eds), The Anatomy of Corporate Law. A Comparative and Functional Approach (3rd edn, OUP 2017) 4; Husa (n 114) 124.

Husa (n 114) 128 (adding that the comparatist ‘cannot decide in advance what their study will reveal’).

ibid 124; Armour and others, What is Corporate Law (n 116) 4.

David Cabrelli and Matthias Siems, ‘A Case-Based Approach to Comparative Company Law’ in Matthias Siems and David Cabrelli (eds), Comparative Company Law. A Case-Based Approach (2nd edn, Hart 2018) 6–7.

Andreas M. Fleckner and Klaus J. Hopt (eds), Comparative Corporate Governance. A Functional and Comparative Analysis (CUP 2013) (drawing on country reports covering a broad range of jurisdictions); Kraakman and others, The Anatomy of Corporate Law (n 116) (comparing mainly Brazil, France, Germany, Italy, Japan, the UK, and the US); Carsten Gerner-Beuerle and Edmund Philipp Schuster, ‘Mapping Directors Duties: Strategies and Trends in the EU’ in Hanne Birkmose, Mette Neville and Karsten Engsig Sørensen (eds), Boards of Directors in European Companies (Wolters Kluwer 2013) 13 (comparing all EU member states); Mathias Siems and David Cabrelli (eds), Comparative Company Law. A Case-Based Approach (2nd ed, Hart 2018) (comparing Germany, France, the UK, Spain, Poland, Finland, Latvia, the Netherlands, the US, Japan and South Africa); Carsten Gerner-Beuerle and Michael Anderson Schillig, Comparative Company Law (OUP 2019) 465 (comparing Germany, France, the UK and the US); Carsten Gerner-Beuerle, ‘The Duty of Care and the Business Judgment Rule: A Case Study in Legal Transplants and Local Narratives’ in Afra Afsharipour and Martin Gelter (eds), Comparative Corporate Governance (Edward Elgar 2021) 220 (comparing Germany, France, the UK and the US). See further, the sources cited below in Ch. III.B.

OECD, G20/OECD Principles of Corporate Governance 2023 (OECD Publishing 2023).

The G20/OECD Principles of Corporate Governance claim to be ‘the main international benchmark for good corporate governance’ (ibid, Preface).

Siems, Methods of Comparative Corporate Law (n 114) 17–18; Armour and others, What is Corporate Law (n 116) 3.

Siems, Methods of Comparative Corporate Law (n 114) 18.

See Javier Solana, ‘Climate Litigation in Financial Markets: A Typology’ (2020) 9 Transnational Environmental Law 103, 126–27.

The same dilemma is expressed in Gerner-Beuerle and Schuster (n 120) 14.

Claire Woods, ‘Funding Climate Change: How Pension Fund Fiduciary Duty Masks Trustee Inertia and Short-Termism’ in James P. Hawley, Shyam J. Kamath and Andrew T. Williams (eds), Corporate Governance Failures. The Role of Institutional Investors in the Global Financial Crisis (University of Pennsylvania Press, 2011) 242 (UK and US); Brett McDonnell and others, ‘Green Boardrooms?’ (2021) 53 Connecticut Law Review 335, 386–91 (Australia and US); Carissa Wong, ‘Director Duty of Care in China and the United States: What Liability for Climate Change?’ (2016) 18 Vermont Journal of Environmental Law 287 (China and US); Janet Dine, ‘Corporate Regulation, Climate Change and Corporate Law: Challenges and Balance in an International and Global World’ (2015) 26 European Business Law Review 173 (UK and Albania).

Sarah Barker and Ellie Mulholland, ‘Directors’ Liability and Climate Risk: Comparative Paper – Australia, Canada, South Africa, and the United Kingdom (CCLI, 2019) <https://​com​mon​wealth​climate​law.org/wp-content/uploads/2022/06/CCLI-Directors-Liability-and-Climate-Risk-Comparative-Paper-October-2019-vFINAL.pdf> (Australia, Canada, South Africa and the UK); Rolf H. Weber and Andreas Hösli, ‘Climate Change Liability: Comparing Risks for Directors in Jurisdictions of the Common and Civil Law’ (2020) 10 Climate Law 151 (Australia, US, UK, France, and Switzerland); Ellie Mulholland and others, ‘Climate Change and Directors’ Duties: Closing the Gap Between Legal Obligation and Enforcement Practice’ in Richard LeBlanc (eds), The Handbook of Board Governance (2nd edn, John Wiley & Sons 2020); CCLI/Climate Governance Initiative, ‘Primer on Climate Change: Directors’ Duties and Disclosure Obligations’ (2021) <https://​ccli.​ubc.​ca/wp-content/uploads/2021/06/Primer-on-Climate-Change-1.pdf> (based on country reports from 21 jurisdictions); ibid, ‘Primer on Climate Change: Directors’ Duties and Disclosure Obligations’ (2nd edition, 2022) <https://​com​mon​wealth​climate​law.​org/wp-content/uploads/2022/07/CCLI-CGI-Primer-2022.pdf> (based on country reports from 27 jurisdictions); Muriuki Muriungi, ‘Directors’ Duties and Climate Change in Africa: Evidence from Kenya, Nigeria and South Africa’ (2023) ex/ante Special Issue 65.

Eg Perry E. Wallace, ‘Climate Change, Corporate Strategy, and Corporate Law Duties’ (2009) 44 Wake Forest Law Review 757; Lisa Benjamin, ‘The Road to Paris Runs Through Delaware: Climate Litigation and Directors’ Duties’ (2020) 2 Utah Law Review 313; Hari M. Osofsky and others, ‘Energy Re-Investment’ (2019) 94 Ind. L.J. 595, 635–39; Sarah Barker, Cynthia Williams and Alex Cooper, ‘Fiduciary Duties and Climate Change in the United States’ (CCLI, 2021) <https://ccli.ubc.ca/wp-content/uploads/2021/12/Fiduciary-duties-and-climate-change-in-the-United-States.pdf>.

Eg Lisa Benjamin, ‘The Duty of Due Consideration in the Anthropocene: Climate Risk and English Directorial Duties’ (2017) 11 Carbon and Climate Law Review 90; ibid, Companies and Change (n 83).

Eg Sarah Barker, ‘Directors’ Duties in the Anthropocene. Liability for Corporate Harm Due to Inaction on Climate Change’ (unpublished, 2013) <http://responsible-in​vest​ment​banking.​com/wp-content/uploads/2014/11/Directors-Duties-in-the-Anthropocene-December-2013.pdf>; Sarah Barker and others, ‘Climate Change and the Fiduciary Duties of Pension Fund Trustees: Lessons from the Australian law’ (2016) 6 Journal of Sustainable Finance & Investment 211; Noel Hutley and Sebastian Hartford-Davis, ‘Climate Change and Directors’ Duties’ (Memorandum of Opinion, 2016) <https://​cpd.​org.​au/wp-content/uploads/2016/10/Legal-Opinion-on-Climate-Change-and-Directors-Duties.pdf> 22; ibid, ‘Climate Change and Directors’ Duties. Supplementary Memorandum of Opinion’ (2019) <https://apo.org.au/node/227561>; Prafula Pearce, ‘Duty to Address Climate Change Litigation Risks for Australian Energy Companies – Policy and Governance Issues’ (2021) 14 Energies 7838.

Christine Kaufmann, ‘Respecting Human Rights in Investment Banking: A Change in Paradigm’ in Karen Wendt (ed), CSR, Sustainability, Ethics & Governance (Springer 2015) 509, 511.

Chiara Macchi, ‘The Climate Change Dimension of Business and Human Rights: The Gradual Consolidation of a Concept of “Climate Due Diligence”’ (2021) 6 Business and Human Rights Journal 93; Chiara Macchi and Nadia Bernaz, ‘Business, Human Rights and Climate Due Diligence: Understanding the Responsibility of Banks’ (2021) 13 Sustainability 8391; Claire Bright and Karin Buhmann, ‘Risk-Based Due Diligence, Climate Change, Human Rights and the Just Transition’ (2021) 13 Sustainability 10454; Mikko Rajavuori, Annalisa Savaresi, and Harro van Asselt, ‘Mandatory Due Diligence Laws and Climate Change Litigation: Bridging the Corporate Climate Accountability Gap?’ (2023) 17 Regulation & Governance 944; Ekaterina Aristova and others, ‘Corporate Climate Change Responsibilities Under the OECD Guidelines for Multinational Enterprises’ (2024) 73 International and Comparative Law Quarterly 505.

With respect to the UNGP and the OECD GL, see eg Karin Buhmann, ‘Public Regulators and CSR: The ‘Social License to Operate’ in Recent United Nations Instruments on Business and Human Rights and the Juridification of CSR’ (2016) 136 J Bus Ethics 699.

IPCC, AR6. Annex I: Glossary (2023) 122.

ibid.

ibid, 121.

United Nations Framework Convention to Climate Change, 9 May 1992, in force 21 March 1994, 1771 UNTS (‘UNFCCC’). UNFCCC was ratified by 196 states and the EU, making it one of the most widely ratified treaties (UNFCCC, Status of Ratification of the Convention <https://unfccc.int/process-and-meetings/the-convention/status-of-ratification/status-of-ratification-of-the-convention>; Mayer, The International Law on Climate Change (n 72) 35).

IPCC, AR6, SYR, Annex I: Glossary (2023) 126.

ibid.

Armour and others, What is Corporate Law (n 116) 5–15.

Eg ibid, 13 (referring to ownership as ‘the right to control the firm, and the right to receive the firm’s net earnings (…) typically proportional to the amount of capital contributed to the firm’, but clarifying that the term ‘owners’ is used ‘simply to refer to the group who have entitlement to control the firm’s assets’ while recognising that as a matter of law, the firm itself, acting through its managers, is the owner of a pool of assets separate from assets owned by shareholders’ (ibid, 5, emphasis added). The firm’s assets are thus unavailable for attachment by the shareholder’s own creditors, so-called ‘entity-shielding’ (ibid, 6).

Eg Lynn A. Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations and the Public (Berrett-Koehler 2012) 36–44; ibid, ‘On the Rise of Shareholder Primacy, Signs of its Fall, and the Return of Managerialism (in the Closet)’ (2013) 36 Seattle University Law Review 1169, 1174–77, with further references; Sjåfjell, Towards a Sustainable European Company Law (n 106) 32–34 (stating that referring to ownership is ‘probably also partly a result of terminological laziness, as it is easier to say that X owns company A than to say X owns shares in company A’).

Cf the distinction by Armour and others between ‘business corporations’ and ‘nonprofit firms’ such as foundations (Armour and others, What is Corporate Law (n 116) 14–15); this study focuses on the former.

Sjåfjell and Anker-Sørensen point out that ‘board of directors’ and ‘directors’ are Anglo-Saxon terms and argue that ‘board’ and ‘board members’ is thus more appropriate as a general European term (Beate Sjåfjell and Linn Anker-Sørensen, ‘Directors’ Duties and Corporate Social Responsibility (CSR)’ in Hanne S. Birkmose Mette Neville and Karsten Engsig Sørensen (eds), Boards of Directors in European Companies – Reshaping and Harmonising their Organisation and Duties (Kluwer Law International 2013) 153). In any event, as the G20/OECD Principles of Corporate Governance 2023 show, the term directors is widely established beyond Anglo-Saxon jurisdictions.

Klaus J. Hopt, ‘Comparative Corporate Governance: The State of the Art and International Regulation’ in Fleckner and Hopt (eds), Comparative Corporate Governance (n 120) 3, 10.

Adrian Cadbury, Report of the Committee on the Financial Aspects of Corporate (1992) <http://www.ecgi.org/codes/documents/cadbury.pdf> para. 2.5 (where it is added that ‘(b)oards of directors are responsible for the governance of their companies’).

Hopt, Comparative Corporate Governance (n 146) 10.

Morgera (n 79) 16–18.

ibid, 18–19.

Report of the Special Representative of the Secretary-General on the issue of Human Rights and Transnational Corporations and Other Business Enterprises: Mapping International Standards of Responsibility and Accountability for Corporate Acts’, A/HRC/4/35 (19 February 2007), paras 6 and 56.

See Liesbeth Enneking and Jeroen Veldman, ‘Towards Responsible Business Conduct in Global Value Chains’ (2019) 4 Erasmus Law Review 1, 2–3.

ibid. Concerning CSR, see eg Beate Sjafjell, ‘Internalizing Externalities in EU Law: Why Neither Corporate Governance nor Corporate Social Responsibility Provides the Answers’ (2009) 40 Geo Wash Int’l L Rev 977.

The European Commission, for instance, considers the concepts to mean the same and uses them interchangeably (see European Commission, ‘Corporate Social Responsibility, Responsible Business Conduct, and Business & Human Rights – Overview of Progress’ (2019) <https://ec.europa.eu/docsroom/documents/34963>)

The Global Compact, ‘Who Cares Wins: Connecting Financial Markets to a Changing World’ (2004) <https://www.unepfi.org/fileadmin/events/2004/stocks/who_​cares_​wins_​global_​compact_2004.pdf>; UNEP FI, ‘A legal framework for the integration of environmental, social and governance issues into institutional investment’ (2005) https://www.unepfi.org/wordpress/wp-content/uploads/2022/07/Freshfields-A-legal-framework-for-the-integration-of-ESG-issues-into-institutional-investment.pdf (often referred to as ‘the Freshfields Report’).

Alessandra Lehmen, ‘The rise of ESG Law: In search of lost time’ (2021) Academia Letters <https://doi.org/10.20935/AL1906>.

IPCC, AR6. SYR: Annex I: Glossary (2023) 124.

ibid.

ibid. Some of these GHGs are also ozone-depleting.

Black carbon, the most strongly light-absorbing component of particulate matter, is formed by incomplete combustion of fossil fuels, biofuels and biomass (IPCC, SR.1.5. Annex I: Glossary (2018) 541, 543).

IPCC, AR6. SYR: Annex I: Glossary (2023), 122–23. See also the metric of GWP-100, meaning the global warming potential over 100 years (ibid, 124). For the most recent GWP-100 data of the various GHGs, see IPCC, AR6. WG I (2023) 1017 (Table 7.15).

2

The Regime Complex of Corporate Climate Obligations

The International Law on Climate Change

A Stocktake after Three Decades of State-Centrism

The international law on climate change governs the rights and obligations of states. However, it remains largely silent on the obligations of companies and other non-state actors (below, II.A.2). Since its inception in the early 1990s, the regime of international climate change law, which is state-centric in nature, has not resulted in state action that comes close to achieving the ultimate objective of international climate change policy, namely the limitation of global temperature to a level that would prevent dangerous climate change. Collectively, and in most cases, individually, states’ ambitions to mitigate climate change are inadequate, frustrating hopes that the bottom-up approach introduced by the Paris Agreement would mark a paradigm change.

In the late 1980s and early 1990s, there was a strong international momentum in favour of limiting global climate change, as well as, more generally, for the concept of sustainable development.[1] In 1988, states expressed serious concern that ‘certain human activities could change global climate patterns, threatening present and future generations with potentially severe economic and social consequences’ and that the effects of climate change ‘could be disastrous for mankind if timely steps are not taken at all levels’.[2] Shortly after the adoption of the Montreal Protocol in 1987,[3] the establishment of the IPCC by the World Meteorological Organization (WMO) and the UN Environmental Programme (UNEP) in 1988, and the publication of the IPCC’s First Assessment Report in 1990,[4] the UN Framework Convention on Climate Change (UNFCCC) was adopted in 1992. Today, alongside a range of regimes and initiatives dispersed across multiple treaties, the UNFCCC constitutes the international ‘regime complex’ for climate change. This complex represents a loosely connected network of specific regimes – most notably those addressing climate change, ozone-depleting substances, international transportation (shipping and aviation), biodiversity, and human rights – as well as overarching principles of international law, including the no-harm rule, sustainable development, the precautionary and polluter-pays principles, the duty to cooperate, and the doctrines of state responsibility and liability for transboundary harm.[5]

The ultimate objective of the UNFCCC is the stabilisation of GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system (Article 2 UNFCCC). Due to a lack of consensus among states during the negotiations, a more precise objective was not included in the UNFCCC and, as a result, no definition of what level of risk would be ‘dangerous’ was established.[6] Following several accords and agreements made at the annual Conferences of the Parties (COP) under the UNFCCC regime, including the 1997 Kyoto Protocol,[7] the adoption of the Paris Agreement in December 2015 marked a major cornerstone. Specifying the UNFCCC’s ultimate objective, the Paris Agreement’s goals, as set out under its Article 2(1), are threefold:

(a) holding global average temperature increase to ‘well-below’ 2°C above pre-industrial levels whilst pursuing efforts to limit temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change (climate change mitigation);

(b) increasing the ability to adapt to the adverse impacts of climate change (climate change adaptation); and

(c) aligning finance flows with a pathway towards low GHG emissions and climate-resilient development.[8]

The Paris Agreement is a legally binding treaty as defined by the Vienna Convention on the Law of Treaties.[9] It is characterised by a ‘bottom-up’ approach, meaning that the success of the agreement depends on the willingness of its parties – which include, in addition to most states, the EU – to review and strengthen their commitments, while relying largely on modalities of implementation to be defined by subsequent COP decisions.[10] The Paris Agreement provides a mix of binding and non-binding provisions on parties’ efforts in terms of mitigation, adaptation and finance.[11] In contrast to the Kyoto Protocol, the Paris Agreement does not explicitly require its parties to achieve GHG reductions in the sense of an obligation of result but rather imposes obligations of conduct.[12] However, while procedural in nature, most of the legally binding provisions can be viewed as obligations of result in the sense that they require parties to provide certain types of information at certain points in time in accordance with certain agreed rules.[13] Specifically, parties are obliged to submit their nationally determined contribution (NDC) to the UNFCCC Secretariat every five years and to pursue domestic actions to achieve the objectives of those NDCs.[14] While recognising the ‘common but differentiated responsibilities and respective capabilities’ (CBDR-RC) of its parties, the Paris Agreement requires that NDCs ‘represent a progression over time’.[15] NDCs must reflect a party’s highest possible ambition considering its individual responsibilities and capabilities.[16] Pointing out that various provisions of the Paris Agreement express ‘a certain standard of conduct that corresponds to what a responsible State ought to do under normal conditions in a situation with its best practicable and available means, with a view to fulfilling its international obligation’, Voigt argues that parties are subject to a due diligence obligation (or ‘best effort standard’), committing each party to define its highest possible mitigation target.[17] Arguably, states with high total GHG emissions or very high per capita emissions (whether past or current) are subject to a higher standard of due diligence both in terms of mitigation and adaptation.[18] Indeed, in its landmark 2025 Advisory Opinion on the obligation of states in respect of climate change, the International Court of Justice (ICJ) confirmed that ‘a State that does not exercise due diligence in the performance of its primary obligation to prevent significant harm to the environment, including to the climate system, commits an internationally wrongful act entailing its responsibility’.[19]

As with other major global issues such as geopolitical tensions, health crises, tax evasion, money laundering and cybersecurity, climate change generally calls for a globally coordinated response. However, in addition to the super-wicked nature of climate change (above, I.A.4), the fragmentation of international law poses formidable challenges to the establishment of coherent international rules.[20] Despite the general consensus on the necessity of a globally coordinated response to climate change, the efforts initiated under the UNFCCC regime have been characterised by dysfunction and national interests to secure access to resources and energy in support of (short-term) economic growth and welfare.[21] Furthermore, as a result of successful lobbying, certain GHG-intensive sectors, such as agriculture (above, I.A.3), have been exempted from mitigation policies in most industrialised countries.[22] Therefore, it is not surprising that global GHG emissions have continued to rise sharply since the UNFCCC came into force in 1994 (see above, I.A.2). There is evidence suggesting that mitigation policies have led to several GtCO₂-eq of avoided GHG emissions, but these reductions have been outweighed by continued global emissions growth.[23] The year 2022 saw global emissions reach a new record high of 57.4 GtCO₂-eq, marking a 1.2 per cent increase on the previous year. Another new record was set in 2023, with emissions rising by a further 1.3 per cent, indicating a continued upward trend.[24]

The absence of adequate ambition on the part of the parties to the Paris Agreement is reflected in their NDCs. Analysing the first round of NDCs, the 2020 UNEP Emissions Gap Report stated that ‘(c)urrent NDCs remain seriously inadequate to achieve the climate goals of the Paris Agreement and would lead to a temperature increase of at least 3°C by the end of the century’.[25] In 2021, the UNFCCC Secretariat reported that the first round of NDCs taken together ‘fall far short of what is required’ to achieve the temperature goal of the Paris Agreement.[26] Worse, some extremely high-emitting sectors such as international shipping, international aviation and military were not even considered in most states’ NDCs.[27] The 2023 Global Stocktake, concluded at COP28 in Dubai, while irritatingly recognising ‘overall progress’, underlined that ‘(p)arties are not yet collectively on track towards achieving the purpose of the Paris Agreement and its long-term goals’.[28] In its landmark 2024 judgment in the matter of Verein KlimaSeniorinnen and Others v Switzerland (below, II.B.4), the European Court of Human Rights (ECtHR) recognised the ‘widely acknowledged inadequacy of past State action to combat climate change globally’ and concluded that current global mitigation efforts are insufficient to meet the 1.5°C target.[29] Although ‘immediate, accelerated and relentless mitigation action is needed to bring about the deep annual emission cuts that are required from now to 2030 to narrow the emissions gap, with unparalleled annual cuts required to bridge the gap’,[30] global GHG emissions are expected to further increase, with a possible peak before 2030 (see Fig. 3 below).[31] Further, as recent experience has shown, reductions in global GHG emissions due to crises such as COVID-19 are only temporary, and previous levels of GHG emissions are quickly recovered and exceeded.[32] An analysis of the second round of NDCs under the Paris Agreement, submitted by 64 Parties between 1 January 2024 and 30 September 2025, found a progression in terms of quality, credibility and economic coverage, with 89 per cent of Parties communicating economy-wide targets (compared with 81 per cent in their previous NDCs).[33]

[picture]

Fig. 3: 1.5°C/2°C pathways contrasted with NDCs[34]

Overall, a stocktake of the UNFCCC regime three decades after its inception raises serious doubts about the effectiveness of the international legal framework on climate change in terms of reducing GHG emissions on the scale and at the pace necessary to avoid the most catastrophic climate change scenarios. Given states’ collective and individual lack of ambition, the prospects for a turnaround are slim, even under the bottom-up approach under the Paris Agreement.[35] States fail to agree on phasing out fossil fuel production. Rather than introducing stringent measures to reduce GHG emissions, climate policy continues to rely heavily on market-based solutions such as carbon pricing (below, II.B.2), disclosure regimes (below, II.C.2) and hopes for the successful development of new technologies whose deployment at scale remains uncertain (such as CCS, above, I.A.3).[36] The apparent failure of the UNFCCC regime to deliver progress towards achieving significant reductions in global GHG emissions calls for the exploration of alternative approaches, including approaches that involve the responsibility of non-state actors to mitigate climate change (below, II.A.2).

Private Climate Governance

Companies are commonly viewed as creations of national law, thus largely eschewing traditional international law in the form of treaties and customary international law.[37] Accordingly, it is generally understood that international climate change law does not afford corporations the status of legal subjects.[38] In line with international law generally, international climate change law categorises corporations as ‘non-state actors’.[39] This category includes any actor that is not a state, including international organisations, sub-national administrations, industry associations, companies, civil society organisations, individuals and indigenous peoples.[40] Given their economic importance and contribution to climate change, companies are a critical category of non-state actors in climate governance (above, I.A.3).[41] While generally not considered to be subject to international obligations, corporations enjoy extensive rights under international investment law, leading to a situation of ‘great power without great responsibility’.[42] Possibly filling this responsibility gap, a plethora of quasi-legal, polycentric forms of governance mechanisms have emerged that defy straightforward categorisation.[43] These instruments ‘cut across traditional state-based jurisdictions, operate across public–private divides and seek to develop new approaches and techniques through which responses are developed’.[44] They embody the idea of private climate governance, an (elusive) concept that challenges the purely state-centric rationale of the UNFCCC regime. While deviating from traditional forms of governance, private climate governance is commonly framed as conferring a more active role on non-state actors in global climate governance, albeit without (legal) responsibility. Private climate governance instruments should not be confused with international standards (below, II.B.3).

From the state-centric perspective underpinning the UNFCCC regime (above, II.A.1), corporations have two potential roles: as observers (and potentially, as formal or informal participants, for example through industry associations) in multilateral international negotiations, and as objects of national laws and regulations.[45] However, having allowed industry associations to engage in lobbying, agenda-setting, policy implementation, and monitoring from the outset, the UNFCCC (and other environmental law regimes) never fully embraced the idealised form of state-centric governance.[46] In the shadow of the state-centric UNFCCC regime, various forms of polycentric climate change governance have emerged; to the extent that businesses are involved, the literature refers to these governance forms as private climate governance.[47] Private climate governance includes both company-specific instruments (eg supply-chain mechanisms, GHG emission reduction pledges) and industry-wide schemes (eg certification schemes or GHG accounting and inventory schemes).[48] Prominent examples of the latter category include the GHG Protocol (below, II.B.1.3) and the TCFDR (below, IV.A.3.3).[49] Resonating with dominant discourses in corporate environmentalism (above, I.A.5), the participation of private actors in global climate governance is commonly presented in a positive light, as an opportunity to increase global climate ambition in the absence of adequate governmental responses.[50]

In the lead-up to the adoption of the Paris Agreement, efforts were made to articulate the climate responsibilities of businesses within the framework of international climate change law. For instance, the submission of the Office of the UN High Commissioner for Human Rights (OHCHR) to COP21 (at which the Paris Agreement was adopted in November 2015) stressed that ‘businesses are also duty-bearers’ that must ‘be accountable for their climate impacts and participate responsibility in climate change mitigation and adaptation efforts with full respect for human rights’ (below, IV.A.3.1.2).[51] This call went largely unheard. The Paris Agreement, in its preamble, merely recognises ‘the importance of the engagements of all levels of government and various actors’. The COP 21 decision makes modest references to ‘non-party stakeholders’ (including civil society, the private sector, financial institutions, cities and other sub-national authorities) by welcoming their efforts to address and respond to climate change, inviting them ‘to scale up their efforts and support actions to reduce emissions and/or to build resilience and decrease vulnerability to the adverse effects of climate change’ (and to demonstrate these efforts through the Non-State Actor Zone for Climate Action (NAZCA) platform), while recognising the importance of providing incentives for emission reductions (including through instruments such as domestic policies and carbon pricing).[52] The decision further calls for the ‘scaling up and introduction of new or strengthened voluntary efforts or initiatives’.[53] Following the adoption of the Paris Agreement, several UN-led initiatives (such as the UN’s Race to Zero Campaign)[54] were launched with the aspiration of increasing non-state action on climate change, but their scope was confined to voluntary commitments (below II.B.1.2).[55]

The non-acceptance of private actors as legal subjects under international law problem has commonly been ‘bypassed’ by interpreting the obligations of states to include a duty to regulate the conduct of private actors operating within their jurisdiction (above, II.A.1; below, II.B.2).[56] On the assumption that there is no corporate responsibility for the adverse effects of climate change under international climate law, one might be inclined to conclude that the primary (if not sole) responsibility of corporations is to comply with domestic climate laws and regulations (below, II.B.2).[57] This is a premature conclusion. It is beyond the scope of this study to engage in the fundamental debate on whether corporations may have legal obligations directly under international (climate) law.[58] Nevertheless, a few short remarks are warranted at this juncture. As Clapham points out, even though non-state actors cannot be parties to treaties, the substantive norms as well as the general principles reflected therein ‘might easily be adapted to apply to (them)’.[59] Indeed, while international law currently does not impose ‘direct’ obligations on non-state actors, companies are increasingly facing liability claims under domestic law regimes. These claims seek to establish links between the international climate change law and its operationalisation at the level of domestic liability, for instance under tort or corporate law (below, II.B.4; IV.C).[60] In addition, international standards (including international standards on responsible business conduct; below, II.B.3) play a pivotal role in establishing a normative framework for climate-related corporate responsibility (below, IV.A.1).[61]

Private climate governance faces several conceptual limitations and practical hurdles.[62] First, given the manifold interlinkages between the public and private spheres (eg above, I.A.2), it is not always simple to distinguish between state and non-state action.[63] Second, non-state actors comprise a heterogeneous group of actors with potentially conflicting interests. Some may be advocating for enhanced corporate mitigation action, while others may seek to delay any meaningful steps in this direction.[64] Third, there are practical challenges to enhancing the transparency and effectiveness of private climate governance initiatives, such as difficulties with tracking the implementation of corporate emission reduction pledges.[65] Fourth, while voluntary corporate actions may be driven by a desire to anticipate impending regulatory developments, there is a problem of free-riding, in that early adopters may fear disadvantages in relation to industry laggards.[66] In addition, private climate governance instruments are often criticised for a lack of coherence, limited enforceability, and the possibility of ‘cherry picking’.[67] For example, companies may be able to freely select key metrics (such as the baseline year against which GHG emission reductions are measured) and methodologies for self-monitoring. These challenges provide a compelling rationale for standardisation, coherence and regulation, with a view to establishing a level playing field.[68]

Rarely explored in-depth, the legal ramifications of private climate governance mechanisms are poorly understood.[69] More often than not, private climate governance initiatives are referred to as ‘non-binding’ or ‘voluntary’, without further analysis or nuance.[70] This does not do justice to the normative function of international standards within a complex global climate governance regime (below, II.B.3).[71] As an example, GHG emissions reduction pledges may be characterised as a type of contract or statement relevant under consumer protection law or unfair competition law, which would allow the application of enforceable domestic remedies.[72] Furthermore, a body of climate litigation is emerging in which legal arguments are based directly or indirectly on international standards (below, IV.C).

Overall, private climate governance should not be regarded as a coherent mode of governance, but rather as a heterogeneous phenomenon embedded in a complex web composed of the international climate change law, domestic legal avenues and international standards. Evidently, the lack of specific legal obligations under international climate change law does not mean that corporations (and their directors) operate in a legal void.[73] In lieu of corporate obligations under international law stricto sensu, corporate climate responsibilities are governed by a loosely coupled and poorly understood set of domestic laws and regulations (below, II.B.2), private climate governance schemes, and international standards (below, II.B.3). And yet, while the case for including non-state actors in global climate governance is compelling, it also adds further complexity and prompts questions about the respective roles of different actors.[74]

Operationalising the International Law on Climate Change

The Net Zero Concept

A Frame of Reference to Achieve the 1.5°C Target

Historically, the ambition of international climate policy has been framed either as a stabilised level of GHGs in the atmosphere (UNFCCC), or as an emission reduction target expressed in percentages (Kyoto Protocol). Both approaches were underpinned by the general assumption that international climate policy would slowly progress and that environmental policy instruments could be established and gradually strengthened over time.[75] Today, climate ambition is commonly expressed in terms of a specific target date for achieving net zero emissions, typically by around 2050, which is linked to the temperature goal of the Paris Agreement (above, II.A.1).[76] Since the adoption of the Paris Agreement in 2015, achieving net zero emissions has become the defining frame for climate action for both states and non-state actors.[77] The concept of net zero originates from physical climate science, but it is more than a scientific concept or technical target: it serves as a frame of reference through which climate change mitigation efforts, including those of corporations, can be understood and structured.[78]

While the long-term temperature goal of the Paris Agreement is formulated somewhat vaguely (‘well-below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels’), the 2018 IPCC Special Report on 1.5°C (SR1.5) and the Glasgow Climate Pact (2021)[79] put strong emphasis on the 1.5°C target, that is, the more ambitious end of the spectrum provided by the Paris Agreement. This was based on the recognition that, at an average temperature increase of 1.5°C, the impacts of climate change, while still very severe, are expected to be ‘much lower’ than under a 2°C scenario.[80] In that sense, SR1.5 paved the way for the language used by the public and private sector to achieving net zero by 2050.[81] ‘Net’ in net zero means that residual GHG emissions will still be possible, but balancing through anthropogenic removals is required.[82] Although not identical from a scientific point of view, the terms ‘carbon neutrality’,[83] ‘climate neutrality’[84] and ‘net zero’[85] are commonly used as equivalents. Operationalising a temperature target involves calculating budgets of GHGs that can be emitted to stay within a given temperature increase limit, a concept commonly referred to as ‘remaining carbon budget’.[86] In 2018, the IPCC estimated the remaining carbon budget to be 580 GtCO₂ for a probability of 50 per cent to achieve 1.5°C, or 420 GtCO₂ for a 66 per cent probability, respectively.[87] In 2023, the IPCC stated that ‘(e)stimates of future CO₂ emissions from existing fossil fuel infrastructures without additional abatement already exceed the remaining carbon budget for limiting warming to 1.5°C’.[88]

To simulate GHG emission pathways (or scenarios)[89] corresponding to different levels of warming, scientists use computer models that are constantly evolving.[90] Due to a number of factors, including the inherent limitations of climate models and different assumptions about the future (both for human activities and for natural effects over decades and centuries), projections of future climate change and related impacts are inevitably subject to considerable uncertainty.[91] Crucially, meeting the Paris Agreement’s temperature target in most scenarios depends on net negative emissions to reduce temperatures once they have peaked and possibly temporarily exceeded 1.5°C (overshoot).[92] In pathways limiting global temperature increase to 1.5°C with no or limited overshoot, global net CO₂ emissions fall by about 48 per cent until 2030 (relative to 2019 levels), reaching net zero around 2050 (while total GHG emissions fall by 43 per cent by 2030 and by 84 per cent by 2050).[93] In 1.5°C and 2°C pathways set out in AR6, global GHG emissions are projected to peak between 2020 and 2025, assuming immediate mitigation action.[94] 1.5°C and 2°C pathways involve deep cuts not only in CO₂ but also in non-CO₂ emissions including black carbon, methane and nitrous oxide.[95]

Net Zero Targets

Prompted by the Paris Agreement, it has become common practice for states to adopt longer-term net zero targets as well as intermediate short-term GHG reduction targets. These targets are typically expressed in state’s NDCs (above, II.A.1), and in many cases have been embedded into national legislation. Typically as a form of private climate governance (above, II.A.2), many large companies have adopted their own net zero targets. Both for states and non-state actors, there is no generally accepted methodology for setting and implementing net zero targets. Consequently, current net zero targets often lack robustness, comparability and credibility.

The majority of global GHG emissions are covered by a net zero target. In 2021, around two-thirds of global GHG emissions were covered by a net zero target.[96] By 2023, the coverage had risen to 88 per cent.[97] A 2025 report found that although the US had stepped back and abandoned its national target, 137 of 198 national governments (including the EU and Taiwan) had net zero targets.[98] Many parties to the Paris Agreement, including the EU, as well as sub-national entities have set targets to achieve net zero by around 2050, or in some cases (such as Bahrain, China, India or Saudi Arabia) by 2060 or 2070.[99] These targets can take the form of (seemingly rather informal) pledges, or they can be enshrined in policy or law.[100] While net zero is a longer-term goal (which must be followed by net negative emissions in most scenarios, see above, II.B.1.1), staying on a Paris Agreement-aligned pathway depends critically on achieving ambitious short-term interim targets (above, II.B.1.1).[101] For instance, the EU has committed to a reduction of at least 55 per cent by 2030 (relative to 1990 levels).[102] In addition to curbing GHG emissions, climate mitigation policies often extend to other measures such as halting deforestation or scaling up renewable energy.[103]

Although they are not, and cannot be, parties to the Paris Agreement (above, II.A.2), many large companies have announced net zero targets.[104] Large companies are increasingly aligning their corporate strategies with the net zero goal, which is encouraged by private climate governance initiatives (see above, II.A.2).[105] Large, publicly visible corporations with a significant GHG emissions footprint are more likely to have set a net zero target.[106] A 2022 report found that more than a third of the world’s largest publicly traded corporations have announced net zero targets.[107] By 2023, almost half of the world’s largest companies had a net zero target.[108] By 2025, the share of large publicly listed companies with a net zero target had risen to about twothirds.[109] Corporate net zero targets take different forms. They may be formally embedded in corporate strategy documents or annual reports, or more vaguely expressed as an intention to set a target.[110]

Both for states and non-state actors, setting a meaningful net zero target arguably requires a conversion of the global carbon budget (above II.B.1.1) into an individual budget.[111] However, a generally accepted methodology for this conversion is currently lacking.[112] In contrast to the direct prescription of emissions reductions characteristic of the Kyoto Protocol, the Paris Agreement employs a bottom-up approach, primarily focusing on process, entrusting the parties with the determination of their individual targets and the corresponding emission reduction pathways (above, II.A.1). Due to the lack of a commonly agreed methodology, states’ net zero targets vary widely in scope, transparency and quality.[113] The same is true for the net zero targets of non-state actors.[114] A number of initiatives have been established with the objective of providing companies with guidance on the establishment of robust net zero targets (eg the UN Race to Zero,[115] the UN HLEG on the Net Zero Emissions Commitments of Non-State Entities,[116] the Transition Pathway Initiative,[117] the Science-based Targets Initiative (SBTi) Corporate Net Zero Standard,[118] and the ISO Carbon Neutrality Standard).[119] However, despite the increasing convergence between these initiatives, there remains a lack of generally accepted methodology for linking corporate targets to national or global targets.[120] As a result, corporate net zero targets vary widely in terms of ambition, scope, transparency, design and credibility, making them difficult to compare and in some cases leading to allegations of greenwashing (below, II.B.4.3).[121] Third-party certification schemes such as SBTi have been criticised over issues of transparency and methodology.[122] Furthermore, corporate net zero targets often do not cover Scope 3 emissions (below, II.B.1.3) and rely heavily on offsets (ie, the purchase and retirement of voluntary carbon credits, below, IV.B.4.3).[123] In addition, in instances where a target has been set, the manner in which it is to be accomplished is frequently ambiguous.[124] In sum, defining the scope and time dimension of net zero targets at the entity level has, in practice, been delegated to the individual actors, raising the question of how a diverse set of non-standardised pledges from states and non-state actors will add up to the global carbon budget.[125]

The legal quality of corporate net zero targets is poorly researched. Reference to the term target creates some ambiguity as to whether it signifies a mere aspiration or a firm commitment.[126] Some authors argue that GHG reduction targets can be characterised as a type of contract or statement relevant under consumer protection law or unfair competition law (above, II.A.2). In the landmark case of Milieudefensie et al. v Royal Dutch Shell, the District Court of The Hague considered the reduction pathways as developed by climate science to be ‘the best possible chance to prevent the most serious consequences of climate change’, thus transposing a global GHG emission reduction target (a 45 per cent reduction by 2030, based on SR1.5) directly into a (binding) target for Shell (below, IV.C.4.2.2).[127]

Indirect Emissions

It is becoming increasingly evident that corporate action is imperative in order to achieve the net zero transition. Consequently, there is a necessity to translate the global GHG budget into enterprise-level targets (above, II.C.2).[128] However, the devil is in the detail when it comes to measuring and accounting for corporate GHG emissions, which is a prerequisite for the establishment of robust and credible reduction targets. One issue of particular importance in this context is that of indirect emissions. Companies produce direct emissions, for example, through the operation of their facilities, but depending on the industry and business model, the majority of emissions occur throughout the value chain (indirect emissions).[129]

The GHG Protocol, a widely used standard for accounting and reporting corporate GHG emissions, distinguishes between direct (Scope 1) and indirect (Scope 2, Scope 3) GHG emissions:

Table 3: Emission Categories as per GHG Protocol[130]

Scope 1 | Direct | GHG emissions occurring from sources owned or controlled by a company
Scope 2 | Indirect | GHG emissions from the generation of purchased electricity consumed by the company
Scope 3 | Indirect | All other indirect GHG emissions that occur in the company’s value chain, including both upstream and downstream

Scope 3 emissions, originally introduced by the GHG Protocol as an ‘optional’ reporting category, are those that result from the company’s activities but are caused by sources not owned or controlled by the company, such as the transportation of purchased fuels, the extraction and production of purchased materials, and the use of sold services and products.[131] Crucially, a company’s indirect emissions (Scope 2 and 3) are the direct emissions (Scope 1) of another company (below, Fig. 4), which raises questions about double counting and shared or partial responsibility for GHG emissions occurring along supply chains.[132]

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Fig. 4: Upstream and downstream GHG emissions (GHG Protocol)[133]

The primary purpose of Scope 3 emissions accounting and reporting is to provide a standardised approach to assist companies understand their GHG emissions across their entire value chain, enabling them to focus their efforts on the greatest opportunities for reducing GHG emissions.[134] The significance of Scope 3 differs greatly by industry sector (below, Fig. 5). For example, the Scope 3 emissions of financial organisations (particularly the downstream emissions related to investments) represent by far the largest proportion of their total GHG emissions.[135] Another example is the meat and dairy sector, where land-use-related emissions (Scope 3) account for a large share of total GHG emissions.[136]

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Fig. 5: Scope 1, 2 and 3 emissions by sector[137]

Despite their importance, Scope 3 emissions are typically excluded from both corporate reporting and target setting, raising serious concerns about the extent to which companies are addressing the full range of GHG emissions from their activities.[138] Driven by investor demand, private climate governance initiatives, standardisation and regulation, the demand for Scope 3 GHG disclosure (and therefore, measurement) is growing. Scope 3 GHG emissions ‘are becoming an essential component of climate-related risk analysis in commercial and financial markets’.[139] However, a number of challenges remain. One key issue is the accurate collection of data. For example, if a company’s suppliers do not measure their GHG emissions, the company must use estimates to account for its indirect emissions.[140] In addition, unlike Scope 1 and 2 emissions, self-reported Scope 3 emissions are typically not validated by third parties, which means that under-reporting of Scope 3 emissions can be significant.[141]

Separate from accounting, the question of corporate responsibility for reducing indirect emissions arises. This issue has increasingly surfaced in climate litigation, most notably in Milieudefensie et al. v Royal Dutch Shell (below, IV.C.4.2). The issue of responsibility for indirect emissions also arises in public climate litigation, particularly in the context of Environmental Impact Assessments (EIAs). A prime example is the Norwegian case People v Arctic Oil, in which the key issue are the emissions resulting from the combustion of exported oil and gas products (‘extraterritorial emissions’).[142] In 2020, the Norwegian Supreme Court ruled that the right to a healthy environment enshrined in Article 112 of the Norwegian Constitution requires that the Government’s EIA to be carried out under Norwegian and EU law before drilling licences are granted must include extraterritorial emissions; the Court accepted that there is no doubt that these emissions affect and cause harm on Norwegian territory and that the Norwegian authorities can directly influence or take measures against these emissions.[143] In October 2025, while ultimately finding no violation of the Convention at the exploration stage, the ECtHR clarified that comprehensive EIAs, including extraterritorial emissions, must be carried out at the production stage.[144]

National Laws and Regulations

The rationale for international climate change law is derived from the authority of sovereign states to negotiate GHG reduction targets at the international level; these targets would then be implemented through national policies and laws (above, II.A).[145] The UNFCCC recognises the principle of state sovereignty in international cooperation to address climate change.[146] While the Paris Agreement requires states to take action to fulfil the commitments set out in their NDCs (see above, section II.A.1), it gives them the discretion to decide which actions to take. Relevant domestic laws and regulations[147] are typically spread across various areas of law, combining different regulatory techniques.[148] The objective of domestic climate policies is to either reduce GHG emissions or enhance and restore GHGs sinks, such as forests and wetlands.[149]

Large multinational corporations present significant challenges to national legal systems and their regulation.[150] Assigning responsibility in a business context is difficult for many reasons, including the organisation of business in corporate groups, diffuse control relationships, global value chains and the proliferation of financial intermediaries.[151] These factors make both formal regulation and informal constraints through investment and consumer markets very challenging.[152] To some extent, multinational companies are able to structure their business in such a way as to avoid the jurisdiction of a particular country (regulatory arbitrage).[153] In the climate change context, regulatory arbitrage triggers the problem of carbon leakage.[154] If a country adopts stricter climate change laws and policies, companies may be inclined to relocate their GHG-intensive activities to more ‘lenient’ jurisdictions.[155] If this happens, stricter jurisdictions may fear economic disadvantages, while from a global perspective, no GHG emissions reductions are achieved, thus defeating the purpose of introducing climate change laws and policies. In addition, countries that adopt laws and regulations that lead to the early retirement of fossil fuel-related infrastructure risk extremely high compensation claims from foreign investors brought under investor-state dispute settlement (ISDS) mechanisms, such as under the Energy Charter Treaty (ECT), contributing to a ‘regulatory chill’ (above, II.A.2).[156]

In theory, states could compel companies within their jurisdictional reach to reduce their GHG emissions.[157] However, such direct measures face strong political and industry opposition, including due to fears of economic disadvantage to other countries that do not have the same level of ambition.[158] In lieu of obligations directly requiring reductions of GHG emissions, business activities are typically regulated through a combination of two regulatory instruments: market-based mechanisms and command-and-control (C&C) regulations.[159] As outlined in the following discussion, these two distinct types of regulation are mechanisms designed to operationalise international climate change legislation at the national level.[160]

Praised for their efficiency, market-based approaches are very popular in climate economics, policy and regulation.[161] Important examples include carbon taxes[162] and emission trading schemes.[163] Faith in the functioning of markets is reflected in mainstream socio-economic discourses that promote private actors as the best agents to mitigate climate change through technological and market innovation.[164] The Stern Review, a prominent study on the economics of climate change published in 2007 by former World Bank chief economist Stern, recognised climate change as ‘the greatest market failure the world has ever seen’, arguing that ‘(i)nternational companies are taking a lead in demonstrating how profits can be increased while reducing emissions from industrial activities globally’, and further claiming that ‘large corporations have longer time horizons than governments’.[165] Typically, market-based instruments seek to internalise negative externalities, that is, the costs of a particular product or service that are not imposed on the producer or consumer and are therefore not taken into account in ‘rational’ economic decision making.[166] These mechanisms require the producer or consumer to pay a price that, in theory, corresponds to the value of the damage caused.[167] However, objective valuation is almost impossible in the context of climate change, because it would require pricing things that are not currently valued in the market or determining the value of damages that are expected to unfold over centuries or millennia.[168] Therefore, although the theory of internalising negative externalities through pricing mechanisms is widely supported, in practice, the introduction of adequate carbon prices is dependent on political will.[169] In addition to taxes, ‘positive’ economic incentives such as feed-in tariffs are also often part of market-based instruments.[170] A common critique of current market-based regulations is that carbon prices are (far) too low to lead to behavioural changes, and therefore do not deliver on the objectives of the Paris Agreement.[171] Another point of criticism relates to the limited scope of existing carbon pricing mechanisms. In 2024, only about a quarter of global CO₂ equivalent were covered by a carbon pricing mechanism.[172] The EU ETS, the most comprehensive ETS in the world, covered less than half (37 per cent) of the EU’s total GHG emissions in 2022.[173] In addition, the energy crisis and high inflation in 2023 led many governments to respond with relief measures, such as lowering energy prices for businesses through changes in energy taxes, fossil fuel subsidies and direct payments.[174] Overall, it is highly questionable whether market-based mechanisms alone will be sufficient to achieve deep and immediate cuts in GHG emissions across all sectors of the economy, unless they are significantly strengthened by a higher carbon price and broader coverage.[175]

C&C regulation refers to the use of legal rules backed by criminal, administrative or civil sanctions.[176] In the context of climate change, C&C regulation either aims directly to mitigate climate change or has other objectives which incidentally contribute to climate change mitigation, such as improving air quality or energy efficiency.[177] Three main types of climate-related C&C regulation can be distinguished: emission standards, technology standards, and product standards.[178] In addition to these types of (technical) standards, consumer protection law, unfair competition law, tort law (or its equivalents) and corporate law have emerged as key areas of law to govern the climate-related activities of companies.[179] Furthermore, since around 2010, several countries have enacted due diligence laws that, either implicitly or explicitly, cover climate-related issues (below, IV.A.4). The importance of criminal law, arguably the strongest form of C&C regulation, may also be growing.[180] Another notable recent development is the introduction of framework legislation requiring economy-wide net zero commitments. Switzerland, with its Climate and Innovation Act 2022, was the first country to introduce legislation explicitly requiring companies to achieve net zero GHG emissions by 2050 at the latest.[181] Potential limitations of C&C regulation include poorly targeted rule making, insufficient flexibility, under- or over-enforcement, and unintended consequences.[182]

In sum, the lack of reductions in global GHG emissions raises serious doubts about the effectiveness of regulatory measures, as currently designed, to achieve reductions in corporate GHG emissions at the speed and scale required to enable the transition to a net zero global economy. Accordingly, there have been increasing calls at the UN level in recent years for states to adopt laws and regulations that directly require companies to take action on climate change (below, IV.A.3.1.2).[183]

International Standards

Despite intra-governmental efforts to establish a binding international instrument since the 1970s, states have consistently resisted using international treaties to impose direct legal obligations on corporations (above, II.A).[184] In the absence of a comprehensive, binding framework for corporate actors, international standards have emerged as a result of decentralised, highly networked forms of coordination.[185] International standards can be seen as a way of translating international law into normative standards of conduct applicable to companies. In this sense, they serve an intermediary and gap-filling function.[186] In contrast to private climate governance instruments, international standards derive their authority from governmental endorsement.

Etymologically, the term ‘standard’ refers to the notion of reasonable, acceptable behaviour in the circumstances.[187] In general terms, standards can be described as providing a ‘legal benchmark allowing for an appreciation of the conduct of individuals based on a model’.[188] A variety of (not necessarily synonymous) terms are employed to describe quasi-legal rules in the international context. These include, in particular, ‘principles’ (eg the UNGP), ‘guidelines’ (eg the OECD GL), or ‘norms’.[189] This thesis uses the term ‘international standard’ as an umbrella term to denote broadly accepted minimum levels of social and environmental corporate behaviour in alignment with principles established in traditional sources of international law, such as international conventions or custom.[190] In that sense, international standards embody the translation of the fundamental values underpinning international obligations and principles of international law into reasonable benchmarks for assessing companies’ environmental performance.[191]

A typical characteristic of international standards is that they are designed to be flexible and adaptable to different circumstances.[192] This flexibility requires a certain degree of abstraction, which can be seen as a positive aspect.[193] But it also means that standards are often vague and imprecise, triggering a need for specification through adaptation to the circumstances.[194]

Opinions on the legal status of international standards vary.[195] Similar to private climate governance initiatives (above, II.A.2), international standards are often generally referred to as ‘voluntary’, ‘non-binding’ or ‘soft law’ because they are not normally legally enforceable in the same way as traditional ‘hard law’; this view is based on a formalistic, state-centred concept of regulation.[196] However, as standards represent an internationally endorsed benchmark of acceptable corporate behaviour that is increasingly ‘hardened’ through regulation (above, II.B.2; below, IV.A.4) and enforced through litigation (below, IV.C), describing them as ‘voluntary’ or similar does not accurately describe their legal effect. In this study, international standards are considered legitimate sources with persuasive authority to supplement national law, regardless of their precise legal status. Specifically, they may serve as an interpretive resource in cases where national law is openly framed, as is the case with the duty of care in corporate law (below, III.B.2.3; IV.A.1).[197]

Enforcement through Litigation

Climate Change Litigation

Frustrated with the lack of sufficient action on climate change mitigation (above, II.A), a range of actors have turned to the judiciary to hold governments – and, increasingly, companies and their directors – to account.[198] Climate change litigation is a complex phenomenon, spanning multiple levels of governance, areas of law and economic sectors.[199] The IPCC recognises that climate change litigation can have an impact on the outcome and ambition of climate policy.[200] Despite the considerable growth observed in the field of climate change litigation over the past two decades, it remains a relatively recent phenomenon.[201]

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Fig. 6: Total number of climate change cases, US and non-US (1986 to 2024)[202]

A general distinction can be made between legal actions in the public sphere (public climate litigation) and litigation in the private sphere (private climate litigation).[203] While public climate litigation accounts for the majority of cases, private climate litigation is growing in importance.[204] Accordingly, private climate litigation represents an increasing risk for companies, at least for those not considered on track with the transition to net zero (below, III.A.4.2). As shown in Fig. 6, a substantial proportion of all cases are litigated in the US. One potential explanation for this phenomenon is the litigious culture in the US, in which each party is typically responsible for bearing its own legal costs.[205]

There is no universally accepted definition of climate change litigation. Proposed definitions range from narrower ones that require climate change or GHG emissions to be an explicit (though not necessarily the only) subject of a lawsuit, to broader ones that take into account the motivation of the plaintiffs or include cases where climate change is only a secondary or peripheral issue.[206] Some commentators further distinguish between strategic climate litigation, where plaintiffs seek to exert bottom-up pressure on respondents (whether public or private actors), and incidental climate litigation, where this is not the case.[207]

Public Climate Litigation

Following about two decades of limited success for plaintiffs in public climate litigation, the last few years have seen the first major court decisions against states. In Europe, the peak national courts in the Netherlands (Urgenda, 2019)[208] and Germany (Neubauer, 2021)[209] held their respective governments accountable to their obligations to mitigate climate change. In 2024, the landmark decision by the ECtHR in Verein KlimaSeniorinnen and Others v Switzerland marked the first instance in which an international court found a state to be in violation of its international (human rights) obligations in the context of climate change. This decision, discussed below in this Section, was seconded in 2024 and 2025 by three landmark advisory opinions issued by the International Tribunal for the Law of the Sea (ITLOS)[210], the International Court of Justice (ICJ)[211] and the Inter-American Court of Human Rights (IACtHR)[212]. In particular, the ICJ affirmed that states have an ‘obligation to prevent significant harm to the climate system and other parts of the environment’ and must cooperate in good faith to mitigate climate change.[213]

Human rights have played an increasing role in climate litigation, which has been described as a ‘rights turn’ in climate litigation.[214] A self-standing human right to a stable climate is not currently recognised, but the human rights implications of climate change have recently begun to inform courts’ rulings on the climate-related obligations of states (and, in some cases, corporations, see below; II.B.4.3).[215] The case of the Netherlands is a prime example. In December 2019, the Supreme Court of the Netherlands confirmed in the matter of Urgenda v The Netherlands that, by failing to take sufficient measures to prevent dangerous climate change, the Dutch government had failed to comply with its positive obligations under human rights law, in particular Articles 2 (right to life) and 8 (right to respect for private and family life) of the European Convention on Human Rights (ECHR).[216] The Supreme Court upheld the lower court rulings ordering the Dutch government to reduce the country’s GHG emissions by at least 25 per cent (compared to 1990 levels) by the end of 2020. Notably, the case was brought under Article 6:162 of the Dutch Civil Code,[217] a broadly framed duty of care statute, with supporting arguments based on national law (in particular, the state’s obligation to protect the environment under Article 21 of the Dutch Constitution) and international law (namely, international climate change law, principles of international law including the no-harm principle and the precautionary principle, as well as human rights under the ECHR).[218] The decision by the court of first instance (the District Court of The Hague) marked the first ever successful climate change action based on tort law.[219] While upholding the District Court’s order, both the Court of Appeal and the Supreme Court based their decisions primarily on human rights law rather than tort law, confirming the ‘rights turn’ in (public) climate litigation.[220] The Supreme Court referred to established case law of the ECtHR and applied it in the context of climate change (notably, the ECtHR had not ruled on such a dispute at the time).[221] In addition, the Supreme Court held that, in accordance with the precautionary principle, states have an obligation to take appropriate measures under Articles 2 and 8 ECHR even where the precise materialisation of a risk is not entirely certain, as is the case with climate change.[222] Furthermore, the judges of the Supreme Court rejected the Dutch Government’s argument that the global dimension of climate change excludes the responsibility of an individual state to act; reiterating the principle of CBDR-RC and the no-harm principle (above, II.A.1), the Court held that the Netherlands’ contribution to climate change justifies partial responsibility, whereby ‘each country is responsible for its part and can therefore be called to account in that respect’.[223] In the matter of Neubauer, the German Constitutional Court imposed a procedural requirement on the German legislature to allocate the country’s remaining CO₂ budget over time with sufficient foresight, having particular regard to the interests of future generations as protected by Article 20a of the German Constitution and drawing on climate science to determine Germany’s national share of the global remaining CO₂ budget.[224]

In addition to national cases, climate litigants are increasingly seeking to involve international courts. In several cases, applicants have submitted complaints to the ECtHR, claiming that their governments had violated the Convention by failing to provide sufficient protection against the adverse effects of climate change.[225] In April 2024, the ECtHR’s issued an unprecedented ruling in the matter of Verein KlimaSeniorinnen and Others v Switzerland.[226] In a near-unanimous decision, the Grand Chamber of the Court found that there had been a violation of Articles 6 (access to justice) and 8 ECHR. It held that Article 8 includes a right for individuals to effective protection by the state authorities from serious adverse effects of climate change on their life, health, well-being and quality of life.[227] While recognising Switzerland’s margin of appreciation concerning the details of its domestic climate policy, the Court found that there were critical lacunae in the domestic regulatory framework, including a failure to quantify the country’s remaining carbon budget; the Court thus found that Switzerland had not effectively complied with its positive obligations under Article 8.[228] In this context, the Court reiterated the critical importance of carbon budgets and policies for net zero emissions, as emphasised by the IPCC (above, II.B).[229] Moreover, the ECtHR stressed that in environmental matters, states’ responsibility under Article 8 includes a duty to regulate private industry.[230] The Court rejected the Swiss Government’s implicit argument that Switzerland’s contribution to global climate change is relatively small and that it lacks the capacity to effectively address climate change on its own (‘drop in the ocean’ argument).[231] In the Grand Chamber’s view, each state has ‘its own share of responsibilities’.[232] Further, ECtHR found that the Swiss authorities had violated Article 6 ECHR by failing to adequately consider the compelling scientific evidence on climate change and not taking the complaints seriously.[233] In this context, the Court emphasised the key role of domestic courts in climate change litigation.[234] On the same day that the KlimaSeniorinnen ruling was delivered, the ECtHR declared two other cases challenging government inaction on climate change to be inadmissible on formal grounds (Carême v France; Duarte Agostinho and Others v Portugal and 32 Others).[235] Concerning the case of Greenpeace Nordic and Others and Others Norway, see above II.B.1.3.

Private Climate Litigation

Within the body of climate change litigation, there is a growing body of lawsuits against private actors. In 2024, around 20 per cent of all climate litigation cases were filed against companies or their directors and officers.[236] Private climate litigation is defined here as legal actions that are directed against private actors (typically corporations, and in some cases, their directors and officers), brought before a judicial or quasi-judicial dispute resolution body, based on private law (such as tort or company law), and characterised by a reasonably clear (rather than remote) link to climate change.[237]

The phenomenon of private climate litigation was initially concentrated mostly in the US but later spread to many other jurisdictions. The ‘first wave’ of private climate litigation in the US (from 2005 to 2015) included the two important cases of Comer v Murphy Oil[238] and Native Village of Kivalina v ExxonMobil.[239] In both instances, the courts rejected the argument that the respondents (both energy companies) were responsible for the climate-related damage alleged by the plaintiffs.[240] While the first wave of private climate litigation was largely unsuccessful from the plaintiffs’ perspective, a second wave began to form, extending beyond the US.[241] The first wave used, at least in part, strategies previously used in tobacco and asbestos litigation, whereas the second wave is characterised by a wider range of litigation strategies and legal arguments.[242] The expansion also resulted in the diversification of the targeted sectors, affecting companies in the manufacturing, construction materials (especially cement), finance, transportation, and agriculture sectors (below, Fig. 7).

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Fig. 7: Private Climate Litigation cases by sector type (2015 to 2024)[243]

In many cases, private climate litigation is triggered by climate litigation in the public sphere. In the Netherlands, building on Urgenda, and notably relying on the same legal basis (Article 6:162 of the Dutch Civil Code), a lawsuit was filed in 2019 against Royal Dutch Shell, the largest corporate GHG emitter in the Netherlands. In a first decision of its kind, in May 2021, the District Court of The Hague ordered Shell to reduce its group-wide CO₂ emissions in line with global GHG emission pathways (Milieudefensie et al. v Royal Dutch Shell, below, IV.C.4.2). Pending the appeal against the District Court’s ruling, a shareholder lawsuit was filed with the High Court of England in 2022 against the members of Shell’s board of directors, alleging breach of directors’ duties under English law for mismanagement of climate risks (below, III.C.4.4). In Germany, building on the Neubauer decision and invoking protections under fundamental rights, including those of future generations, lawsuits were filed against several major German corporate emitters, based on extra-contractual liability. Legal actions were initiated against three major automotive manufacturers, seeking court injunctions to mandate reductions in GHG emissions in alignment with the Paris Agreement and the cessation of internal combustion engine production by 2030 or sooner; additionally, a fossil fuel company was sued, with the plaintiffs petitioning for a court injunction to strengthen the company’s GHG reduction target and to halt natural gas and crude oil extraction by 2025.[244] Despite the examples of the Netherlands and Germany just mentioned, it is important to note that a precedent in public climate litigation does not constitute a legal prerequisite for initiating a lawsuit against a private actor. Indeed, in many instances, private climate litigation has been brought independently of previous litigation in the public sphere.

Within private climate litigation, we can identify three main types of cases: internal, external, and anti-greenwashing cases:[245]

Internal cases refer to legal actions against corporations (and/or their directors and officers) initiated by constituents of the company[246], in particular shareholders (typically through derivative actions)[247] or creditors (typically in the case of insolvency). The legal basis for internal cases is usually found in corporate law. The primary argument commonly involves allegations of inadequate disclosure and management of climate change-related financial risks.[248] Within a subset of internal cases against pension funds, plaintiffs (pension fund beneficiaries) allege that the fund (or its trustees) failed to adequately disclose and manage climate-related risks. Several examples of internal private climate litigation cases are discussed further below at III.C.4.

External cases involve legal action initiated by third parties (non-constituents) against corporations with which they have no direct relationship but which they claim have adversely affected them. Typically, external cases are brought by or on behalf of individuals, ranging from single persons to tens of thousands of citizens, sometimes organised as associations and often supported by NGOs (as co-plaintiffs or otherwise). Some cases are brought on behalf of future generations.[249] The legal basis for these actions is commonly found in tort law or its civil law equivalents (the laws of non-contractual obligations, extra-contractual obligations, or delicts),[250] or specific due diligence laws (see below, IV.A.4). In external cases, it is customary for plaintiffs to assert that companies are partly responsible for causing climate change, on the grounds of their past and present GHG emissions, as well as those which they are projected to emit in the future. In accordance with these allegations, plaintiffs further assert that the companies should be mandated to either provide compensation for their share of a particular climate-related harm and/or to reduce their GHG emissions. Some lawsuits against fossil fuel producers allege that these companies took steps to conceal the foreseeable effects of fossil fuel use on the climate and related harms.[251] Several examples of external private climate litigation cases are discussed further below at IV.C.4.

Anti-greenwashing cases refer to a rapidly growing body of legal actions alleging that companies misrepresent their climate impacts, eg by using claims such as climate neutral or net zero (above, I.A.5).[252] Numerous examples, including the prominent Dieselgate scandal[253] and Fossielvrij NL v KLM,[254] demonstrate that false or misleading environmental claims can have serious legal consequences for a company and its directors and officers. The legal basis for anti-greenwashing cases is commonly found in consumer protection or unfair competition law. Unlike internal and external cases, greenwashing cases have a significant success rate in favour of plaintiffs.[255]

The remedies sought by plaintiffs in private climate litigation are diverse and extend beyond claims for financial compensation. Non-monetary remedies often include declaratory relief and injunctive orders. For instance, plaintiffs may seek court declarations recognising corporate responsibility for climate-related harms or injunctions requiring respondents to reduce GHG emissions, modify business practices, or cease misleading advertising related to environmental performance. While the formal legal basis of private climate litigation typically lies within the framework of domestic private law, certain cases rely on supplementary arguments drawn from legal sources that are not ordinarily considered directly enforceable against corporations. These supporting norms – often derived from international environmental law, human rights instruments, or international RBC standards (above II.A.2) – serve to reinforce or contextualise the duties asserted under domestic legal doctrines. For example, in Milieudefensie, international human rights treaty obligations and international RBC standards (namely, the UNGP and the OECD GL) constituted essential reference points in the Court’s assessment of a standard enshrined in the domestic civil code (below, IV.C.4.2).[256]

Critical legal issues that often arise in private climate litigation include questions of justiciability (eg in the US, the political question doctrine),[257] along with issues of standing and legitimate interest, as well as complex evidentiary challenges associated with establishing causation and harm.[258] Where establishing causation and harm is required, plaintiffs routinely rely on the findings of climate science to substantiate the alleged link between respondents’ GHG emissions and climate impacts.[259] The field of attribution science estimates, with increasing accuracy, the likelihood that human interference with the climate system has contributed to the materialisation of a given physical risk (below, III.A.2.1).[260] This information can be used to estimate the proportion of economic loss from a given realised physical risk that is attributable to human-induced climate change.[261] Such advances in climate science may potentially reduce the burden of proof to establish a causal link between GHG-emitting activities and a specific climate change-related harm.[262] While it is clear that GHG emissions, including those of large corporations, have collectively contributed to current climate change and thus to related risks and impacts (above, I.A.2), the ubiquity of both the sources and impacts of climate change makes it virtually impossible to establish a direct causal link between a specific amount of GHG emissions produced by a particular company and a specific climate change impact (below, IV.A.2.3). However, the lack of a demonstrable direct causal link is a common problem in environmental harms. As is argued in private climate litigation, eg in Lliuya v RWE (IV.C.4.3.1) and Milieudefensie (below, IV.C.4.2), a possible approach to dealing with collective contribution and ubiquitous harm is that of proportionate (or partial) liability.

The Role of Corporate Law

Approaches in Corporate Law Towards Climate Change

What is the role of corporate law within the evolving regime complex of corporate climate change obligations (above, II.B)? For decades, climate change and sustainability issues in general have not been taken seriously within the domain of corporate law scholarship.[263] In recent years, however, there has been a marked increase in the level of interest in the topic of climate change, both as a specific issue[264] and as part of broader sustainability discussions.[265] These discussions shine a new light on long-standing debates in corporate law and theory. In particular, the question of the company’s purpose, and the closely related question of whose interests directors are required to pursue, demand re-evaluation in light of the existential and systemic risks posed by climate change.[266]

The ultimate goal of company law is, presumably, to serve the interests of society.[267] One would reasonably assume that it is fundamentally in society’s interest to ensure that conditions on Earth remain liveable for future generations. However, due to the state-centric approach to addressing transboundary environmental problems (see above, II.A.1), companies have traditionally not been regarded as playing a significant role in promoting sustainable development.[268] Consequently, company law has, by and large, not been concerned with environmental protection. The reluctance to implement binding rules governing corporate environmental impact at the international level (above, II.A.2) bears resemblance to the Anglo-American social norm of shareholder primacy, which generally sees no significant role for the ‘interventionist regulatory state’ (below, III.B.2.4).[269] As a result, there has long been a perception that corporate law and sustainability are two completely separate issues.[270] This dichotomy is exemplified by the way in which corporate governance codes have traditionally conceptualised sustainability, focusing primarily on economic viability rather than environmental sustainability (below, III.B.2.4.2).[271]

Opinions on the role of corporate law in addressing climate change vary widely, generally falling into three main positions.

Business as usual: This approach recognises only a marginal role, if any, for company law in addressing climate change and other environmental issues. It generally views these matters as entirely outside the scope of company law and a director’s mandate. The business as usual approach is informed by law-and-economics theory and strongly resonates with the social norm of shareholder primacy, which portrays the corporation as a purely private undertaking (see below, III.B.2.4.2).

Regulatory reform: This approach is predicated on the premise that the prevailing interpretation of corporate law is a significant impediment to any meaningful action on climate change mitigation, as well as to the broader objective of cultivating environmentally sustainable business practices. The proponents of this view advocate for corporate law reform, with a particular emphasis on moderating the dominant social norm of shareholder primacy (below, III.B.2.4.2).[272] The EU has taken a prominent stance in favour of regulatory reform in the field of sustainable business practices. This position is evidenced by the 2018 Action Plan on Sustainable Finance, which places a strong emphasis on climate change mitigation.[273]

(Re)interpretation of existing norms: This approach posits that traditional interpretations of corporate law norms are outdated in the face of unprecedented climate risks (below, III.A) and must be re-evaluated.[274] It emphasises the norm-shaping capacity of legal commentary, standard-setting and the judiciary, sometimes suggesting that these mechanisms may be more efficient in driving behavioural change than the protracted and uncertain process of regulatory reform.[275]

The last two approaches can be regarded as complementary and potentially mutually reinforcing. They are informed by the view that corporate law can, and should, assume a role in facilitating the transition to net zero, or, at the very least, should not impede it. Re-examining the norm-shaping capacity of the duty of care in the context of climate change, this thesis is predominantly informed by the third approach.

Although it has been emphasised more recently, the idea that environmental concerns should be incorporated into corporate governance is not a new one.[276] Recently, it has entered the mainstream of corporate law and corporate governance discourse. Today, traditional views that prioritise (narrowly defined) economic success over all other interests are outdated (below, III.B.2.4.2).[277] As an example, a statement entitled ‘Corporate Governance for Sustainability’, published in 2020 and endorsed by dozens of corporate law scholars from various jurisdictions, argued that ‘(w)ith less than a decade left in which to address the catastrophic threat of climate change, and with investors, companies, accountants, policymakers and academics expressing a shared sense of urgency, now is the time to act to reform corporate governance’.[278] However, despite increased attention to climate change in corporate law discourse, fundamental changes in corporate behaviour have not yet been observed.[279]

A distinction can be made between two different functions for corporate law to fulfil its purpose. On one hand, corporate law may impose substantive obligations that mandate the achievement of specific outcomes.[280] On the other hand, it may perform a procedural role, focusing on the quality of organisational and decision-making processes – such as ensuring independence and accountability – without directly prescribing particular outcomes.[281] The use of procedural regulation has seen a marked increase in financial regulation to achieve objectives such as financial stability, particularly in the aftermath of the 2008/2009 global financial crisis.[282] A disadvantage of substantive obligations is that establishing a breach typically necessitates proving complex elements that are often challenging to demonstrate, including the existence of harm, causation, and a failure to exercise due care (above, II.B.2).[283] Procedural obligations, in turn, may be easier to enforce.[284] However, a key limitation of procedural regulation lies in the risk that companies may exploit the discretion afforded by the lack of prescriptive standards to adopt formalistic procedures that are superficially compliant yet effectively amount to mere box-ticking exercises.[285]

Finally, we can identify three main corporate law ‘instruments’ that have the capacity to influence corporate behaviour in relation to climate change: disclosure, shareholder rights and directors’ duties.[286] Informed by the view that transparency enables informed economic decisions by investors, disclosure has been the primary regulatory approach in corporate law to address climate change (below, II.C.2). Further, investors have increasingly leveraged shareholder rights as a means to actively engage with companies on climate change issues, seeking to influence corporate policies and practices (below, II.C.3). Additionally, a new focus has emerged on directors’ duties as a key corporate law norm capable of shaping corporate decision-making in relation to climate change issues (below, II.C.4; III.C).

Climate Change Disclosures

From Voluntary to Mandatory

Climate change reporting has attracted considerable interest in recent years from regulators, financial supervisors, standard-setters, investors and scholars. Conventionally, the disclosure of information pertaining to climate change has been consigned to the domain of ‘non-financial’ reporting. However, given the recognition that climate change may pose significant financial risks to companies (below, III.A.5), climate change is increasingly becoming a matter for financial disclosures. In parallel, the concept of double materiality – a concept under which both financial and non-financial information must be reported if deemed material under the respective materiality threshold (below, II.C.2.2), is increasingly endorsed. Accordingly, there is a general trend away from climate change-related information being a matter that corporations can report on voluntarily, typically as part of ‘non-financial’ reporting, to mandatory disclosure requirements.[287] These developments are gradually rendering climate change-related information an integral part of corporate disclosures. In the absence of a global standard, a highly fragmented body of corporate climate disclosure regimes has emerged. These regimes are dispersed across laws and regulations, stock exchange listing requirements, guidelines and reporting standards.[288] Recognising the challenges posed by fragmentation, standard-setters such as the International Financial Reporting Standards (IFRS) and the European Financial Reporting Advisory Group (EFRAG) have recently developed reporting standards designed to promote greater coherence and comparability in climate change-related disclosures. Overall, large public-interest companies must increasingly report on both the climate change-related risks to the company as well as the climate change-related impacts of the company’s activities (on the general distinction between climate change-related risks and impacts, see below, III.A).

What is the rationale for corporate disclosures? In 1914, US Supreme Court Justice Louis Brandeis famously compared transparency to sunlight as being the best disinfectant, to underscore the importance of transparency in promoting accountability and ethical conduct in business.[289] In the aftermath of the global financial crises of the 1930s and 2008/2009, transparency was widely regarded as essential to restoring confidence in financial markets.[290] The primary objective of corporate reporting has traditionally been to enhance the ability of investors to assess financial performance, thereby promoting the efficient allocation of capital.[291] Information on social and environmental matters, in turn, has been consigned to the domain of (typically voluntary) non-financial reporting.[292] There is no generally accepted definition of non-financial reporting; ‘non-financial’ is simply the negation of financial, and as such, non-financial reporting focuses on data that is not financial in nature.[293] As with financial reporting, the primary target audience of non-financial reporting is investors, although it may certainly also be directed at other stakeholders such as the general public and governmental agencies.[294] Further, there is the notion of sustainability reporting, which – while not always clearly distinguishable from non-financial reporting – adopts a broader reporting spectrum that includes the impacts of a company on environmental and social issues (and thus, a double materiality approach, below II.C.2.2; III.A.2.5).[295] The target audience of sustainability reporting encompasses all relevant stakeholders (not only investors).[296]

Over the past two decades, numerous reporting standards and frameworks pertaining to climate change reporting have emerged. The most frequently used reporting frameworks and standards include CDP (formerly, the Carbon Disclosure Project),[297] the Climate Disclosures Standards Board Framework (CDSB),[298] the Global Reporting Initiative Standards (GRI),[299] the IFRS Sustainability Disclosure Standards,[300] the Sustainability Accounting Board Standard (SASB Standards), and the TCFDR (below, IV.A.3.3).[301] These frameworks and standards differ in scope – some concentrating specifically on climate-related issues, while others encompass a broader spectrum of sustainability topics – as well as in their underlying concept of materiality (below, II.C.2.2) and methodological approaches, ranging from principles-based to more detailed, prescriptive requirements.[302]

At the beginning of the twenty-first century, countries began to implement climate change reporting requirements for companies. An early adopter was Australia, which in 2007 introduced legislation requiring large GHG emitters to report on their GHG emissions, energy consumption and energy production.[303] In the US, the Securities and Exchange Commission (SEC) issued its first guidance on climate change-related disclosure in 2010.[304] This emerging trend was reflected in the 2011 version of the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD GL), which encouraged companies to disclose their GHG emissions as part of reporting on ‘areas where reporting standards are still evolving’, recognising that climate reporting covers the full range of GHG emissions, including ‘direct and indirect, current and future, corporate and product emissions’.[305] Going beyond disclosure of GHG emissions, France introduced requirements for large listed companies (on a comply-or-explain basis) to disclose their exposure to climate risks in 2015.[306] Promoting itself as the global leader in the field of promoting sustainable business,[307] the EU has made considerable efforts to introduce mandatory disclosure requirements on social and environmental issues, with a particular emphasis on climate change-related information. A first step was taken with the 2014 Non-Financial Reporting Directive (NFRD), which introduced mandatory non-financial reporting requirements for large companies on environmental, social, human rights and bribery matters.[308] The non-financial statement required by NFRD must include a narrative description of the policies pursued by the company in relation to these matters, including the respective due diligence processes implemented.[309] Accordingly, disclosure obligations implicitly require internal due diligence processes to engage with environmental and social issues.[310] Building on the TCFDR, and as a supplement to the NFRD, the European Commission published specific guidelines on reporting climate-related information in 2019.[311] The 2023 Corporate Sustainability Reporting Directive (CSRD 2023) extended and strengthened the sustainability reporting requirements for large and public-interest companies operating in the EU.[312] In relation to climate change, the CSRD 2023 requires companies to provide information on (i) their plans (including implementing actions and related financial and investment plans) to ensure that their business model and strategy are consistent with the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement, the objective of achieving climate neutrality by 2050, and, where relevant, the exposure of the undertaking to coal‑, oil- and gas-related activities; (ii) time-bound sustainability targets including, where appropriate, absolute GHG reduction targets at least for 2030 (interim target) and 2050; (iii) sustainability-related roles and expertise at board level and relevant incentive schemes; (iv) sustainability policies; (v) due diligence processes; (vi) the company’s exposure to sustainability risks and how it manages them; and (vii) the indicators used to assess all of the above disclosures.[313] This shows that climate reporting in the EU goes well beyond the disclosure of the company’s GHG emissions, requiring disclosures on corporate governance, strategy and due diligence. Before entering into force, the CSRD 2023 was revised as part of the European Commission’s Omnibus I package, yielding a revised CSRD text adopted in December 2025 (CSRD 2025).[314]

There are ongoing efforts to harmonise the wide variety of reporting standards and frameworks related to climate change-related information. These efforts are driven mainly by EFRAG and the International Sustainability Standards Board (ISSB), a standard-setting body established by the IFRS. In June 2023, the ISSB published ‘IFRS S2 Climate-related Disclosures’, which integrates and builds on the TCFDR and the SASB Standards.[315] To standardise the way in which companies report on climate change and other sustainability issues under the CSRD 2023, the European Commission adopted the first set of the European Sustainability Reporting Standards (ESRS) in 2023, which included ESRS E1-Climate Change.[316]

The Quest for Materiality

Whether an item of information must be reported in a company’s disclosures depends critically on the criterion of materiality. Despite its fundamental importance to reporting, materiality is an elusive concept.[317] Perceptions of what constitutes material information are dynamic and evolve in line with developments in regulation, standard-setting, market practice and litigation.[318] In recent years, climate change has become a key issue in the quest for materiality.

The materiality test was developed by US courts in the context of financial reporting. It asks whether there is a substantial likelihood that a particular piece of information would have been significant in the deliberations of a hypothetical ‘reasonable investor’.[319] Based on this concept, the G20/OECD Principles of Corporate Governance define (financial) materiality as information that, if omitted or misstated, could reasonably be expected to influence an investor’s assessment of a company’s value or, alternatively, information that a reasonable investor would consider important in making an investment or voting decision.[320] Put simply, ‘that which a reasonable investor finds material is material’.[321] While developed in the context of financial information, the materiality test also applies, mutatis mutandis, to determine the relevant threshold in non-financial and sustainability reporting (above, II.C.2.1).[322] The financial materiality concept is ‘company-centric’ in the sense that it is concerned with social and environmental risks only where they are viewed as affecting the financial performance of the reporting company; in contrast, materiality in sustainability reporting focuses on externalities and corporate accountability to (non-investor) stakeholders, society, or nature, and typically emphasises a long(er)-term perspective.[323] The concept of double materiality, which underpins sustainability reporting, means that information that is material from either a financial or a sustainability perspective, or from both perspectives, must be disclosed.[324] There is a lack of guidance on determining materiality in the realm of sustainability reporting, leading to considerable variations in how materiality is understood and applied in sustainability reporting.[325]

Materiality considerations are essential in climate change disclosures. While not introducing clearly defined requirements for climate disclosures, the SEC guidelines of 2010 (above, II.C.2.1) reminded issuers that the materiality threshold applies to all information, including climate-related risks.[326] The TCFDR popularised the fact that climate change-related information may be financially material to companies, incorporating it into its principles-based reporting recommendations (below, III.A.6; IV.A.3.3). Under IFRS S2 Climate-related Disclosures (above, II.C.2.1), which (like the TCFDR) adopts a financial materiality approach, companies must disclose information about climate-related risks and opportunities that ‘could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term’.[327] The double materiality concept is increasingly reflected in recent reporting standards and corporate governance codes. The 2023 version of the G20/OECD Corporate Governance Principles recognises the increasing investor demand for sustainability-related disclosures, including in relation to GHG emissions.[328] They state that material sustainability-related information could include, for example, ‘environmental and social matters that can reasonably be expected to affect a company’s asset value and its ability to generate revenues and long-term growth’, but also ‘a company’s own impact on society and the environment … if it is expected to affect the company’s value, such as environmental liabilities under a jurisdiction’s existing laws and regulations, or (GHG) emissions that may be capped or taxed in the future’.[329] Accordingly, albeit embedded into a financial materiality concept, the 2023 version of the G20/OECD Corporate Governance Principles recognises the relevance of companies’ climate change-related impacts. Similarly, the OECD GL in their 2023 version recommend that, in addition to traditional financial information, companies disclose material information on ‘sustainability-related information’, notably ‘climate-related risks’.[330] Further, they acknowledge that an enterprise’s actual or potential adverse impacts on people, the environment and society may constitute material information.[331] In the EU, the concept of double materiality has been gradually implemented into climate reporting requirements. While reporting duality was already evident in the NFRD (albeit unclear conceptually),[332] the European Commission’s guidelines on reporting climate-related information of 2019 explicitly introduced a double materiality standard for climate-related information.[333] The double materiality concept was further strengthened through the CSRD 2023, which requires the disclosure of information that is material from both perspectives (financial materiality and sustainability materiality) as well as from only one perspective, thus requiring a double materiality assessment.[334]

The determination of materiality in the realm of climate change-related information includes a differentiation between direct and indirect emissions (above, II.B.1.3). The TCFDR posit that organisations should disclose Scope 1 and 2 GHG emissions independent of a materiality assessment, while Scope 3 emission disclosures are subject to a materiality threshold (see below, IV.B.2.2).[335] This is reflected, for instance, in the CSRD 2023, where disclosing a Scope 3 target is required only ‘where relevant’.[336]

Limitations and Challenges

There are several limitations and practical challenges associated with climate change reporting and related requirements. They mainly include complexity, weakness, lack of standardisation and limited scope.

The first limitation is complexity. As Villiers observes, rather than increasing transparency, reporting requirements have often led to obfuscation and confusion, allowing harmful corporate behaviours to continue unchallenged and thus achieving ‘the opposite of what reporting is supposed to achieve’.[337] Accordingly, the theoretical claim that transparency is essential for increasing trust (above, II.C.2.1) may have ‘never become the reality’.[338] Indeed, the proliferation of voluntary reporting standards tends to allow corporations to cherry-pick information and standards in a way that makes their social and environmental credentials shine in a good light, leading to various problems, including impression management, information overload, and greenwashing.[339] The same problem may persist in mandatory reporting schemes that allow for a wide margin of flexibility, including due to a lack of guidance on the determination of materiality. Accordingly, the transition ‘from voluntary to mandatory’ climate reporting alone does not imply progress. While implying a more encompassing concept of reporting, double materiality has added further complexity, not least in terms of terminology.[340]

The second limitation is weakness. As a ‘regulatory tool of minimum intrusion’, disclosure merely compels the release of information to an audience that is presumed to be interested in receiving it and to act on it in a way that contributes to achieving the objective of the disclosure regime.[341] As regulators generally shy away from directly and adequately pricing GHG emissions, let alone directly mandating GHG emissions reductions (above, II.B.2), the focus turns to the seemingly next-best alternative: helping investors (and possibly other users of disclosed data) assess climate risk through increased transparency by requiring companies to disclose information.[342] In such a setting limited to enhancing transparency, the reduction of GHG emissions is only a possible, indirect and hard-to-measure effect of climate change disclosure. In addition, without a credible ‘threat’ of regulation and enforcement, reporting standards lack teeth.[343] Nevertheless, studies suggest that mandatory disclosures can lead to emission reductions without adverse effects on financial performance.[344] Further, a study on the impact of the NFRD suggests that the Directive led to several perceived changes in corporate behaviour, including increased awareness of the importance of non-financial issues within companies (including the board and top management), harmonisation of information and processes, and a general push for a long-term vision and integration of sustainability into corporate strategy.[345]

Third, the current lack of standardisation casts doubts on the relevance, reliability and comparability of the data disclosed.[346] Efforts to enhance standardisation under the aegis of the ISSB and EFRAG aim to address this issue.

Fourth, most current disclosure schemes and standards do not cover the full range of GHG emissions. In particular, Scope 3 emissions are typically not disclosed, even though they may (depending on the industry) represent the largest share of a company’s total GHG emissions (above, II.B.1.3). Making Scope 3 disclosures mandatory could reduce the risk of circumventing reporting regimes by outsourcing GHG-intensive activities to jurisdictions with poor or no climate disclosure reporting regimes or to SMEs that are not subject to disclosure requirements.[347]

Overall, there is considerable risk that climate disclosure initiatives raise misplaced expectations as to their potential to lead to significant reductions in corporate GHG emissions.[348] While recent developments in standard-setting and regulatory frameworks are commendable, they may not be sufficient to effect substantial changes in behaviour, and complexity threatens to undermine their potential.[349] Arguably, the shortcomings of voluntary GHG disclosure regimes should be addressed by introducing and enforcing comprehensive mandatory corporate climate disclosure regimes.[350] Mandatory disclosure requirements generally increase the likelihood of enforcement, including through breach of duty claims against directors over inadequate disclosure of climate change-related information (below, III.C.4).[351] However, as pointed out, the introduction of mandatory reporting requirements alone is not a panacea.

Shareholder Engagement on Climate Change

Investor attention to climate risks has grown strongly in recent years.[352] Institutional investors such as asset managers, banks, insurance companies, pension funds, and mutual funds increasingly take the view that investee companies should prioritise climate risk management.[353] In 2020, climate change was the issue that was raised most frequently in institutional investor engagement.[354] In the US alone, in the 2021 proxy season, shareholders filed 66 resolutions specifically addressing climate change issues (in addition to 13 proposals concerning climate-related lobbying).[355] It appears that the primary reason for this development was the mounting awareness among investors of the financial ramifications of climate-related risks for their portfolios (below, III.A.5).[356] Given the massive sums of assets under management they oversee, institutional investors are potential catalysts in driving corporations towards a pathway consistent with the trajectory towards net zero.[357] Further, investors’ views on climate issues are important because they inform boards’ materiality assessments (above, II.C.2.2; below, III.C.2).[358]

Since the beginning of the century, investor groups have advocated for government-imposed disclosure requirements concerning the financial impact of climate change on corporations.[359] Companies have generally resisted this call, arguing that the effects of climate change are too uncertain and remote to merit disclosure.[360] In recent years, investors have formed a multitude of global and regional coalitions and initiatives addressing climate change risk (and related disclosure).[361] Major mainstream investors have also increased their focus on the issue. In January 2020, BlackRock, one of the world’s largest asset managers, announced a number of initiatives to place sustainability at the heart of its investment approach.[362] And yet, as critics point out, there is often a stark contrast between investor rhetoric and action, reflected in the voting behaviour of most major investors on climate-related resolutions at annual general meetings.[363]

In the US, investor support for climate proposals peaked in 2022 but declined in subsequent years.[364] Particularly in the US, increased investor attention on climate change and other sustainability issues has more recently faced strong political pushback – the so-called ‘ESG-backlash’.[365] In fact, the years 2024 and 2025 saw many major investors, including BlackRock, leaving shareholder initiatives promoting action on climate change.[366]

Investors concerned about climate risk can generally choose between divesting from a GHG-intensive investment, for instance by selling the relevant shares (divestment, exit), or engaging with an investee company with a view to encouraging it to take certain measures to address climate risks (engagement, voice).[367] Engagement options range from discussions with management and the board to more confrontational steps such as filing shareholder resolutions and taking court action (below, III.C.4).[368] Proposals may demand short-term action, for instance, the issuance of a report on a particular issue (such as the company’s exposure to climate risk), or they may seek broader and longer-term action, such as divestment from thermal coal.[369] Primarily in the US and in Australia, and more recently also in Europe, investors have filed climate change-related proposals asking investee companies to develop and publish transition plans, set emission reduction targets, disclose their climate risks, avoid climate-related lobbying, and generally improve their governance of climate risks.[370] Inspired by ‘Say on Pay’ initiatives that have emerged in the context of executive remuneration, ‘Say on Climate’ initiatives are gaining traction, particularly within the energy, extractive and financial sectors.[371] Typically led by ‘activist’ investors such as Engine No. 1 or investor coalitions such as Follow This or ShareAction, investor initiatives have led to remarkable results. In 2021, for example, a successful campaign led by Engine No. 1 led to the appointment of three new board members at ExxonMobil, with the declared aim of pushing the energy company to reduce its carbon footprint.[372] Another example is Australian company Woodside Petroleum: in April 2020, a majority of investors voted in favour of a shareholder resolution calling for the setting of GHG emission reduction targets.[373]

Opinions are divided on the question of whether divestment or engagement is more effective from the perspective of an investor concerned about climate change risk (see below, IV.B.4.4).[374] Institutional investors generally seem to prefer engagement over divestment.[375] Although climate risk awareness has become mainstream in the financial sector, it is difficult to determine the extent to which this translates into significant changes in investor decision-making and, ultimately, the behaviour of investee companies.[376] Although institutional investors are commonly presumed to have a longer investment horizon compared to other investors, the trustees or directors of these entities are under significant pressure to deliver short-term returns for their beneficiaries. This has given rise to serious doubts as to whether a critical mass of institutional investors divesting from GHG-intensive industries will be achieved.[377] In light of the considerable ESG-related backlash witnessed in recent years, there persists a considerable degree of uncertainty regarding the potential contribution of investor engagement to the objective of aligning financial flows with the Paris Agreement.[378]

Directors’ Duties

In recent years, a debate has emerged concerning the question of whether directors are required to consider the company’s climate risks and impacts as part of their duty of care (below, III.C). The duty of care is an open-ended norm, which is characterised by its flexibility and ability to adapt to different circumstances. It is also capable of evolving in response to changing circumstances or societal perceptions (below, III.B.2.3). Within corporate governance, directors occupy a central position. Functionally separate from the shareholders, directors are primarily responsible for the company’s strategy and for overseeing the management of the company (below, III.B.1). Directors’ duties are functionally linked to the other two main tools of corporate law in the context of climate change: disclosure and shareholder rights. As discussed in more detail later (below, III.C.2), directors are required to ensure the adequacy and accuracy of disclosures, including climate disclosures. Furthermore, directors are accountable to the company’s shareholders, who may have demands regarding the company’s approach to climate change (above, II.C.3). A key question is how to specify the typically open-ended standard of care encapsulated in the duty of care in the context of climate change (below, III.B.2).

Interim Conclusions

In response to sub-RQ 1, Chapter II has outlined the regime complex of corporate climate obligations, thereby establishing the foundation for the subsequent in-depth analysis of the duty of care in the context of climate change (Chapter III) and the concept of climate change due diligence (Chapter IV). Several interim conclusions can be drawn at this juncture.

Since its inception in the early 1990s, international climate change law has not led to state action sufficient to achieve the ultimate goal of international climate change policy, namely, to limit the global temperature increase to a level that prevents dangerous climate change (above, II.A.1). This conclusion calls for an exploration of the responsibilities of non-state actors, with a particular focus on the responsibilities of corporations (above, II.A.2). But international climate change law is largely silent on the obligations of non-state actors. In lieu of explicit provisions in (written) international law, polycentric forms of private climate governance have emerged. The objective of these instruments is to encourage the private sector to contribute to achieving the goals of the Paris Agreement. Although these private climate governance instruments are commonly denoted as ‘voluntary’, characterising them as non-binding is inadequate, as they contribute to a gradually consolidating consensus that corporate climate obligations beyond mere compliance with technical regulations do in fact exist.

Following the ratification of the Paris Agreement, the concept of net zero by around mid-century has emerged as the relevant frame of reference for both states and non-state actors (above, II.B.1). The net zero concept originates from climate science, specifically the concept of a remaining carbon budget. It is operationalised in a variety of ways, including through the implementation of net zero targets, the adoption of national laws and regulations, and the establishment of international standards. Whilst the majority of large companies have adopted some form of net zero target, a universally accepted methodology for translating the global net zero target into corporate targets is missing. As a result, corporate net zero targets commonly lack methodological robustness and comparability, including in relation to Scope 3 emissions.

A main instrument of operationalising international climate change law is domestic legislation (above, II.B.2). In respect of requirements directly applicable to companies, countries typically combine market-based mechanisms with command-and-control regulation. In most cases, regulators abstain from directly requiring companies to reduce their GHG emissions. Influenced by economic theories that see market-based mechanisms as the best way to ‘solve’ the ‘market failure’ of climate change, carbon pricing is the predominant instrument used by countries. However, carbon pricing instruments as currently designed are not nearly as effective as they are sometimes portrayed, mainly due to (far too) low carbon prices and an insufficient scope of coverage. Consequently, current national laws, policies and ambitions (as expressed through states’ NDCs) are highly unlikely to lead to the substantial and rapid changes in behaviour that would be needed to stay on a 1.5°C pathway.

Representing benchmarks of internationally endorsed acceptable corporate behaviour, international standards may fill the ‘regulatory gap’ created by the lack of effective regulatory instruments at the domestic levels (above, II.B.3). International standards (such as the UNGP and the OECD GL) represent the transposition of fundamental values underpinning obligations and principles of international law to a reasonable benchmark to assess corporate behaviour. Their flexibility allows for adaptation to diverse circumstances.

The emerging phenomenon of climate change litigation, particularly that of private climate litigation, sheds light on current key issues of corporate climate responsibility, including in relation to proportionate liability and responsibility for a company’s indirect GHG emissions (above, II.B.4). This type of litigation contributes to delineating (and possibly establishing) climate change obligations of corporate actors.

Because of its direct relevance to the regulation of corporate activity, corporate law occupies an important role within the regime complex of corporate climate obligations (above, II.C). Underpinned by the trust in transparency to solve market failures, disclosure has traditionally been the main corporate law tool to address climate change (above, II.C.2). Other key instruments include shareholder rights and directors’ duties, both of which are functionally related to reporting. The emphasis on disclosure gives rise to the pivotal issue of materiality, which determines the information that must be provided in corporate disclosures. Given the broadly accepted financial materiality of climate change risks to corporations, related disclosures now form an integral part of financial disclosures. While the concept of materiality was initially developed in the financial sphere, it has since been adapted to apply to sustainability information, informed by the concept of double materiality. Disclosure has several limitations, including weakness and lack of standardisation, raising significant concerns regarding the potential for substantial effects on reducing GHG emissions through climate reporting. While shareholder engagement on climate issues has generally grown in recent years, it has been set back by the so-called ESG backlash since around 2022.

The concept of sustainable development was popularised in 1987 through the UN’s ‘Our Common Future’ Report led by Gro Harlem Brundtland, then Prime Minister of Norway (World Commission on Environment and Development (WCED), Our Common Future, A/42/427 (4 August 1987)).

UN General Assembly, Protection of Global Climate for Present and Future Generations of Mankind, GA A/Res. 43/53 (6 December 1988).

Montreal Protocol on Substances that Deplete the Ozone Layer, 16 September 1987, in force 1 January 1989, 1522 UNTS 3 (Montreal Protocol). The Montreal Protocol established control measures concerning certain highly potent GHGs (CFCs and halons as per Annex A of the Montreal Protocol) and is generally viewed as a success (Mayer, The International Law on Climate Change (n 72) 53).

IPCC, AR1 (1990).

Robert O. Keohane and David G. Victor, ‘The Regime Complex for Climate Change’ (2011) 9 Perspectives on Politics 7; Mayer, The International Law on Climate Change (n 65) 51–88; Margaretha Wewerinke-Singh, State Responsibility, Climate Change and Human Rights under International Law (Hart Publishing 2019) 70–81.

Mayer, The International Law on Climate Change (n 65) 36.

Kyoto Protocol to the United Nations Framework Convention to Climate Change, 11 December 1997, in force 16 February 2005, 2303 UNTS 162 (Kyoto Protocol). The Kyoto Protocol was never ratified by the US.

Article 2(1) Paris Agreement. See also Article 4(1): ‘In order to achieve the long-term temperature goal set out in Article 2, Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognizing that peaking will take longer for developing country Parties, and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.’

Vienna Convention on the Law of Treaties, 23 May 1969, in force 27 January 1980, 1155 UNTS 331; Daniel Bodansky, ‘The Legal Character of the Paris Agreement’ (2016) 25 RECIEL 142, 144.

Mayer, The International Law on Climate Change (n 72) 47. The main differences between the Paris Agreement and the Kyoto Protocol include: (i) in the Paris Agreement, no general distinction is made between developing and developed States, whilst acknowledging that developed States are expected to make more substantial contributions in applying the principle of common but differentiated responsibilities (see Article 3 UNFCCC, Article 2(2) Paris Agreement); (ii) in the Paris Agreement, national commitments are not negotiated but determined unilaterally by each Party (bottom-up approach) and communicated to the UNFCCC Secretariat, relying mostly on ‘naming and shaming’ (iii) while the Kyoto Protocol focused mostly on mitigation, the Paris Agreement put more emphasis on other means of international cooperation including adaptation, loss and damage, financial support, technological assistance, and capacity building (ibid, 47–8).

Bodansky (n 170) 142; Lavanya Rajamani, ‘The 2015 Paris Agreement: Interplay between Hard, Soft and Non-Obligations’ (2016) 28 Journal of Environmental Law 337.

Benoit Mayer, ‘Obligations of Conduct in the International Law on Climate Change: A Defence’ (2018) 27 RECIEL 130.

Christina Voigt, ‘The Paris Agreement: What is the Standard of Conduct for Parties?’ (2016) 26 QIL 17, 18.

Articles 4(2), (3) Paris Agreement; see Bodansky (n 170) 146.

Articles 3, 4(3), 9(3) Paris Agreement. See Christina Voigt and Felipe Ferreira, ‘‘‘Dynamic Differentiation”: The Principles of CBDR-RC, Progression and Highest Possible Ambition in the Paris Agreement’ (2016) 5 TEL 285.

Article 4(3) Paris Agreement.

Voigt, The Paris Agreement (n 174) 18–19, 21.

This opinion was expressed by HRC member Gentian Zyberi in his individual opinion in the matter of Billy et al. v Australia, HRC, Views adopted by the Committee under article 5(4) of the Optional Protocol, concerning communication No. 3624/2019 CCPR/C/135/D/3624/2019 (22 September 2022).

Obligations Of States In Respect Of Climate Change (Advisory Opinion) ICJ (2025), para. 409.

See, in particular, Martti Koskenniemi, ‘Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law’ (Report of the Study Group of the International Law Commission), A/CN.4/L.682 (13 April 2006). See also Martti Koskenniemi and Päivi Leino, ‘Fragmentation of International Law? Postmodern Anxieties’ (2002) 15 Leiden J. Int’l L. 553).

Thomas Cottier, ‘Multilayered Governance, Pluralism, and Moral Conflict’ (2009) 16 Indiana Journal of Global Legal Studies 647, 651; Eren Cifci and Matthew E. Oliver, ‘Reassessing the Links between GHG Emissions, Economic Growth, and the UNFCCC: A Difference-in-Differences Approach’ (2018) 10 Sustainability 334.

Michaelowa, Allen, and Sha (n 76) 277. Concerning exceptionalism in the agriculture sector, see Alexander Zahar, ‘Agricultural Exceptionalism in the Climate Change Treaties’ (2023) 12 TEL 42.

IPCC, AR6. SYR: SPM (2023), 10.

UNEP, Emissions Gap Report 2023, XVI; UNEP, Emissions Gap Report 2024, XII.

UNEP, Emissions Gap Report 2020, XXI (emphasis added). The follow-up report of 2021 estimated that warming would reach 2.7°C by the end of the century ‘if all unconditional 2030 pledges are fully implemented’ (UNEP, UNEP Emissions Gap Report 2021, XII). The 2023 edition of the report found that ‘(i)f current policies are continued, global warming is estimated to be limited to 3°C’ (UNEP, UNEP Emissions Gap Report 2023, XXII). See also IPCC, AR6. SYR: SPM (2023), 11 (‘(m)odelled pathways that are consistent with NDCs announced prior to COP26 until 2030 and assume no increase in ambition thereafter … (lead) to a median global warming of 2.8 [2.1 to 3.4] °C by 2100’).

UNFCCC Secretariat, Nationally determined contributions under the Paris Agreement. Synthesis report by the secretariat, FCCC/PA/CMA/2021/2 (17 September 2021), 5.

See Benoit Mayer and Zhuoqi Ding, ‘Climate Change Mitigation in the Aviation Sector: A Critical Overview of National and International Initiatives’ (2023) 12 TEL 14.

UNFCCC, Decision 1/CMA.5, FCCC/PA/CMA/2023/16/Add.1 (15 March 2024) I.2., II.A.18. The alleged progress relates to the observation that the outlook had been improved ‘from an expected global temperature increase of 4°C according to some projections prior to the adoption of the Agreement to an increase in the range of 2.1–2.8°C with the full implementation of the latest (NDCs)’ (ibid, II.A.18). Accordingly, the purported ‘progress’ alludes to an allegedly improved future outlook, not actual achievements in terms of climate change mitigation.

Verein KlimaSeniorinnen and Others v Switzerland ECHR 087 (2024), paras 413, 436.

UNEP, Emissions Gap Report 2023, XXI.

UNFCCC Secretariat, Nationally determined contributions (n 187).

IEA, ‘Global Energy Review: CO₂ Emissions in 2021. Global emissions rebound sharply to highest ever level’ (2022) <https://www.iea.org/reports/global-energy-review-co2-​emissions-in-2021-2>.

UNFCCC Secretariat, Nationally determined contributions under the Paris Agreement. Synthesis report by the secretariat UN, FCCC/PA/CMA/2025/8 (28 October 2025).

IPCC, AR6. SYR: SPM (2023) 22.

Mayer states that ‘(a) quarter of century of protracted international negotiations achieved only partial success, and frustration grew among partakers and observers’ whilst also acknowledging that ‘(t)he UNFCCC regime has achieved significant results … (v)irtually every nation now agrees to take some action to tackle climate change’ but then in turn stressing that ‘much more international cooperation is needed if the objective adopted in the Paris Agreement … is to be met’ (Mayer, The International Law on Climate Change (n 72) 33, 50).

Eg Michaelowa, Allen, and Sha (n 76) 277 (emphasising that ‘the only mitigation policy instruments that can thrive are those whose benefits accrue to small but powerful groups, while the costs are spread imperceptibly across large groups’); Benjamin, Responsibilities of Carbon Major Companies (n 97) 354, 374–75.

See eg Doreen Lustig, Veiled Power: International Law and the Private Corporation: 1886–1981 (OUP 2020) 220.

Eg Mayer and Rajavuori, National Fossil Fuel Companies (n 26) 56.

See generally Rajavuori, The Role of Non-State Actors (n 25).

Andrew Clapham, ‘Non-State Actors’ in Daniel Moeckli and others (eds), International Human Rights Law (4th edn, OUP 2022) 583; Rajavuori, The Role of Non-State Actors (n 25) 380.

Rajavuori, The Role of Non-State Actors (n 25) 383.

Chiara Macchi and Josephine van Zeben, ‘Business and Human Rights Implications of Climate Change Litigation: Milieudefensie et al. v Royal Dutch Shell’ (2021) 30 RECIEL 409, 410.

See Veerle Heyvaert and Thijs Etty, ‘Introducing Transnational Environmental Law’ (2012) 1 TEL 1, 4.

Harriet Bulkeley and others, Transnational Climate Change Governance (CUP 2014) 1.

Rajavuori, The Role of Non-State Actors (n 25) 381, 384.

ibid 381.

ibid 385–86. Michael P. Vandenbergh and Jonathan A. Gilligan, ‘Beyond Gridlock’ (2015) 40 Colum J Envtl L 217; Michael P. Vandenbergh, ‘Reconceptualizing the Future of Environmental Law: The Role of Private Climate Governance’ (2015) 32 Pace Envtl L Rev 382; Andrew Jordan and others, ‘Emergence of Polycentric Climate Governance and Its Future Prospects’ (2015) 5 Nature Climate Change 977; Thomas Hale, ‘‘‘All Hands on Deck’’: The Paris Agreement and Non-State Climate Action’ (2016) 16 Global Environmental Politics 12.

Rajavuori, The Role of Non-State Actors (n 25) 382, 385–86.

Further examples will be given throughout this thesis, see, for instance, below, II.B.1.2.

See Rajavuori, The Role of Non-State Actors (n 25) 382 (with references); Karin Bäckstrand and others, ‘Non-State Actors in Global Climate Governance: From Copenhagen to Paris and Beyond’ (2017) 26 Environmental Politics 561.

OHCHR, ‘Understanding Human Rights and Climate Change’ (Submission of the Office of the High Commissioner for Human Rights to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change, 26 November 2015) 4.

Decision 1/CP.21, Adoption of the Paris Agreement, FCCC/CP/2015/10, Add.1 (29 January 2016), paras 134–37.

ibid, para. 122 (emphasis added).

UN, ‘Launch of UN Race-to-Zero Emissions Breakthroughs’ (Press Release, 28 January 2021) <https://unfccc.int/news/launch-of-un-race-to-zero-emissions-breakthroughs>.

Rajavuori, The Role of Non-State Actors (n 25) 386; Mayer, The International Law on Climate Change (n 72) 272–73. Nevertheless, some commentators argue that the Paris Agreement has created a system of institutionalised hybrid multilateralism in which national NDCs are the backbone of mitigation, adaptation and finance, and in which it is recognised that NSAs have an indispensable role as implementers, experts and watchdogs (Bäckstrand and others (n 211) 567–68).

Mayer and Rajavuori, National Fossil Fuel Companies (n 26) 56–57.

Rajavuori, The Role of Non-State Actors (n 25) 384.

Clapham challenges the widespread conception that corporations do not have international legal obligations (in the context of human rights), pointing to case-law of the Supreme Courts of the US and Canada (Clapham, Non-State Actors (n 201) 596–98). See generally André Nollkaemper, ‘Responsibility of Transnational Corporations in International Environmental Law: Three Perspectives’ in Gerd Winter (ed), Multilevel Governance of Global Environmental Change: Perspectives from Science, Sociology and the Law (CUP 2006) 179, 185; Markos Karavias, Corporate Obligations under International Law (OUP 2013); Morgera (n 79) 24–68.

Clapham, Non-State Actors (n 201) 586 (with further reference).

Rajavuori, The Role of Non-State Actors (n 25) 384–85.

Daniel Iglesias Márquez, ‘Cambio Climático y Responsabilidad Empresarial: Análisis Del Papel de Las Empresas Para Alcanzar Los Objetivos Del Acuerdo de París’ (2020) 36 Anuario Español de Derecho Internacional 327, 348; see also Clapham, Non-State Actors (n 201) 595–96.

Rajavuori, The Role of Non-State Actors (n 25) 382–83.

ibid, 382.

ibid.

ibid, 382–83.

ibid, 386 (with reference).

Eg Lise Smit and others, Study on due diligence requirements through the supply chain (European Commission Publications Office 2020), 556; Issachar Rosen-Zvi, ‘You Are Too Soft!: What Can Corporate Social Responsibility Do For Climate Change?’ (2011) 12 Minnesota Journal of Law, Science & Technology 234; Julia Anna Bingler and others, ‘Cheap Talk and Cherry-Picking: What ClimateBert Has to Say on Corporate Climate Risk Disclosures’ (2022) 47 Finance Research Letters 102776.

ibid. See Beate Sjåfjell, ‘Regulating for Corporate Sustainability: Why the Public–Private Divide Misses the Point’ in Barnali Choudhury and Martin Petrin (eds), Understanding the Company: Corporate Governance and Theory (CUP 2017) 145, 159.

Rajavuori, The Role of Non-State Actors (n 25) 387–88.

See ibid, 387.

ibid, 387.

ibid, 383, 397.

Eg David M. Ong, ‘The Impact of Environmental Law on Corporate Governance: International and Comparative Perspectives’ (2001) 12 EJIL 685, 686 (emphasis added).

Mayer, The International Law on Climate Change (n 72) 273.

Michaelowa, Allen, and Sha (n 76) 276.

Fankhauser and others (n 73).

Thomas Hale and others, ‘Assessing the Rapidly-Emerging Landscape of Net Zero Targets’ (2021) 22 Climate Policy 18.

See Damon Matthews and Ken Caldeira, ‘Stabilizing Climate Requires Near-Zero Emissions’ (2008) 35 Geophysical Research Letters 1; Fankhauser and others (n 73) 15.

UNFCCC, Decision 1/CMA.3, FCCC/PA/CMA/2021/10/Add.1 (8 March 2022), recitals 21-22.

ibid, recital 16.

TCFD, Guidance on Metrics, Targets, and Transition Plans (2021) <https://assets.bbhub.io/company/sites/60/2021/07/2021-Metrics_Targets_Guidance-1.pdf> 40.

IPCC, AR6. SYR (2023) Annex I (Glossary) 127.

Defined by the IPCC as ‘(c)ondition in which anthropogenic carbon dioxide (CO₂) emissions associated with a subject are balanced by anthropogenic CO₂ removals’ (IPCC, AR6. WG III: Glossary (2023), 1797).

This term is broader than carbon neutrality; it is defined by the IPCC as ‘a state in which human activities result in no net effect on the climate system’ (IPCC, SR1.5. Annex I: Glossary (2018) 545).

At a global scale, the IPCC views the terms GHG neutrality and net zero GHG emissions as equivalent (IPCC, AR6. SYR (2023), Annex I (Glossary) 126–27.

ibid 121 (defining the remaining carbon budget as ‘the maximum amount of cumulative net global anthropogenic CO₂ emissions that would result in limiting global warming to a given level with a given probability, taking into account the effect of other anthropogenic climate forcers … when expressed from a recent specified date); see Meinshausen and others (n 61).

IPCC, SR1.5. SPM (2018) 12. See Joeri Rogelj and others, ‘Estimating and Tracking the Remaining Carbon Budget for Stringent Climate Targets’ (2019) 571 Nature 335, 335–42.

IPCC, AR6. SYR: SPM (2023) 20. Abatement here refers to anthropogenic actions that reduce the amount of GHGs that are released from fossil fuel infrastructure to the atmosphere (ibid).

The terms pathways and scenarios are commonly used interchangeably in the literature (see IPCC, AR6. SYR, SPM (2023) 9).

IPCC, SR1.5 (2018) 93, 159.

ibid, 69; ibid, AR5. WGI (2014) 119, 156.

Overshoot means that a specified level of global warming, such as 1.5°C, is temporarily exceeded, but then followed by a decline achieved through anthropogenic removal of CO₂ emissions globally (IPCC, SR1.5, Annex I: Glossary (2018) 559; IPCC, AR6. SYR: SPM (2023) 23). A net negative emissions situation is achieved when metric-weighted anthropogenic GHG removals exceed metric-weighted anthropogenic GHG emissions (IPCC, AR6. WGIII: Annex I (2022), 1809).

IPCC, AR6. SYR: SPM (2023) 20–21; see also ibid, SR1.5. SPM (2018), 12.

ibid, AR6. SYR: SPM (2023) 20.

ibid, SR1.5. SPM (2018) 12.

Richard Black and others, ‘Taking Stock: A Global Assessment of Net Zero Targets’ (Energy & Climate Intelligence Unit and Oxford Net Zero, 2021) <https://ca1-eci.edcdn.com/reports/ECIU-Oxford_Taking_Stock.pdf>.

Kaya Axelsson and others, ‘Net Zero Stocktake 2023’ (NewClimate Institute, Oxford Net Zero, Energy & Climate Intelligence Unit and Data-Driven EnviroLab, 2023) <https://​zero​tracker.​net/analysis/net-zero-stocktake-2023> 4.

Net Zero Tracker, ‘Net Zero Stocktake 2025’ (NewClimate Institute, Oxford Net Zero, Energy & Climate Intelligence Unit, and Data-Driven EnviroLab, 2025) <https://​zero​tracker.​net/analysis/net-zero-stocktake-2025> 3.

Niklas Höhne and others, ‘Wave of Net Zero Emission Targets Opens Window to Meeting the Paris Agreement’ (2021) 11 Nature Climate Change 820.

Eg Alina Averchenkova and Tiffanie Chan, ‘Governance pathways to credible implementation of net zero targets’ (LSE, 2023) <https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2023/10/Governance-pathways-to-credible-implementation-of-net-zero-targets.pdf>.

See Takeshi Kuramochi and others, ‘Ten Key Short-Term Sectoral Benchmarks to Limit Warming to 1.5°C’ (2018) 18 Climate Policy 287 (presenting detailed measures and targets necessary for each sector to stay on a 1.5°C compatible pathway).

European Commission, Stepping up Europe’s 2030 climate ambition (17 September 2020) COM(2020) 562 final.

On the latter, see eg Alessandro Monti and Beatriz Martinez Romera, ‘Fifty Shades of Binding: Appraising the Enforcement Toolkit for the EU’s 2030 Renewable Energy Targets’ (2020) 29 RECIEL 221.

Axelsson and others (n 258).

See TCFD, Guidance on Metrics, Targets, and Transition Plans, 40.

Fred Hans and others ‘Net zero stocktake 2022. Assessing the status and trends of net zero target setting across countries, sub-national governments and companies’ (NewClimate Institute, Oxford Net Zero, Energy & Climate Intelligence Unit and Data-Driven EnviroLab, 2022) <https://zerotracker.net/analysis/net-zero-stocktake-2022> 26–27.

ibid 5 (pointing out that this marked a clear increase since December 2020; at that time, only one-fifth of these companies had announced a net zero target).

Axelsson and others (n 258) 5. In 2024, more than 40 per cent of NSAs still lacked emission reduction or net zero equivalent targets (Net Zero Tracker, ‘Net Zero Stocktake 2024’ (2024) <www.zerotracker.net/analysis/net-zero-stocktake-2024> 3).

Net Zero Tracker (n 259).

Hans and others (n 267) 27–28.

Fankhauser and others (n 73) 16.

OECD, Managing Climate Risks and Impacts Through Due Diligence for Responsible Business Conduct: A Tool for Institutional Investors (OECD Publishing 2023) <https://​www.​oecd.​org/content/dam/oecd/en/publications/reports/2023/10/managing-climate-risks-and-impacts-through-due-diligence-for-responsible-business-conduct_​024e​5002/​8aee4fce-en.pdf> 29.

IPCC, AR6. WGIII (2023) 1407–08.

UN, Race to Zero Progress Report (2023) 8.

UN, Race to Zero <https://climatechampions.unfccc.int/system/race-to-zero/> (claiming to be ‘the world’s largest coalition of non-state actors taking immediate action to halve global emissions by 2030’).

UN High‑Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities, ‘Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions’ (2022) <https://www.un.org/sites/un2.un.org/files/high-level​expert​group​update7​.pdf>.

The Transition Pathway Initiative (TPI) <https://www.transitionpathwayinitiative.org/>.

Science-based Target initiative, ‘SBTi Corporate Net Zero Standard’ (2024) <https://​science​based​targets.org/resources/files/Net-Zero-Standard.pdf>.

ISO 14068-1:2023 Climate change management - Transition to net zero. Part 1: Carbon neutrality.

Fankhauser and others (n 73) 16; Axelsson and others (n 258).

Eg Hale and others (n 238); Anders Bjørn and others, ‘Can Science-Based Targets Make the Private Sector Paris-Aligned? A Review of the Emerging Evidence’ (2022) Curr Clim Change Rep 8, 53; Simon Dietz and others, ‘How Ambitious are Oil and Gas Companies’ Climate Goals?’ (2021) 374 Science 405, 408.

Thomas Day and others, ‘Corporate Climate Responsibility Monitor 2023’ (New Climate Institute 2023) <https://newclimate.org/resources/publications/corporate-climate-responsibility-monitor-2023> 6 (stating that third-party certifications ‘lend credibility to companies whose targets are highly insufficient’); Beate Sjåfjell, ‘Sustainable Value Creation in the Land of Oil and Honey? The Corporate Governance Role of the Norwegian State’ in Beate Sjåfjell and Jukka Mähönen (eds), Nordic Company Law: Broadening the Horizon (Scandinavian University Press 2023) 241, 258.

Hans and others (n 267) 29–30; Axelsson and others (n 258) 22.

Hans and others (n 267) 26; see also John Armour, Luca Enriques and Thom Wetzer, ‘Mandatory Corporate Climate Disclosures’ (2022) Columbia Business Law Review 1085, 1108–09, 1140.

Fankhauser and others (n 73) 16.

Armour, Enriques, and Wetzer (n 285) 1140.

District Court of The Hague, C/09/571932/HA ZA 19–379, 26 May 2021, Milieudefensie et al. v Royal Dutch Shell, para. 4.4.29 (Milieudefensie (District Court)).

Oskar Krabbe and others, ‘Aligning Corporate Greenhouse-Gas Emissions Targets with Climate Goals’ (2015) 5 Nat. Clim. Change 1057.

Edgar G. Hertwich and Richard Wood, ‘The Growing Importance of Scope 3 Greenhouse Gas Emissions from Industry’ (2018) 13 Environmental Research Letters 53.

WBCSD/WRI, The Greenhouse Gas Protocol. A Corporate Accounting and Reporting Standard (revised edn, 2004), 25.

ibid 25; WRI/WBCSD, Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Supplement to the GHG Protocol Corporate Accounting and Reporting Standard (2011).

Hertwich and Wood (n 290) 3; TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 54–58.

WRI/WBCSD, Corporate Value Chain (Scope 3) Standard (n 292) 5.

ibid.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 57.

Shefali Sharma, ‘Emissions Impossible Europe: How Europe’s Big Meat and Dairy are heating up the planet’ (The Institute for Agriculture and Trade Policy, 2021) <https://​www.​iatp.​org/emissions-impossible-europe>.

CDP, ‘CDP Technical Note: Relevance of Scope 3 Categories by Sector’ (2023) <https://​cdn.​cdp.​net/cdp-production/cms/guidance_docs/pdfs/000/003/504/original/CDP-technical-note-scope-3-relevance-by-sector.pdf?1649687608> 6.

Eg WEF/Boston Consulting Group, ‘Net-zero challenge: The supply chain opportunity’ (2021) <https://www3.weforum.org/docs/WEF_​Net_​Zero_​Challenge_​The_​Supply_​Chain_​Opportunity_​2021.pdf> 24 (‘Few companies disclose their Scope 3 emissions … those that do often need to develop estimates based on information such as weight, quantity and spend for procured materials, as well as emission factor databases based on country averages’); Jack Arnold and Perrine Toledano, ‘Corporate Net-Zero Pledges: The Bad and the Ugly’ (Columbia Center on Sustainable Investment, 2021) <https://​scholar​ship.​law.columbia.edu/sustainable_​invest​ment_​staffpubs/211/> 5.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 55.

ibid 57.

Hans and others (n 267) 30.

Norwegian Supreme Court, Case no. 20-051052SIV-HRET, Greenpeace Nordic Association v Ministry of Petroleum and Energy (2020) (People v Arctic Oil).

ibid, paras 149, 155, 167 and 260. See Christina Voigt, ‘The First Climate Judgment before the Norwegian Supreme Court: Aligning Law with Politics’ (2021) 33 Journal of Environmental Law 697. In 2021, the Norwegian Supreme Court ruled that the licences issued by the Ministry of Petroleum and Energy for oil and gas exploration in the south-eastern Barents Sea did not violate the constitutional right to a healthy environment under Article 112 of the Norwegian Constitution. The petitioners filed a complaint with the ECtHR against this decision.

Greenpeace Nordic and Others v Norway, ECHR Application no. 34068/21 (2025), para. 319.

Rajavuori, The Role of Non-State Actors (n 25) 381 (with reference).

See UNFCCC, recital 9, 10.

On the distinction between legislation and regulation, see Nir Kosti, David Levi-Faur, and Guy Mor, ‘Legislation and Regulation: Three Analytical Distinctions’ (2019) 7 The Theory and Practice of Legislation 169.

Tiffanie Chan and Catherine Higham, ‘Evolving regulation of companies in climate change framework laws’ (LSE, 2023) <https://www.lse.ac.uk/granthaminstitute/news/evolving-regulation-of-companies-in-climate-change-framework-laws/>.

Mayer, The International Law on Climate Change (n 72) 124.

See eg David Milman, National Corporate Law in a Globalised Market: The UK Experience in Perspective (Edward Elgar 2009).

Sjåfjell and Bruner (n 106) 3, 6.

ibid.

ibid 7.

That is, the ‘resulting risk of energy-intensive industries relocating to countries with less stringent environmental policies’ (Christine Kaufmann and Rolf H. Weber, ‘Carbon-Related Border Tax Adjustment: Mitigating Climate Change or Restricting International Trade?’ (2011) 10 World Trade Review 497, 498). But see Shaik M.S.U. Eskander and Sam Fankhauser, ‘The Impact of Climate Legislation on Trade-Related Carbon Emissions 1996–2018’ (2023) 85 Environmental and Resource Economics 167 (concluding that ‘there has been no detrimental effect of climate legislation on international emissions’).

See eg Benjamin, Companies and Climate Change (n 83) 80.

Eg Kyla Tienhaara, ‘Regulatory Chill in a Warming World: The Threat to Climate Policy Posed by Investor-State Dispute Settlement’ (2018) 7 TEL 229; David Boyd, Paying polluters: the catastrophic consequences of investor-State dispute settlement for climate and environment action and human rights (13 July 2023) A/78/168.

See Benjamin, Responsibilities of Carbon Major Companies (n 97) 355–57.

See Michaelowa, Allen, and Sha (n 76) 277–79.

Mayer, The International Law on Climate Change (n 72) 26 (highlighting that the Kyoto Protocol and the Paris Agreement encourage various ways of climate change mitigation, including both market and non-market approaches).

See Mayer, The International Law on Climate Change (n 72) 124–29.

Using taxation as both the concept and the solution to externality problems was proposed by Pigou (Arthur Cecil Pigou, Economics of Welfare (4th edn, Macmillan and Co. 1932); Ronald Harry Coase, ‘The Problem of Social Cost’ (1960) 3 Journal of Law and Economics 1; International Monetary Fund (IMF), ‘Fiscal Monitor October 2019: How to Mitigate Climate Change’ (2019) <https://www.imf.org/en/Publications/FM/Issues/2019/09/12/fiscal-monitor-october-2019> viii; OECD, ‘Effective Carbon Rates 2018: Pricing Carbon Emissions Through Taxes and Emissions Trading’ (OECD 2018) 11; The World Bank, State and Trends of Carbon Pricing 2020 (World Bank 2020).

Many countries have introduced (and in some cases later abandoned) or considered carbon taxes and levies in various forms (fuel taxes, air travel taxes, meat taxes, etc) and with different levels of ambition (OECD, Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading (OECD Publishing 2021); The World Bank, State and Trends of Carbon Pricing 2021 (World Bank 2021).

ETS allocate allowances for a given unit of GHG emission caused by economic activities, either through requiring emitters to purchase them, or by distributing them for free. These allowances can then be traded by market participants. In contrast to taxes and duties, where prices are fixed by the state, ETS allow demand to influence the price (Mayer, The International Law on Climate Change (n 72) 126–28).

Wright and Nyberg, Inconvenient Truth (n 83) 1634, 1637.

Nicholas Stern, The Economics of Climate Change: The Stern Review (CUP 2007) 457. Similar views were expressed in the Garnaut Review, a 2011 study analysing the impacts of climate change on the Australian economy: ‘(t)he wonders of the free market, and the inspiration, energy and hard work of the Australian private sector, took businesses to global success that neither politician nor bureaucrat could have picked’, concluding that ‘(t)he market economy proved itself able to create solutions and find opportunities with far greater efficiency than the regulatory approach’ (Ross Garnaut, The Garnaut Review 2011: Australia in the Global Response to Climate Change (CUP 2011) 67–68).

Mayer, The International Law on Climate Change (n 72) 126.

ibid.

ibid.

ibid 126–27.

Feed-in tariffs were used for instance in Germany to foster the transition to renewable energy (David M. Driesen, ‘The Limits of Pricing Carbon’ (2014) 4 Climate Law 107, 108).

Eg World Bank, State and Trends of Carbon Pricing 2021 (n 323) 6 (stating that ‘(m)any jurisdictions are broadening and deepening their carbon pricing instruments to better align with their climate goals, but prices remain too low to deliver on the objectives of the Paris Agreement’). In 2022, the World Bank observed slight progress but stated that ‘prices must rise considerably more to meet the Paris Agreement temperature goals, as less than 4% of global emissions were covered by a direct carbon price within the range needed by 2030’ (World Bank, State and Trends of Carbon Pricing 2022 (2022) 9).

World Bank, ‘State and Trends of Carbon Pricing 2024’ (2024) 22. In 2025, the World Bank reported that around 28 per cent of global emissions were covered by a direct carbon price (World Bank, ‘State and Trends of Carbon Pricing 2025’ (2025) 20).

European Environment Agency (EEA), ‘Trends and projections in 2024’ (2024) <https://​www.​eea.​europa.eu/en/analysis/publications/trends-and-projections-in-europe-2024> 22. In 2024, the scope of the EU ETS was expanded to include maritime transport.

World Bank, State and Trends of Carbon Pricing 2023 (2023) 8.

Benjamin states that overall, ‘carbon markets on their own … have largely failed to ensure GHG emissions reductions’ (Benjamin, Responsibilities of Carbon Major Companies (n 97) 355, 368). See also Driesen (n 331) 110.

See Julia Black, ‘Decentring Regulation: Understanding the Role of Regulation and Self-Regulation in a “Post-Regulatory” World’ (2001) 54 Current Legal Problems 103, 105.

Mayer, The International Law on Climate Change (n 72) 125.

ibid 125–26.

Rajavuori, The Role of Non-State Actors (n 25) 387. See, eg Monika Hinteregger, ‘Civil Liability and the Challenges of Climate Change: A Functional Analysis’ (2017) 8 Journal of European Tort Law 238; Martin Spitzer and Bernhard Burtscher, ‘Liability for Climate Change: Cases, Challenges and Concepts’ (2017) 8 Journal of European Tort Law 137.

Eg Rena Steinzor, ‘How Criminal Law can Help Save the Environment’ (2016) 46 Environmental Law 209.

Federal Act on Climate Protection Goals, Innovation and Strengthening Energy Security of 30 September 2022, SR 810.1 [Switzerland], Article 5(1). In terms of scope, the requirement to achieve net zero by 2050 encompasses Scope 1 and 2, but not Scope 3 emissions (but companies are encouraged by the Swiss legislator to reduce Scope 3 emissions as well).

Unilateral in approach, based on simple cause–effect relations and envisaging a linear pathway from policy formation to implementation, C&C regulation is ‘centred’ in the sense that it assumes that the state is capable of commanding and controlling, that the state is the only actor, and that it is potentially effective in doing so (Black (n 337) 105–06). See also Rosen-Zvi (n 228) 237.

See also Report of the Special Rapporteur on the promotion and protection of human rights in the context of climate change, Ian Fry, Exploring approaches to enhance climate change legislation, supporting climate change litigation and advancing the principle of intergenerational justice, A/78/255 (28 July 2023).

See generally Morgera (n 79) 83–136.

Mariana Pargendler, ‘The Rise of International Corporate Law’ (2021) 98 Wash U. L. Rev. 1765, 1772–73.

Morgera (n 79) 72.

ibid, 74–76.

ibid, 74.

ibid, 71–80.

See ibid, 71–80 (with references).

ibid, 78.

ibid, 72.

ibid, 74 (with further reference).

ibid.

ibid, 73–80.

See eg Rolf Weber, ‘Multilayered Governance in International Financial Regulation and Supervision’ (2010) 13 Journal of International Economic Law 683, 699; Doreen McBarnet, ‘Corporate Social Responsibility Beyond Law, Through Law and For Law’ in Doreen McBarnet, Aurora Voiculescu, and Tom Campbell (eds), The New Corporate Accountability: Corporate Social Responsibility and the Law (CUP 2007) 1; Rosen-Zvi (n 228) 239.

See Morgera (n 79) 81. See also Malcom Rogge, ‘Humanity Constrains Loyalty: Fiduciary Duty, Human Rights, and the Corporate Decision Maker’ (2021) 26 Fordham Journal of Corporate & Financial Law 147.

See eg Joana Setzer and Lisa C. Vanhala, ‘Climate Change Litigation: A Review of Research on Courts and Litigants in Climate Governance’ (2019) 10 Wiley Interdisciplinary Reviews: Climate Change 1; Ivano Alogna, Christine Bakker and Jean-Pierre Gauci (eds), Climate Change Litigation: Global Perspectives (Brill Nijhoff 2021).

Jacqueline Peel and Hari M. Osofsky, Climate Change Litigation: Regulatory Pathways to Cleaner Energy (CUP 2015) 4.

IPCC, AR6. WGIII (2023) 125.

Ivano Alogna, Christine Bakker and Jean-Pierre Gauci, ‘Climate Change Litigation: Global Perspectives – An Introduction’ in Alogna, Bakker and Gauci (n 359) 1, 3.

Joana Setzer and Catherine Higham, ‘Global trends in climate change litigation: 2025 snapshot’ (LSE, 2025) 11 (stating that ‘the possible slowdown [of new cases being filed since 2021] might, in part, be due to the diversification of case strategies over time, with more cases addressing climate issues only peripherally and thus not being captured in existing databases’).

See generally Andreas Hösli, ‘Private Climate Litigation: Enforcing Corporate Climate Responsibility through Dispute Resolution? A Taxonomy’ in Ottavio Quirico and Walter Baber (eds), Implementing Climate Policy: Designing and Deploying Net Zero Carbon Governance (CUP 2024) 287.

IPCC, AR6. WG III (2023), 1375–77; Weber and Hösli, Climate Change Liability (n 128) 158–62; Hösli, Private Climate Litigation (n 364).

Michael B. Gerrard, ‘Climate Change Litigation in the United States: High Volume of Cases, Mostly About Statutes’ in Alogna, Bakker and Gauci (n 359) 33, 46.

As a main example of a rather narrow conception, see ibid (excluding cases that ‘may have been motivated by climate change but do not explicitly talk about it, such as an effort to stop a coal-fired power plant on non-climate legal grounds’). See generally Jacqueline Peel and Jolene Lin, ‘Transnational Climate Litigation: The Contribution of The Global South’ (2019) 113 The American Journal of International Law 679, 686–95; Peel and Osofsky, Climate Change Litigation (n 360) 4–9.

Eg Geetanjali Ganguly, Joana Setzer and Veerle Heyvaert, ‘If at First You Don’t Succeed: Suing Corporations for Climate Change’ (2018) 38 Oxford Journal of Legal Studies 841, 843.

Supreme Court of the Netherlands, Case No. 19/00135, 20 December 2019, The State of the Netherlands v Urgenda Foundation (unofficial English version: <https://​uitspraken.​rechtspraak.nl/inziendocument?id=ECLI:NL:HR:2019:2007>) (Urgenda (Supreme Court)).

German Constitutional Court (Bundesverfassungsgericht), Order of the First Senate of 24 March 2021 – 1 BvR 2656/18 (Neubauer).

Request for an Advisory Opinion submitted by the Commission of Small Island States on Climate Change and International Law (Advisory Opinion) ITLOS (2024).

ICJ, Advisory Opinion.

Climate Emergency and Human Rights (Advisory Opinion AO-32/25) IACtHR (2025).

ICJ, Advisory Opinion, paras. 132-39, 409.

Eg Annalisa Savaresi and Joana Setzer, ‘Rights-based Litigation in the Climate Emergency: Mapping the Landscape and New Knowledge Frontiers’ (2022) Journal of Human Rights and the Environment 7.

Macchi and Bernaz (n 133) 6.

European Convention on Human Rights, 213 UNTS 221. See generally Christine Bakker, ‘Climate Change Litigation in the Netherlands: The Urgenda Case and Beyond’ in Climate Change Litigation: Global Perspectives (n 366) 199.

Burgerlijk Wetboek (BW), Stb. 1992, 302 [Civil Code].

Bakker (n 377) 203. See District Court of The Hague, C/09/456689 / HA ZA 13-1396, 24 June 2015, Urgenda Foundation v The State of the Netherlands (unofficial English version: <https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBDHA:2015:7196>).

Roger Cox, ‘A Climate Change Litigation Precedent: Urgenda Foundation v The State of the Netherlands’ (2016) 34 Journal of Energy & Natural Resources Law 143, 144; Kars De Graaf and Jan Jans, ‘The Urgenda Decision: Netherlands Liable for Role in Causing Dangerous Global Climate Change’ (2015) 27 Journal of Environmental Law 517, 527.

Benoit Mayer, ‘The State of the Netherlands v Urgenda Foundation: Ruling of the Court of Appeal of The Hague’ (9 October 2018)’ (2019) 8 Transnational Environmental Law 167, 179; Jacqueline Peel and Hari M. Osofsky, ‘A Rights Turn in Climate Change Litigation?’ (2018) 7 Transnational Environmental Law 37.

See Bakker (n 377) 208–15.

Urgenda (Supreme Court), para. 5.2.3.

ibid, para. 5.7.5. See discussion in Bakker (n 377) 213–14.

See Louis Kotzé, ‘Neubauer et al. versus Germany: Planetary Climate Litigation for the Anthropocene?’ (2021) 22 German Law Journal 1423.

See Helen Keller and Corina Heri, ‘The Future is Now: Climate Cases Before the ECtHR’ (2022) 40 Nordic Journal of Human Rights 153.

See Andreas Hösli and Meret Rehmann, ‘Verein KlimaSeniorinnen Schweiz and Others v. Switzerland: the European Court of Human Rights’ Answer to Climate Change’ (2024) 14 Climate Law 263.

KlimaSeniorinnen, para. 19.

ibid, paras 572–73.

ibid, para. 571.

ibid, para. 435.

ibid, paras 253, 257, 441. As Mayer points out, the so-called ‘drop-in-the-ocean’ argument is not unique to climate change, but common to many environmental problems such as water and air pollution (Mayer, The Emergence of Climate Assessment as a Customary Law Obligation, in Debating Climate Law (n 25) 285, 292).

KlimaSeniorinnen, para. 442.

ibid, paras 629–40.

ibid, para. 639.

Carême v France ECHR 088 (2024), inadmissible on the ground that the applicant had in the meantime relocated and was therefore not entitled to claim victim status under the Convention. Duarte Agostinho and Others v Portugal and 32 Others ECHR 089 (2024), inadmissible for non-exhaustion of domestic remedies in Portugal.

Setzer and Higham, 2025 snapshot (n 363) 18.

See Hösli, Private Climate Litigation (n 364) 291.

Comer v Murphy Oil USA Inc 607 F.3d 1049 (5th Cir 2010)

Kivalina v ExxonMobil Corporation et al 696 F.3d 849 (9th Cir 2012).

For a discussion of these cases, see Ganguly, Setzer and Heyvaert (n 368) 846–49.

See ibid, 842 (adding that even ‘unsuccessful’ cases ‘may help to guide climate change responsive adjudication in the longer term’).

ibid 842, 856.

Setzer and Higham, 2025 snapshot (n 363) 19.

OLG Braunschweig, Decision of 24 June 2024 – 2 U 8/23 (Kaiser et al. v Volkswagen); OLG Stuttgart, Decision of 8 November 2023 – 12 U 170/22, MDR 2024, 38 (Deutsche Umwelthilfe v Mercedes Benz); OLG München, Decision of 12 October 2023 – 32 U 936/23 e, MDR 2024, 497 (Deutsche Umwelthilfe v Bayerische Motoren Werke AG); LG Kassel, case no. unknown (Metz et al. v Wintershall Dea AG). All these cases were rejected by the respective lower courts, which denied accepting a ‘horizontal’ effect of fundamental rights. To the author’s knowledge, all cases were pending appeal as at end of 2025, except for Metz et al. v Wintershall Dea AG, which was discontinued in November 2024 following the sale of most of the companies’ business (Wintershall Dea, ‘Climate lawsuit against Wintershall Dea withdrawn’ (Press Release, 26 November 2024) <https://wintershalldea.com/en/newsroom/climate-lawsuit-against-wintershall-dea-withdrawn>).

This categorisation is largely based on Hösli, Private Climate Litigation (n 364) 291–93.

Corporate constituents include the shareholders and the company directors; sometimes it is argued that the category includes other stakeholder groups such as employees, consumers, etc (Susan Watson, ‘The Company and its Constituents’ (2023, ECGI Law Working Paper N° 701/2023) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4413444>). The term should not be taken to imply a strict distinction but rather as useful for categorising different types of private climate litigation.

A derivative action is brought by a shareholder (or several shareholders) on behalf of the company, enforcing the company’s rights against those who are in control of the company (typically, the directors) (eg John Farrar and Pamela Hanrahan, Corporate Governance (LexisNexis Butterworths 2017) 330).

See eg Solana, Climate Litigation in Financial Markets (n 125); Ganguly, Setzer and Heyvaert (n 368) 858–61; Weber and Hösli, Climate Change Liability (n 128) 172–92.

In Milieudefensie, the District Court accepted that the claims were brought on behalf of interests of current and future generations of Dutch residents and inhabitants of the Wadden Sea area (at least those who are resident in the Netherlands) as being ‘suitable for bundling’ in a collective claim but excluded the interests of current and future generations of the world’s population at large (Milieudefensie (District Court) paras 4.2.3–4.2.4).

International Commission of Jurists, Corporate Complicity & Legal Accountability. Vol. 3: Civil Remedies (2008) 3. To capture both common law and civil law conceptions, the ICL proposes the term ‘law of civil remedies’ whilst noting that other bodies of law including environmental law, company law, and criminal law may also give rise to civil liability (ibid).

See eg Business & Human Rights Resource Centre, ‘Turning up the Heat: Corporate legal accountability for climate change. Corporate Legal Accountability Annual Briefing’ (2018) <https://media.business-humanrights.org/media/documents/files/CLA_​AB_​2018_​Full.​pdf>.

For an overview, see Lisa Benjamin and others, ‘Climate-Washing Litigation: Legal Liability for Misleading Climate Communications’ (The Climate Social Science Network Report 2022) <https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2022/01/CSSN-Research-Report-2022-1-Climate-Washing-Litigation-Legal-Liability-for-Misleading-Climate-Communications.pdf>.

In January 2017, German car manufacturer Volkswagen AG (VW) agreed to plead guilty to ‘participating in a conspiracy to defraud the United States and VW’s US customers and to violate the Clean Air Act by lying and misleading the EPA and US customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with US emissions standards, using cheating software to circumvent the US testing process and concealing material facts about its cheating from US regulators’ and to pay a total of USD 4.3 billion in criminal and civil penalties. In addition, several executives and employees were indicted, see US Department of Justice, ‘Volkswagen AG Agrees to Plead Guilty and Pay .3 Billion in Criminal and Civil Penalties; Six Volkswagen Executives and Employees are Indicted in Connection with Conspiracy to Cheat U.S. Emissions Tests’ (Press Release, 11 January 2017) <https://www.justice.gov/opa/pr/volkswagen-ag-agrees-plead-guilty-and-pay-43-billion-criminal-and-civil-penalties-six>. Following the settlement of criminal charges, civil lawsuits were filed against Volkswagen in numerous jurisdictions worldwide.

District Court of Amsterdam, C/13/719848 / HA ZA 22-524, 20 March 2024, Foundation to Promote the Fossil-Free Movement v Royal Airline N.V. In a first-of-its-kind judgment handed down on 20 March 2024, the District Court of Amsterdam held that 15 of 19 claims used by the airline (using terms such as ‘sustainable’) were misleading. As the relevant claims had already been withdrawn at the time of the ruling, the Court did not grant injunctive relief.

Joana Setzer and Catherine Higham, ‘Global trends in climate change litigation: 2024 snapshot’ (LSE, 2024) 38 (pointing to a success rate of about 70 per cent for plaintiffs).

See Andreas Hösli, ‘Milieudefensie et al. v. Shell: A Tipping Point in Climate Change Litigation against Corporations?’ (2021) 11 Climate Law 195, 199–200.

Eg Ganguly, Setzer and Heyvaert (n 368) 846.

Eg Setzer and Vanhala (n 25) 9–10.

Eg Petra Minnerop and Friederike Otto, ‘Climate Change and Causation: Joining Law and Climate Science on the Basis of Formal Logic’ (2020) 27 Buffalo J. Environ. Law 49.

Eg Michael Burger, Jessica Wentz, Radley Horton, ‘The Law and Science of Climate Change Attribution’ (2020) 45 Columbia Journal of Environmental Law 57.

For example, it is estimated that between one-third and three-quarters of the estimated damage from Hurricane Harvey in 2017 (USD 90 billion in total) is attributable to anthropogenic influence on the climate system (David J. Frame and others, ‘The Economic Costs of Hurricane Harvey Attributable to Climate Change’ (2020) 160 Climatic Change 271).

Eg Sophie Marjanac and Lindene Patton, ‘Extreme Weather Event Attribution Science and Climate Change Litigation: An Essential Step in the Causal Chain?’ (2018) 36 Journal of Energy and Natural Resources Law 265; Rupert F. Stuart-Smith and others, ‘Filling the Evidentiary Gap in Climate Litigation’ (2021) 11 Nature Climate Change 651.

There are, of course, exceptions. See, for instance, the seminal work of Sjåfjell and Benjamin, as well as the work of other authors cited in this study.

Eg Benjamin, Companies and Climate Change (n 83); Andreas Engert and others (eds), Business Law and the Transition to a Net Zero Economy (C.H. Beck Hart Nomos 2022); Rolf H. Weber and Andreas Hösli, ‘Corporate Climate Responsibility – The Rise of a New Governance Issue’ (2021) sui generis <https://doi.org/10.21257/sg.171> 83.

Eg Sjåfjell and Richardson (eds), Company Law and Sustainability (n 102); Sjåfjell and Bruner (eds), The Cambridge Handbook of Corporate Law (n 106); Sarah E. Light, ‘The Law of the Corporation as Environmental Law’ (2019) 71 Stanford Law Review 137, 213 (arguing that corporate law should be integrated into the broadly construed environmental law toolkit).

McDonnell and others, Green Boardrooms (n 127) 338–39 (observing ‘a new phase in a cycle of corporate governance debates raising fundamental questions of corporate law’); Benjamin, Companies and Climate Change (n 83) 18 (stating that ‘(t)he risks of climate change are so great they now challenge how we think about companies and the traditional role they have played in society … many of the norms and laws that regulate this space are outdated, and in fact are subject to dramatic changes as society, policy makers, financial regulators, investors and companies themselves better understand the risks and opportunities climate change poses’). With respect to sustainability more broadly, see Beate Sjåfjell, ‘Sustainable Value Creation Within Planetary Boundaries – Reforming Corporate Purpose and Duties of the Corporate Board’ (2020) 12 Sustainability 6245.

Armour and others, What is Corporate Law (n 116) 22.

Eg Surya Deva, ‘Sustainable Development: What Role for the Company Law?’ (2011) 8 ICCLJ 76.

Benjamin, Companies and Climate Change (n 83) 90.

Andrew Johnston and Beate Sjåfjell, ‘The EU’s Approach to Environmentally Sustainable Business: Can Disclosure Overcome the Failings of Shareholder Primacy?’ in Marjan Peeters and Mariolina Eliantonio (eds), Research Handbook on EU Environmental Law (Edward Elgar 2020) 396, 401.

Johnston and Sjåfjell, The EU’s Approach to Environmentally Sustainable Business (n 431) 398.

Eg Beate Sjåfjell, ‘Beyond Climate Risk: Integrating Sustainability into the Duties of the Corporate Bond’ (2018) 23 Deakin L Rev 4158 (arguing that ‘(s)ociety must take back the power of defining corporate purpose and the role and duties of the board, which has been captured by the social norm of shareholder primacy’, stating further that ‘(s)uch a corporate law reform could be key to a broader reform, which may be necessary to mitigate the systemic unsustainability of business and finance today’); Benjamin, Responsibilities of Carbon Major Companies (n 97) 377 (‘(r)eform of both company law and traditional environmental regulation may be required to solve the problem of rising corporate emissions. Indeed, the very purpose of the company may need to be rethought … (t)he shareholder wealth maximization norm should be moderated by concerns for sustainable development … as well as natural planetary boundaries’).

European Commission, ‘Action Plan: Financing Sustainable Growth’ (8 March 2018) COM(2018) 97 final; Tadas Zukas, Regulating Sustainable Finance in Europe (Duncker & Humblot 2024); Beate Sjåfjell, ‘Reforming EU Company Law to Secure the Future of European Business’ (2021) 18 ECFR 190, 197. Notably, in 2025, the EU significantly scaled back its ambitions to incentivise business sustainability through regulatory reform.

Eg Wallace (n 129) 767, 775–76 (arguing that initiatives aiming at influencing the legal interpretation of existing law, combined with ‘evolving knowledge and values about climate change, will gradually create a quite different legal culture for affected corporations’); Benjamin, Companies and Climate Change (n 83) 18 (stating that ‘climate change is forcing a reinterpretation of corporate norms and laws’).

Eg McDonnell and others (n 127) 339–40.

See eg Ong (n 234) 686 (arguing that ‘corporate environmental protection cannot be fully achieved until it is successfully internalized within the corporate governance regime, rather than remaining as yet another external regulation to be complied with at the minimum level conducive to a company’s balance sheet’).

See eg Benjamin, Companies and Climate Change (n 83) 9.

Andrew Johnston and others, ‘Corporate Governance for Sustainability Statement’ (Harvard Law School Forum on Corporate Governance, 2019) <https://​corp​gov.​law.​harvard.​edu/2020/01/07/corporate-governance-for-sustainability-statement/> 3.

McDonnell and others (n 127) 337–39 (finding, based on surveys with representatives of US and Australian companies, that corporate law tools ‘have not yet had a significant impact on underlying corporate behaviour in ways that substantively affect the allocation of resources and capital to address climate change’).

Iris H-Y. Chiu and Anna Donovan, ‘A New Milestone in Corporate Regulation: Procedural Legalisation, Standards of Transnational Corporate Behaviour and Lessons from Financial Regulation and Anti-bribery Regulation’ (2017) 17 Journal of Corporate Law Studies 427, 434.

ibid (acknowledging a ‘key weakness in regulatory design and empirical research that examines the ex post or output legitimacy of procedural legislation’).

ibid.

ibid.

ibid 434.

ibid 434, 456.

McDonnell and others, Green Boardrooms (n 127) 337–39.

See generally Armour, Enriques, and Wetzer (n 285); Andreas Hösli and Rolf H. Weber, ‘Climate Change Reporting and Due Diligence: Frontiers of Corporate Climate Responsibility’ (2021) 6 ECFR 948.

See eg TCFD, Final Report (n 109) 54–61; Hösli and Weber, Climate Change Reporting and Due Diligence (n 448) 960–63 (focusing on developments under EU law and at the international level).

Louis D. Brandeis, Other People’s Money and How the Bankers Use It (Frederick A. Stokes Company 2007, first published 1914 by The McClure Publications) 92 (stating that ‘(s)unlight is said to be the best of disinfectants; electric light is the most efficient policeman’).

See Christine Kaufmann and Rolf H. Weber, ‘The Role of Transparency in Financial Regulation’ (2010) 13 Journal of International Economic Law 779, 787.

Eg Iris H.-Y. Chiu, ‘Disclosure Regulation and Sustainability. Legislation and Governance Implications’ in Cambridge Handbook of Corporate Law (n 106) 521.

David Monciardini, Jukka Tapio Mähönen and Georgina Tsagas, ‘Rethinking Non-Financial Reporting: A Blueprint for Structural Regulatory Changes’ (2020) 10 Account. Econ. Law 2020 1, 4; Baumüller and Josef Baumüller and Michaela-Maria Schaffhauser-Linzatti, ‘In search of materiality for nonfinancial information-reporting requirements of the Directive 2014/95/EU’ (2018) 26 Sustainability Management Forum 101, 102. On the origins of the term ‘non-financial reporting’ see Josef Baumüller and Karina Sopp, ‘Double Materiality and the Shift from Non-financial to European Sustainability Reporting: Review, Outlook and Implications’ (2022) 23 Journal of Applied Accounting Research 8, 11–12.

Baumüller and Schaffhauser-Linzatti (n 453) 102. See generally Charlotte Villiers, ‘New Directions in the European Union’s Regulatory Framework for Corporate Reporting, Due Diligence and Accountability: The Challenge of Complexity’ (2022) 13 EJRR 548.

See Baumüller and Sopp (n 453) 12.

ibid. See also the concept of integrated reporting, which builds on the idea of shared value creation by the providers of the ‘six capitals’ (financial, manufactured, intellectual, human, societal and environmental capital) and thus seeks to combine key financial and non-financial aspects (Jukka Mähönen, ‘Integrated Reporting and Sustainable Corporate Governance from European Perspective’ (2020) 10 Accounting, Economics and Law: A Convivium 1.

ibid.

CDP <https://www.cdp.net/en/>.

CDSB, CDSB Framework for reporting environmental and social information (2022) <https://​www.​ifrs.org/content/dam/ifrs/groups/cdsb/cdsb-framework-​2022.​pdf>.

GRI <https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/>.

IFRS <https://www.ifrs.org/sustainability/knowledge-hub/introduction-to-issb-and-ifrs-sustainability-disclosure-standards/>.

SASB <https://sasb.ifrs.org/standards/>.

See OECD, ‘Climate Change and Corporate Governance’ (2022) <https://www.oecd.org/content/dam/oecd/en/publications/reports/2022/06/climate-change-and-cor​po​rate-governance_551e0831/272d85c3-en.pdf> 15–16.

National Greenhouse and Energy Reporting Act 2007 (Cth), No. 174, 2007 (Australia).

SEC, ‘Commission Guidance Regarding Disclosure Related to Climate Change’, 75 Fed. Reg 6290 (2010).

OECD GL (2011), Ch. III, para. 33.

Loi n° 2015-992 du 17 août 2015 relative à la transition énergétique pour la croissance verte, Journal officiel de la République française, 18 October 2015 (France), Article 173-III, IV; Code de commerce, [Code du commerce], Loi n° 2000-657 du 13 juillet 2000, Journal officiel de la République française, Article L. 225-102-1, R. 225-104, R. 225-105.

European Commission, The European Green Deal (n 55). The document begins with expressing the European Commission’s ‘commitment to tackling climate and environmental-related challenges that is this generation’s defining task’, stating further that the EU ‘can build on its strengths as a global leader on climate and environmental measures, consumer protection, and workers’ rights’ (ibid, 2).

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, [2014] OJ L 330 (NFRD).

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements, and related reports of certain types of undertakings, [2013] OJ L 182/19 (Accounting Directive) as amended by Article 1 NFRD.

Chiu (n 452) 530.

European Commission, Guidelines on non-financial reporting: Supplement on reporting climate-related information, C(2019) 4490 final, 2.

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, [2022] OJ L 322 (CSRD 2023).

Article 19a Accounting Directive as amended by Article 1 CSRD 2023.

See Proposal for a Directive of the European Parliament and of the Council amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements, 2025/0045 (COD), 10 December 2025.

IFRS, IFRS S2 Climate-related Disclosures <https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures/#standard>.

Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards, [2023] OJ L, 2023/2772 (ESRS).

Baumüller and Schaffhauser-Linzatti (n 453) 101–102; Robert G. Eccles and Tim Youmans, ‘Materiality in Corporate Governance: The Statement of Significant Audiences and Materiality’ (2016) 28 Journal of Applied Corporate Finance 39, 42.

Hana V. Vizcarra, ‘The Reasonable Investor and Climate-related Information: Changing Expectations for Financial Disclosures’ (2020) Environmental Law Reporter 10106, 10106-09; ibid, ‘Reasonable Investor’s Growing Awareness of Climate Risk and Its Impact on US Corporate Disclosure Law’ in Daniel C. Esty and Todd Cort (eds), Values at Work. Sustainable Investing and ESG Reporting (Palgrave Macmillan 2020) 181; IOSCO, Report on Sustainability-related Issuer Disclosures (2021) <https://www.iosco.org/library/pubdocs/pdf/IOSCOPD678.pdf> 25–30; Eccles and Youmans (n 478) 42; OECD, Climate Change and Corporate Governance (n 463) 32; G20/OECD Principles of Corporate Governance 2023, VI.A.1.

TSC Industries, Inc. v Northway, Inc. 426 US 438 (US 1976), 449. See Vizcarra, The Reasonable Investor (n 479); Eccles and Youmans (n 478) 42.

G20/OECD, Principles of Corporate Governance 2023, IV (Chapeau).

Vizcarra, The Reasonable Investor (n 479) 10107–08.

Baumüller and Schaffhauser-Linzatti (n 453) 102; Monciardini, Mähönen and Tsagas (n 453) 22; Eccles and Youmans (n 478) 42–43; see G20/OECD, Principles of Corporate Governance 2023, IV.A.1 (applying a financial materiality threshold to determining sustainability materiality, ‘(w)ithout prejudice to voluntary initiatives or specific environmental regulations that may contain additional disclosure requirements’).

Monciardini, Mähönen and Tsagas (n 453) 22; G20/OECD Principles of Corporate Governance 2023, VI.A.1.

See generally Baumüller and Sopp (n 453).

ibid, 9.

Armour, Enriques, and Wetzer (n 285) 1108–09.

ibid.

G20/OECD Principles of Corporate Governance 2023, VI.A, VI.A.5.

ibid, VI.A.1 (stating further that ‘some jurisdictions also consider what is material to investors to include companies’ influence on non-diversifiable risks … (f)or example, an investor may consider that the value created by a profit maximising major carbon emitting company in their portfolio would be offset by losses in the value of other investee companies affected by climate change’).

OECD GL (2023), Ch. III, para. 2; ibid, Commentary on Ch. III, para. 33.

ibid, Ch. III, para. 3; ibid, Commentary on Ch. III, paras 32–34.

Monciardini, Mähönen and Tsagas (n 453) 22–23 (criticising the lack of a clear methodology under NFRD for reporting companies to define and assess materiality for non-financial information).

European Commission, Guidelines on Non-Financial Reporting (n 472) 4; Monciardini, Mähönen and Tsagas (n 453) 27.

CSRD 2023, recital 29; Baumüller and Sopp (n 486) 8.

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures (2021) <https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf> 5–6.

Article 29a(2)(a)(i) Accounting Directive as amended by the CSRD 2023.

Villiers, New Directions (n 454) 554.

See ibid.

Monciardini, Mähönen and Tsagas (n 453) 4 (with references); Baumüller and Schaffhauser-Linzatti (n 453) 102 (with references).

For example, the concept of double materiality is not well understood by most stakeholders (Pieter de Groen and others, Study on the Non-Financial Reporting Directive (2020) <https://op.europa.eu/en/publication-detail/-/publication/1ef8fe0e-98e1-11eb-b85c-01aa75ed71a1/language-en> 11). See further Baumüller and Schaffhauser-Linzatti (n 453) 108; Monciardini, Mähönen, and Tsagas (n 453) 19.

Chiu (n 452) 521 (with further reference).

Armour, Enriques, and Wetzer (n 285) 1145.

ibid.

Eg Benedikt Downar and others, ‘The Impact of Carbon Disclosure Mandates on Emissions and Financial Operating Performance’ (2021) 26 Review of Accounting Studies 1137 (finding emissions reductions of 8 per cent or more).

De Groen and others (n 501) 113.

Eg Julia Anna Bingler and Chiara Colesanti Senni, ‘Taming the Green Swan: A Criteria-based Analysis to Improve the Understanding of Climate-related Financial Risk Assessment Tools’ (2022) 22 Climate Policy 356; Johnston and Sjåfjell (n 432) 409 (with a focus on Europe); Monciardini, Mähönen and Tsagas (n 453) 17–18; TCFD, 2020 Status Report (2020) <https://www.fsb.org/wp-content/uploads/P291020-1.pdf> 50–51.

See Armour, Enriques, and Wetzer (n 285) 1139.

Nadia Ameli, Sumit Kothari, and Michael Grubb ‘Misplaced Expectations from Climate Disclosure Initiatives’ (2021) Nature Climate Change 917. See generally concerning the shortcomings of regulatory conceptions towards sustainability reporting in the EU, Beate Sjåfjell and others, ‘Securing the future of European business: SMART reform proposals’ (University of Oslo Faculty of Law Legal Studies Research Paper Series, No. 2020-11) <https://ssrn.com/abstract=3595048> 44–45; Johnston and Sjåfjell (n 432) 396.

Villiers, New Directions (n 454) 549.

Armour, Enriques, and Wetzer (n 285) 1125, 1145.

Graham Erion, ‘The Stock Market to the Rescue? Carbon Disclosure and the Future of Securities-Related Climate Change Litigation’ (2009) 18 RECIEL 164, 171; Hana V. Vizcarra, ‘Climate-Related Disclosure and Litigation Risk in the Oil & Gas Industry: Will State Attorneys General Investigations Impede the Drive for More Expansive Disclosures?’ (2019) 43 Vt. L. Rev. 733, 745–54.

See generally Benjamin, Companies and Climate Change (n 83) 187–200; Weber and Hösli, Climate Change Liability (n 128) 162–65.

Philipp Krueger, Zacharias Sautner and Laura T. Starks, ‘The Importance of Climate Risks for Institutional Investors’ (2020) 33 Review of Financial Studies 1067, 1086–91.

OECD, Climate Change and Corporate Governance (n 463) 14.

ibid 26.

Krueger, Sautner and Starks (n 514) 1069 (finding, based on a survey, that institutional investors perceive financial risks to be the most important risk they face, followed by operating, governance, and social risks).

ibid.

Vizcarra, The Reasonable Investor (n 479) 181.

Jeffery M. McFarland, ‘Warming Up to Climate Change Risk Disclosure’ (2009) 14 Fordham Journal of Corporate & Financial Law 281.

Camden D. Burton, ‘An Inconvenient Risk: Climate Change Disclosure and the Burden of Corporations’ (2010) 62 Administrative Law Review 1287.

Among others, the Institutional Investors Group on Climate Change (IIGCC), the Asia Investor Group on Climate Change (AIGCC), the Portfolio Decarbonisation Coalition (PDC), the Net-Zero Asset Owner Alliance, the Investor Agenda, the Glasgow Financial Alliance for Net Zero Emissions (GFANZ), and Climate Action 100+.

Larry Fink, ‘Letter to CEOs 2020’ (2020) <www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter>.

BlackRock was criticised for not having followed up its own climate commitments with a corresponding voting record at annual general meetings, see eg Patrick Greenfield and Jasper Jolly, ‘BlackRock joins pressure group taking on biggest polluters’ (The Guardian online, 9 January 2020) <https://www.theguardian.com/environment/2020/jan/09/blackrock-joins-pressure-group-taking-on-biggest-polluters>.

Alexandra White, ‘US shareholders fail to pass any green proposals for first time in 6 years’ (Financial Times, 1 September 2025) <https://www.ft.com/content/72ef​8ca4-​605e-​4502-​b0ee-​f9e12c88a4d1>.

Eg Kameron St Clare, ‘Activism By Any Other Name: Stakeholder Capitalism, ESG, and Political Pushback’ (2023) 10 Emory Corp. Governance & Accountability Rev. Perspectives 30, 35–38.

Ross Kerber, ‘BlackRock quits climate group as Wall Street lowers environmental profile’ (Reuters online, 10 January 2025) <https://www.reuters.com/sustainability/blackrock-quits-climate-group-wall-streets-latest-environmental-step-back-2025-01-09/>.

Eg Neil Gunningham, ‘Divestment, Nonstate Governance, and Climate Change’ (2017) 39 Law & Pol’y 309.

Eg OECD, Climate Change and Corporate Governance (n 463) 25–28.

ibid 26.

Maximilian Horster and Kosmas Papadopoulos, ‘Climate Change and Proxy Voting in the U.S. and Europe’ (Harvard Law School Forum on Corporate Governance and Financial Regulation, 2019) <https://corpgov.law.harvard.edu/2019/01/07/climate-change-and-proxy-voting-in-the-u-s-and-europe/>; ISS Corporate Solutions, ‘The Rise of Say on Climate Proposals’ (2022) <https://www.iss-corporate.com/file/documents/ics-the-rise-of-say-on-climate-proposals.pdf>.

Eg Felix Jaeger, ‘Say No to Climate Change, Say Yes to “Say on Climate”’ in Business Law and the Transition to a Net Zero Economy (n 425) 39.

Matt Philipps, ‘Exxon’s Board Defeat Signals the Rise of Social-Good Activists’ (NY Times online, 9 June 2021) <https://www.nytimes.com/2021/06/09/business/exxon-mobil-engine-no1-activist.html>.

Nick Toscano, ‘“Breakthrough moment”: Woodside investors revolt on climate change’ (Sydney Morning Herald online, 30 April 2020) <www.smh.com.au/business/companies/breakthrough-moment-woodside-investors-revolt-on-climate-change-20200429-p54oe8.html>.)

Krueger, Sautner and Starks (n 514) 1069, 1105.

ibid.

Benjamin is cautiously optimistic that the trend of sustainable investing is promising (Benjamin, Companies and Climate Change (n 83) 209–11; see also ibid, Responsibilities of Carbon Major Companies (n 97) 371–72 (arguing that ‘(i)f the [sustainable investment] movement leads to general market-based recognition of the risks of continued investment in fossil fuel companies … it has the potential to tackle the commercial barriers of shareholder wealth maximization which currently impede more aggressive corporate action on climate change’).

Sjåfjell and others, Shareholder Primacy (n 102) 122 (with further references).

IPCC, AR6. WG III (2023) 1549.

3

Directors’ Duty of Care in The Anthropocene

Climate Risks and Impacts in the Context of Business

The Limitations of Conventional Risk Conceptions in Dealing with Climate Change

Climate change triggers catastrophic risks that have already begun to materialise in the form of severe impacts in all parts of the world (above, I.A.1; below, III.A.2). But how do climate change risks and impacts translate into a business context (sub-RQ 2)? There is no single way of doing this translation, because risk constructs are open to social definition and contestation.[1] Uncertainty is an inherent feature of risk. In an attempt to render uncertainty manageable, several disciplines, including finance, economics, statistics and accounting, have developed methods of codifying and calculating risk. However, this creates an intriguing paradox: uncertainty emphasises dispersion and complexity, whereas risk emphasises regularity and simplification.[2] Moreover, framing uncertainty as risk does ‘not only aim to predict the future: more importantly, (it) also suggest(s) how it should be dealt with, and by whom’.[3] In other words, defining what constitutes a risk implies an allocation of responsibility.[4] As oversight of risk management is a key element of board responsibility (below, III.B), the framing of climate risk is of paramount importance.[5]

The prevailing notions of risk in the domain of corporate law have been shaped by the economic theory of risk management, which emerged during the 1920s.[6] Enterprise Risk Management (ERM), the study of how to manage risk for an enterprise as a whole,[7] describes risk as ‘the possibility that events will occur and affect the achievement of strategy and business objectives’.[8] Organisations are exposed to a variety of risks, including financial risks, market risks, operational risks, and, if the organisation engages in lending, credit risks.[9] Other common risk categories include strategic risk, regulatory risk, reputational risk and legal risk.[10] Recognising that there is no ‘right’ definition of risk and its various sub-categories, Sweeting contends that greater attention should be attributed to the consistent use of these terms within an organisation.[11] The focus of traditional concepts of risk in economic risk theory is on risks to the organisation from external sources (outside-in), as opposed to risks that the organisation’s business activities may pose to other parties (inside-out).

Traditional methods of risk modelling that rely on historical information are ill-equipped to deal with the unprecedented and nonlinear nature of climate risks.[12] The magnitude of these risks to humanity is such that conventional financial metrics are unable to accurately measure their severity and existential threat. Consequently, these risks have not historically been given any economic value.[13] As Weitzman puts it, ‘the most striking feature of the economics of climate change is that its extreme downside is nonnegligible … (d)eep structural uncertainty about the unknown unknowns of what might go very wrong is coupled with essentially unlimited downside liability on possible planetary damages’.[14] While traditional risk frameworks tend to prioritise risks to the company, it is imperative for a comprehensive approach to the framing of climate risks in a business context to acknowledge the ‘bidirectional’ nature of climate risks for companies: on the one hand, corporate activities have contributed significantly to climate change and thus to the creation of climate risks (above, I.A.2); on the other, companies are (increasingly) exposed to climate risks (below, III.A.2–4).[15] In other words, climate change is both a risk for and impact of companies’ activities.[16] Accordingly, by identifying, measuring, and assessing climate risks, corporations participate in the construction of ‘the very same phenomena to which they are responding’.[17] It is not just climate risks that are bidirectional. There are a range of ‘risks of disruption’ that businesses contribute to but are also directly affected by, such as market imbalances and distortions, cybersecurity issues and biodiversity loss.[18]

Corporations are struggling greatly to deal with the ‘super-wickedness’ of climate change (above, I.A.4). For some time now, companies, particularly those in the energy sector, have been using strategic analysis to determine how climate change may affect their business (below, IV.B.3.1).[19] A key feature of these analyses pertains to the identification of the manner in which climate change engenders a variety of risks and opportunities, framed as established ways of doing business.[20] Traditional risk discourses provide a familiar language for dealing with climate change, giving it a monetary value that the company can use to inform its strategy.[21] In this sense, addressing climate risk is presented as a competitive advantage.[22] According to this rationale, climate risks only need to be taken into account by a company (and its directors) if they are regarded as constituting a risk to the company. This approach is consistent with strongly influential narratives informed by law-and-economics theories that have framed climate change and other environmental and social problems as negative externalities (above, II.B.2; below, III.B.2.4.2). The endeavour to translate the complexities of climate change into a comprehensible and manageable framework for business purposes is inherently problematic. It purports to make the existential threat of climate change manageable by breaking it down through categorisation, leading to a situation where climate risks are portrayed as ‘not only preventable but even representative of opportunities for corporate innovation and expansion’.[23] In other words, dividing the threat of climate change into categories and identifying the necessary responses allows us to see the future as challenging but manageable, and even positive, with an abundance of business opportunities.[24] Through this process, companies shift the perception of climate change by using the familiar construct and language of risk, reframing the dangers as opportunities for capital growth and expansion; while the emphasis on the positive aspects may appear to be a motivating factor, it can also have the effect that, as Wright and Nyberg put it, ‘if climate change can be portrayed as a basis for further capitalist growth then there is arguably no reason to stop it’.[25]

This section has indicated a fundamental critique of the emerging framing of climate risk in business. Nevertheless, the study draws upon the categorisation of climate risk into physical and transition risk, as popularised through the TCFDR, a classification that has gained significant endorsement (below, III.A.2.3). Despite being framed within the confines of a conventional, outside-in-focused ERM risk concept, the TCFD risk categorisation represents a first step towards a more comprehensive framing of climate risk within the domain of corporate law, potentially paving the way for a gradual evolution towards a conception of climate risk that includes an inside-out dimension.

Conceptions of Climate Risks and Impacts

Climate Science

Drawing on research into global systemic risk, the IPCC’s reports provide the most authoritative summary of the risks and impacts of climate change.[26] The definitions of climate risks and impacts (along with many other key terms) are not set in stone in the IPCC reports. Rather, they have undergone subtle (or not so subtle) changes from one report to the next.

In SR1.5, climate risk is defined as ‘the potential for adverse consequences of a climate-related hazard, or of adaptation or mitigation responses to such a hazard, on lives, livelihoods, health and well-being, ecosystems and species, economic, social and cultural assets, services (including ecosystem services), and infrastructure’.[27] Accordingly, the IPCC recognises that there are not only physical risks from climate change but also risks stemming from human responses to climate change. Impacts are defined in SR 1.5 as the ‘consequences of realized risks on natural and human systems, where risks result from the interactions of climate-related hazards (including extreme weather and climate events), exposure, and vulnerability’; ‘(i)mpacts may be referred to as consequences or outcomes and can be adverse or beneficial’.[28] Put simply, climate risk is the potential for climate impacts to occur.

While the IPCC was traditionally more concerned with climate impacts, in AR6, the IPCC’s Working Group II[29] determined risk as its central concept, identifying no fewer than 127 key risks (defined as potentially having severe adverse consequences for humans and social-ecological systems)[30] arising from climate change.[31] In comparison to SR 1.5, AR6 provides an expanded definition of (climate) risk (meanwhile, the definition of climate impact remained unaltered):[32]

‘The potential for adverse consequences for human or ecological systems, recognizing the diversity of values and objectives associated with such systems. In the context of climate change, risks can arise from potential impacts of climate change as well as human responses to climate change. Relevant adverse consequences include those on lives, livelihoods, health and well-being, economic, social and cultural assets and investments, infrastructure, services (including ecosystem services), ecosystems and species. In the context of climate change impacts, risks result from dynamic interactions between climate-related hazards with the exposure and vulnerability of the affected human or ecological system to the hazards. Hazards, exposure and vulnerability may each be subject to uncertainty in terms of magnitude and likelihood of occurrence, and each may change over time and space due to socio-economic changes and human decision making. In the context of climate change responses, risks result from the potential for such responses not achieving the intended objective(s), or from potential trade-offs with, or negative side-effects on, other societal objectives, such as the Sustainable Development Goals (SDGs). Risks can arise for example from uncertainty in the implementation, effectiveness or outcomes of climate policy, climate-related investments, technology development or adoption, and system transitions.’[33]

The IPCC’s conception of climate risk recognises the dynamic interactions between climate change (as a physical phenomenon), human activities and ecosystems (below, Fig. 8).

[picture]

Fig. 8: Climate Risks and Impacts (Main Interactions and Trends), IPCC[34]

Sustainability Science

Sustainability science has proposed the concept of anthropocene risk, defined as risks resulting from or related to human-induced changes in key Earth system functions.[35] Climate change is an example of anthropocene risk; another is biodiversity loss. These risks arise from the evolution of globally interconnected socio-ecological systems and exhibit complex cross-scale interactions.[36] Drawing on insights from sustainability science, the concept of anthropocene risk challenges prevailing perceptions of climate change-related financial risk (below, III.A.2.4), pointing to a ‘cognitive disconnect’ between environmental and financial risk.[37]

International Climate Change Law

The Paris Agreement refers to risks and impacts in Article 2, which sets out the three objectives of the Agreement (above, II.A.1). The mitigation goal (Article 2(1)(a) Paris Agreement) recognises that keeping temperature rise well below 2°C while pursuing efforts to achieve 1.5°C would significantly reduce the risks and impacts of climate change. The objective of the adaptation goal, as set forth in Article 2(1)(b) Paris Agreement, is to enhance the capacity to adapt to the adverse impacts of climate change. Although it does not define risk or impact, the Paris Agreement makes reference to the UNFCCC, where the term ‘adverse effects of climate change’ is defined as changes in the physical environment or biota resulting from climate change which have significant deleterious effects on the composition, resilience or productivity of natural and managed ecosystems or on the operation of socio-economic systems or on human health and welfare (above, III.A.2.1).[38] Accordingly, the conception of risk and impact in the international climate change law draws on climate science (above, III.A.2.1).

Financial Risks and Opportunities (TCFD)

Informed by the concept of financial materiality (above, II.C.2.2, III.A.1), the prevailing approach in financial markets is to frame climate change as a business risk (and opportunity) that companies should, or must, disclose to investors. The conception of risk is thus concerned with climate risks and impacts only to the extent that these are perceived as business risks. To illustrate this point, consider the potential ramifications of climate change on a company’s supply chain. These impacts may be so substantial as to constitute a business risk.

The TCFD popularised the conceptualisation of climate risk as a financial risk in a business context (see below, III.A.6; IV.A.3.3). The TCFDR define climate-related risk as ‘the potential negative impacts of climate change on an organization’, while climate-related opportunities are the ‘potential positive impacts related to climate change on an organization’.[39] Although constructed to align with established enterprise risk conceptions, the TCFDR signify a progression towards a more comprehensive conceptualisation of climate risk (above, III.A.1; below, III.A.3–5; IV.A.3.3.2). The TCFDR distinguish two principal categories of climate-related risks: physical risks and transition risks.[40] The first category encompasses the risks associated with the physical impacts of climate change (below, III.A.3); the second category pertains to risks that may emerge as a result of the transition to net zero (below, III.A.4).[41] Both physical and transition risks involve interacting and non-linear environmental, social, economic and geopolitical dynamics that make them difficult to measure.[42]

The TCFD can be criticised as representing a further step in the ‘financialisaton of sustainability’, a critique which refers to the growing role of private governance in addressing pressing societal issues (above, I.A.5; II.A.2).[43] Johnston posits that when companies and investors highlight the risks to their businesses rather than the environmental consequences of their actions, there is a certain degree of detachment from their role in contributing to climate change – similar to a situation where one is ‘taking part in a riot but being concerned for one’s own safety rather than the damage one is doing to the public spaces’.[44] In other words, the TCFDR’s outside-in risk perspective is insufficient for reflecting the full range of risks and impacts triggered by climate change.[45] Building on the work of sustainability science (above, III.A.2.2), Sjåfjell proposes to address this issue by expanding the categories of the TCFDR, involving the addition of business model change risk to transition risk, global catastrophic risk to physical risk, and the introduction of a third category, societal risk, which encompasses risks of civil unrest, authoritarianism and societal collapse.[46]

A step towards a more encompassing conception of risk is reflected in the Recommendations of the Task Force on Nature-Related Financial Disclosures (TNFDR) published in 2023.[47] While conceptually building on the TCFDR, the TNFDR expressly include the dimension of companies’ impacts on nature as well as the dependencies on ecosystem services.[48]

Risks to People and the Planet (UNGP and OECD GL)

In contrast to the TCFDR, the UNGP and the OECD GL are focused primarily on the negative impacts of business activities on people and the planet (below, IV.A.2.1).[49] They refer to ‘potential’ and ‘actual’ adverse impacts of businesses’ activities on the environment and human rights, respectively.[50] An actual impact (sometimes referred to as realised risk) is one that has already occurred or is occurring, whereas a potential impact (sometimes referred to as risk) may occur in the future but has not yet materialised.[51] Impacts on the environment and human rights may also be denominated as third-party impacts.[52] Analogous to the definition of adverse effects of climate change in the UNFCCC (above, III.A.2.3), adverse environmental impacts are defined in the OECD GL as significant changes in the environment or biota which have harmful effects on the composition, resilience, productivity or carrying capacity of natural and managed ecosystems, or on the operation of socio-economic systems or on people.[53]

Although business risks and impacts are commonly depicted as opposites,[54] the distinction between them is not always clear-cut. In fact, business risks and impacts are often interrelated.[55] For instance, an impact on a third party may be so severe that it materialises as a business risk to the corporation.[56] The OECD GL and the UNGP propose to use risk-based due diligence to identify, assess and address potential and actual adverse impacts, including those that are or may become financially material.[57]

Physical Risks

The TCFDR differentiate between physical and transition risks (above, III.A.2.4). Physical risks arise either from extreme weather events such as cyclones, hurricanes, bushfires or floods (acute physical risks) or from longer-term shifts such as sea-level rise, ocean acidification, or chronic heatwaves (chronic physical risks).[58] Physical risks can seriously affect businesses, including direct damage to assets, as well as indirect effects such as supply chain disruption, increased insurance costs, and threats to employee safety and productivity.[59] Further, physical risks are associated with higher risks of zoonotic outbreaks.[60] Physical risks can materialise directly at the company level or at the sectoral or regional level.[61]

The economic losses resulting from the materialisation of physical risks, eg losses in the value of financial assets issued by affected companies such as equities or bonds, are growing.[62] While the total financial losses of realised climate risks are massive, industries are affected differently.[63] Anecdotal evidence suggests a real risk that materialised physical risks can drive a company into insolvency. In the wake of the destructive wildfire seasons in California in 2017 and 2018, the 2019 bankruptcy of utility company PG&E was described as the first climate-related bankruptcy, resulting in losses exceeding USD 20 billion.[64] Legal proceedings were initiated against former directors and officers of PG&E on the grounds that they had breached their fiduciary duties by failing to adequately address the risks associated with climate change-induced wildfires and by providing misleading information about these risks (see below, III.C.4.3).[65]

To anticipate and mitigate physical risks, companies employ various strategies, such as scenario analysis (below, IV.B.3.1), engineering measures, emergency response services and enhancing operational flexibility by diversifying supply chains and retrofitting or relocating vulnerable infrastructure.[66] Nevertheless, due to the unlimited downside of climate risk (above, III.A), it is not possible for any organisation to exert complete control over these risks. In other words, physical risks go beyond what can be managed by anticipation and adaptation.[67] This could ultimately render insurance coverage unattainable or prohibitively expensive.[68]

Transition Risks

The category of transition risk encompasses a wide array of business risks associated with the global transition to a net-zero economy (above, II.B.1).[69] The fundamental premise of characterising the net zero transition as a risk is that organisations failing to adapt their business strategy will be disproportionately vulnerable to the consequences, including loss of market share or even the potential for going out of business. Conversely, each of the transition risks can be regarded as a potential avenue for business growth and expansion (above, III.A.2.4), such as a competitive advantage, with associated financial opportunities (below, III.A.6.2).

The category of transition risks is divided into a number of subcategories, including regulatory risks (or policy risks), litigation risks (or liability risks), reputational risks, technology risks, and market risks (below, III.A.4.1–4).[70]

Table 4: Sub-Categories of Transition Risk[71]

Sub-Category | Source of risk
Regulatory risks (policy risks) | Strengthening of climate policies, laws and regulations
Litigation risks (liability risks) | Climate change-related legal actions against corporations and directors
Reputational risks | Pressure through media coverage, civil society, NGOs, etc
Technology risks | Development and deployment of emerging technologies such as renewable energies, energy efficiency, carbon capture and storage
Market risks | Changes in consumer preferences (eg relating to financial products, transportation, food)

The underlying sources of the transition risk subcategories are frequently interrelated.[72] For instance, a reputational risk can turn into a litigation risk, or market risks may influence policy risks.[73]

Regulatory Risks

The notion of regulatory risks (or policy risks) refers to the uncertainty about future climate change regulations.[74] Climate change laws and regulations have evolved incrementally at different levels (above, II.B.2). Following the adoption of the Paris Agreement, the development of climate-related policy instruments has occurred at both the national and regional levels, and there is a general expectation that this trend will continue (above, II.B.2).[75] Regulatory risks may also arise from strategic policy shifts, a pertinent example of which is Germany’s decision to phase out coal-fired power plants by 2038.[76] The lack of (adequate) climate laws may also constitute regulatory risks. If inadequately addressed, regulatory risks can translate directly into litigation risks for companies and directors (below, III.A.4.2), potentially resulting in major disruption and substantial costs (see II.B.4.3 above).

Common corporate strategies to mitigate regulatory risk, particularly in sectors perceived to be most directly exposed to regulatory risk (such as energy, mining, or finance), include corporate environmentalism actions (see above, I.A.5) such as endorsing voluntary schemes to prevent the adoption of mandatory regulations, directly influencing regulatory processes through lobbying, and counter-regulatory litigation.[77] A recent example of seemingly successful corporate lobbying to mitigate regulatory transition risk is the substantial weakening of proposed legislative acts in the EU on sustainability reporting and sustainability due diligence (below, IV.A.4).[78] In addition to influencing national legislation, corporate lobbying also plays a role in global negotiations on climate change under the UNFCCC.[79] To illustrate, more than 1,700 representatives of oil and gas companies participated at COP 29 in Baku in 2024.[80] In the event that regulatory risk materialises despite counter-lobbying, companies may potentially pursue compensation claims through investor-state arbitration against host states, which contributes to a chilling effect on regulatory efforts to counter climate change (above, II.B.2).

Litigation Risk

Companies and directors are increasingly facing climate change-related legal actions before courts and quasi-judicial bodies (above, II.B.4.3; below, III.C.4, IV.C). Accordingly, private climate litigation (above, II.B.4.3), poses an emerging and potentially growing financial risk to companies in all sectors.[81] Litigation risk can manifest in a number of ways, including through court orders, increased insurance costs, absorption of resources, loss of share price, and negative reputational impact.[82] While commonly perceived as a risk, climate litigation can also be regarded as a financial opportunity, particularly for litigation funders financing private climate litigation.[83]

Data extrapolated from a major global database on climate change litigation, the Sabin Center Database,[84] suggests that private climate litigation is growing in importance. By the end of 2025, the Sabin Center Database identified a total of 473 cases globally against corporations and individuals. In the US alone, 77 cases were listed in the category ‘Securities and Financial Regulation’ and 74 in the category ‘Carbon Offsets and Credits’. The Australian and Pacific Climate Change Litigation Database is a further indicator of the growing relevance of private climate litigation, reporting 114 cases in the Australia-Pacific area in the category ‘Corporate Accountability’ by the end of 2025, of which the two most common sub-categories were misleading and deceptive conduct (55) and transparency/disclosure (14).[85]

A number of studies have been conducted with the objective of quantifying the potential liability costs to companies and investors.[86] A 2023 study by Sato and others found small but statistically significant effects on firm value (measured by share price) of listed fossil fuel companies in the US and Europe following case filings or unfavourable judgements, possibly indicating investors’ perceived estimate of the various costs of climate litigation.[87] Given that climate litigation is still a relatively recent phenomenon, a significant limitation of studies seeking to quantify it is the lack of sufficient precedent.[88] While difficult to quantify, the risks of climate litigation are perceived to be growing across jurisdictions and industries.[89] Companies that underestimate their exposure to climate change litigation risk could see their operations, value and profitability ‘severely affected’.[90]

Corporate strategies to mitigate climate litigation risks include insurance, including Directors & Officers (D&O) insurance[91], and lobbying for laws that pre-empt or limit the possibility to bring private climate litigation claims against companies (above, III.A.4.1).

Reputational Risk

Reputational risk may arise from customer or civil society perceptions of a corporation’s detraction from the net zero transition.[92] Corporate environmentalism actions such as corporate net zero claims and advertising campaigns are increasingly met with a fair degree of scepticism (above, I.A.5; II.B.4.3). For example, in 2020, German manufacturer Siemens was publicly criticised for its decision to work on a highly controversial coal mine project known as the Adani mine in Queensland, Australia, despite the company’s pledge to achieve carbon neutrality by 2030.[93]

Reputational risk can materialise in various ways, including through litigation costs (above, III.A.4.3), higher contracting costs and higher financing costs.[94] In financial markets, reputational costs can be significant and exponentially higher than regulatory fines.[95] Common corporate tactics to mitigate reputational risk include marketing campaigns that emphasise the company’s action on climate change, engagement with critics[96] and the establishment of strategic alliances.[97]

Technology and Market Risk

Technological innovations that facilitate the transition to net zero can exert a significant impact on organisations. A key example is the risk of stranded assets resulting from the early retirement of fossil fuel infrastructure or the devaluation of related financial assets (below, III.A.6.1). One of the main uncertainties when assessing technology risk is the timing of technological developments.[98]

Shifts in supply and demand for certain goods, services and products have an impact on the manner in which companies are affected by climate change.[99] For instance, disruptive developments in the areas of ‘clean’ technologies such as renewable energy, battery storage, or carbon capture affect the competitiveness of certain business models as well as production and distribution costs.[100] The electrification of transport is a prominent example.[101] Another significant case is the ‘protein transition’, the fast market expansion of plant-based products as alternatives to meat and dairy, allowing consumers and companies to lower their food-related GHG footprint.[102]

Opportunities

The transition to net zero involves deep structural changes, which present massive business opportunities that translate into financial opportunities (below, III.A.6.1). The TCFD identifies five main areas of opportunity:[103]

resource efficiency (reducing operating cost while contributing to global GHG reduction efforts and technology innovation);

energy source (reducing energy cost through shifting to using energy from low-GHG emissions sources);

products and services (profiting from shifting consumer and producer preferences);

markets (shifting activities to be better positioned in the net zero transition, including by accessing new marketsor underwriting or financing ‘green’ bonds or infrastructure);

resilience (increasing ability to respond to transition and physical risk).

On the critique of framing climate change as a business opportunity, see above III.A.1.

Climate Change as a Financial Risk and Opportunity

The realisation of physical and transition risks and opportunities may have a financial impact on an organisation:

[picture]

Fig. 9: Climate-related risks, opportunities, and financial impact (TCFD)[104]

Financial Risks

While the financial community has traditionally regarded climate change primarily as an ethical issue, it is now widely recognised as a financial risk.[105] The debate about the financial impact of climate change on the economy is not new[106], but it has gained significant traction over the past decade.[107] In an often-cited speech at Lloyd’s of London in 2015, Mark Carney, then governor of the Bank of England and chair of the Financial Stability Board (FSB), popularised the narrative that climate change poses a threat to financial resilience and long-term prosperity.[108] Carney used the term ‘tragedy of the horizon’ to emphasise that the catastrophic impacts of climate change will be felt beyond the traditional temporal horizons of most actors, including businesses, politicians, and central banks, engendering a situation in which the current generation has no direct incentive to address the problem, instead passing on the burden to future generations.[109]

The IPCC defines climate-related financial risk as ‘the potential adverse impact of climate change on the value of financial assets’.[110] In recent years, there has been explicit recognition of the severe financial risks that may arise from the materialisation of both physical and transition risks, with the potential to threaten global financial stability.[111] This has been acknowledged in various reports published by key international financial market institutions, including the Financial Stability Board (FSB),[112] the Bank for International Settlements (BIS),[113] and the European Central Bank (ECB).[114] The recognition of climate-related financial risks has catalysed a number of initiatives, particularly the industry-led TCFD, which was commissioned by the FSB (below, IV.A.3.3.1).[115] Furthermore, mounting awareness of climate risks in financial markets has led to significant growth in ‘green’ financial products, such as green bonds and other ESG products.[116] However, the methods for using climate science to assess the impact of climate change risks on financial risk have not yet been fully elaborated.[117] In 2017, with the aim of helping market participants to understand material climate risks, the TCFD issued recommendations developed by the industry for companies on the disclosure of their climate-related financial risks (below IV.A.3.3.1). In the same year, a number of central banks and financial market supervisory authorities established the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).[118] Members of the NGFS view climate change as a source of financial risk that is ‘system-wide and potentially irreversible if not addressed’.[119] Notably, the NGFS explicitly recognises the role of the company board in addressing climate risk: as part of integrating climate risks into micro-prudential and financial stability oversight, the NGFS advises its members to engage with financial firms to ‘ensure that climate-related risks are understood and discussed at board level, considered in risk management and investment decisions and embedded into firms’ strategy’.[120] In 2022, the Basel Committee on Banking Supervision (BCBS) issued its ‘Principles for the effective management and supervision of climate-related financial risks’, offering a principles-based approach to managing and supervising climate-related financial risks with 12 principles for banks (including in relation to corporate governance and the role of the board, internal control frameworks, capital and liquidity adequacy, risk management process, scenario analysis, etc) and six principles for prudential supervisors.[121]

Against the backdrop of the financial risks associated with climate change, the notion of stranded assets has emerged as a strong metaphor for conceptualising transition risks.[122] Stranded assets are ‘assets that have suffered from unanticipated or premature write-downs, devaluations, or conversion to liabilities’.[123] In a business-as-usual scenario, abrupt price adjustments and portfolio losses are considered to trigger systemic risk (disorderly transition).[124] According to the IPCC, such a business-as-usual scenario is likely to unfold, as ‘progress on the alignment of financial flows towards the goals of the Paris Agreement remains slow’ (above, II.A.1).[125] This could have a significant impact on financial markets. For instance, it is estimated that approximately 40 per cent of equity portfolios held by investment funds and pension funds are exposed to stranded asset risk.[126] In 2023, the IPCC stated that the ‘relatively slow implementation of commitments by countries and stakeholders in the financial system to scale up climate finance reflects neither the urgent need for ambitious climate action nor the economic rationale for ambitious climate action’.[127] It is therefore conceivable that a ‘carbon bubble’ has emerged which, if not deflated early, could lead to a discounted global wealth loss comparable to that suffered in the 2008/2009 global financial crisis.[128] Of course, due to the unlimited downside of climate risk (III.A.1), the damage could well be several amplitudes greater. Stranded asset risks affect not only fossil fuel producers but also all sectors that rely heavily on these resources (such as fossil fuel-powered manufacturing or transport), as well as those invested in them.[129] Although the Paris Agreement initially created some momentum (see above, II.C.3), many investors (both public and private) do not appear to consider the policy signal strong enough to prompt them to align their investment portfolios with climate goals.[130] Carbon majors commonly counter warnings of stranded asset risks by arguing that society will remain dependent on fossil fuels for a long time, as the transition to low GHG economies will take decades.[131] In any event, even if a growing proportion of investors were to divest from fossil fuels, there may still be enough investors willing to purchase ‘brown’ assets that others consider to be at risk of becoming stranded.[132] In this case, the resources would not be stranded, but merely relocated.

While the existence of climate-related financial risks is increasingly recognised, these risks are difficult to quantify.[133] This is due to several factors, including the fact that relevant information is not easily accessible, is not sufficiently standardised, is difficult for users to understand, and may potentially suffer from serious inaccuracies and greenwashing.[134] Another issue is the endogeneity of climate-related financial risks, meaning that the likelihood of these risks materialising is influenced by the actions of financial actors themselves, leading to multiple and divergent possible mitigation scenarios; in contrast, the common treatment of risk in financial valuation models and asset pricing assumes that risk is exogenous, meaning that it has an external cause or origin.[135]

Overall, markets are likely to fail to adequately assess forward-looking climate risks, resulting in these risks being mispriced.[136] Despite the advent of numerous initiatives designed to assess climate-related financial risks, these risks remain, according to the IPCC, ‘greatly underestimated’ by financial institutions and markets, undermining the capital reallocation needed to finance the transition to a low-carbon economy.[137]

Financial Opportunities

In order to remain competitive in an ever-changing world, corporations need to be innovative and able to adapt their corporate governance practices, meet new demands and seize new opportunities.[138] Although mainstream economic discourse tends to focus on risks, climate change also represents a significant financial opportunity for businesses, albeit somewhat paradoxically and perhaps tragically (above, III.A.5).[139] In 2018, the IPCC estimated that to meet the goal of limiting temperature increase to 1.5°C above pre-industrial levels, the energy system alone would need annual global investment of USD 2.4 trillion, equivalent to 2.5 per cent of the global GDP.[140] In conjunction with public investment, private investment is an indispensable element in financing the net zero transition.[141] In addition to phasing out investment in fossil fuels and other GHG-intensive sectors, a significant increase in investment in low-GHG ventures is a prerequisite for deep decarbonisation of production and consumption.[142] In 2023, the IPCC reiterated that ‘(i)f climate goals are to be achieved, both adaptation and mitigation financing would need to increase many-fold’ (three to six times) to close the global investment gaps.[143]

The Duty of Care: A Key Legal Norm for Directors Across Legal Systems

The Corporate Board: Functions and Duties

It is a core characteristic of the corporation that principal authority over its affairs is vested in a corporate board (concerning terminology, see above, I.C).[144] As is well-established in comparative research, the board’s key functions include setting the company’s strategy as well as advising and overseeing management (below, III.B.2.4).[145] Across jurisdictions, the board has a strategic, advisory and oversight role.[146] The board can thus be seen as ‘in all legal systems the central governance organ’ of a corporation.[147] In that capacity, the board functions as a mediator between the interests of various stakeholders, including shareholders, management, employees, andcreditors, and also between different interests within the same group (eg between controlling and minority shareholders).[148] Due to the recurrence of corporate scandals in recent decades, most attention in corporate law scholarship has focused on the oversight function of the board (below, III.B.2.5), perhaps at the expense of exploring its strategic and advisory role.[149]

The discussion of the duties of the board, or more precisely those of each individual director, goes ‘to the core of corporate law’.[150] Two broadly framed duties guide directors in the execution of their mandate: the duty of care and the duty of loyalty, or their respective equivalents across jurisdictions. (below, III.B.2.1).[151] The legal duties of directors are usually set out in statutory law, but may also be elaborated on in various other legal sources, such as case law, corporate governance codes (below, III.B.2.4.2), organisational documents (eg, articles of association), contracts and stock exchange listing rules..[152] Moreover, in a globalised world, the duties of the board are also informed by international standards (above, II.B.3; below, IV.A.1).

In most jurisdictions, the board of directors is constituted of multiple members.[153] In the Anglo-Saxon tradition, a distinction is made between directors who perform management functions (executive directors) and those who are appointed to the board for their expertise or independence (non-executive directors).[154] Other types of directors can be identified, including de facto directors and shadow directors.[155] When referring to directors, this study generally refers to all types of directors.

The corporate board is commonly elected, at least in large part, by the company’s shareholders, but it is formally separate from them.[156] The board is also formally separate from the company’s operational managers, who are typically designated as ‘officers’ (see below in this section).[157] Due to variations in the architecture of the corporate board, the separation between the board and management is expressed differently across legal systems; thus, from a comparative perspective, the distinction between the board level and the management level requires certain simplification.[158] In some countries, the board is composed of two bodies (two-tier board), a supervisory board (composed entirely of non-executive directors) and a management board (composed entirely of executive directors); in other countries, there is (at least formally) a uniform board (one-tier board) composed of both executive and non-executive directors.[159] A common textbook example for the two-tier board is Germany.[160] One-tier boards are more common internationally and have been adopted, for instance, in the US, the UK, and Switzerland.[161]

The term ‘officer’ commonly refers to the most senior executives of the company, who are typically appointed by the corporate board (in systems with a two-tier system, they are typically appointed by the supervisory board); officers are expected to devote their full time to the management of the company.[162] In companies with a two-tier board, the officers are typically identical with the members of the management board (eg the German Vorstand).[163] In many countries, it is common practice for the most senior executives, such as the Chief Executive Officer (CEO) or the Chief Financial Officer (CFO), to be appointed to the company board, thereby assuming a (sometimes problematic) dual role.[164] The duties of officers are typically not clearly defined in corporate law.[165] Depending on the jurisdiction, officers may be subject to the same legal duties as directors, even if they have not been formally appointed to the board (below, III.B.2.1).

Duty of Care

Origin and Concept

The duty of care is one of the oldest legal norms to impose constraints on directors and, more generally, on those who exercise delegated powers within commercial or custodial relationships.[166] In one form or another, the duty of care exists in virtually every jurisdiction and thus may be considered a ‘near universal’ rule of company law.[167]

The origins of the modern duty of care in the US and UK can be traced back to eighteenth- and nineteenth-century trust law, negligence law and bailment law.[168] It was from these legal doctrines that the duty of care was adopted for the purpose of regulating the duties of company directors.[169] Early English case law on directors’ duties compared the position of directors to that of trustees or quasi-trustees; consequently, it was held that directors have a duty to exercise ‘all ordinary prudence that can be properly and legitimately expected from any person in the conduct of the affairs of the world’.[170] In comparison, continental European countries such as France, Germany and Spain drew on agency law to require directors to act with due care in the discharge of their duties.[171] Early continental European statutes limited the duties of directors to their contractual obligations, but directors were not considered to have a general duty of care by virtue of their position in the company.[172] Over time, this contractual focus shifted to a positional focus, with greater emphasis placed on the hierarchical status of a director.[173]

As with all forms of decision-making, business decisions are made in conditions of uncertainty. Further, directors must consider a wide range of risks and opportunities when making decisions. How does corporate law deal with this situation? In a market economy, it would appear to be an unfavourable proposition for the legislator to enact laws that prescribe the prospective outcome of a director’s decision making ex ante (see above, II.C.1).[174] Accordingly, company law is commonly limited to setting broad standards for how directors should reach their decisions in discharging their duties.[175] The main focus is therefore on the process of decision-making, but not the outcome (see above, II.C.1).

In modern corporate law, the conceptualisation of the duty of care is informed by the position of directors in a company. Directors are often referred to as ‘trustees’, ‘fiduciaries’, or ‘agents’, meaning someone who has been appointed to act for and on behalf of another.[176] In common law terminology, the term ‘fiduciary duties’ is frequently employed to describe the duties of a director.[177] A fiduciary can be described as ‘someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence’.[178] Although perhaps placing less emphasis on the fiduciary nature of the position of directors, civil law systems have developed concepts that perform similar functions, such as the duty to act in good faith, the duty to act in the best interest of the company, and the duty to avoid conflicts of interest.[179] Drawing on the terminology of the Anglo-Saxon tradition, the term ‘fiduciary duties’ is commonly used in international corporate governance codes.[180]

From the perspective of agency theory, a legal-economic theory to analyse corporate law, the fiduciary position of directors gives rise to ‘agency problems’ (or ‘principal–agent’ problems), and accordingly, ‘agency costs’.[181] We will return to this discussion in the context of answering the question of who directors owe their duties to (below, III.B.2.4.3).

We can identify two types of duties that exist in most corporate law systems: the duty of care and the duty of loyalty.[182] The duty of care can generally be described as a broad duty on directors to act with care, skill and diligence in the exercise of their office (below, III.B.2.2).[183] The duty of loyalty mainly concerns situations where a director’s personal interests (potentially) conflict with those of the company, which arises particularly in two scenarios: related-party transactions (self-dealing) and the use of a corporate opportunity (the ‘expropriation’ of a business opportunity that ‘belongs’ to the corporation).[184] The distinction between the two duties (duty of care and duty of loyalty) is not always clear-cut due to differing approaches in different jurisdictions and inconsistencies in case law.[185] In some jurisdictions, certain aspects (in particular, those pertaining to oversight duties) may be regarded as expressions of the duty of loyalty rather than the duty of care (below, III.B.2.5). This study adopts the general concept of the duty of care as it is understood in most jurisdictions.[186] Therefore, it does not address issues that would usually be considered to fall within the remit of the duty of loyalty, in particular related-party transactions and the use of corporate opportunities.[187]

As a ‘non-trivial component of the wider corporate governance system’, the duty of care applies to all functions of the board (above, III.B.1).[188] The personal scope of application is also broad in the sense that it extends to all types of directors (above, III.B.1).[189] In certain countries, the duty of care also applies to officers, even where they are not formally members of the corporate board.[190]

When analysing it from a functional comparative perspective, it is useful to think of the duty of care as a bifurcated standard consisting of a standard of care (below, III.B.2.2) and a standard of review (below, III.B.2.6). The former imposes a duty to exercise a certain level of care (diligence, prudence) in the conduct of business, while the latter deals with the extent to which business decisions are subject to judicial review. While distinguishable in theory, the two standards cannot always be separated strictly in their application, partly because the distinction is more formal in some countries than it is in others, and also because case law within jurisdictions is not always consistent.[191]

Standard of Care

In discharging their duty of care, directors must exercise a certain level of care (above, III.B.2.1). Despite variations in formulation, the standard of care is ‘remarkably similar’ across jurisdictions.[192] Whether through conscious borrowing from other jurisdictions or through independent reflection on the necessity to impose an expectation of due care on directors, analogous legal responses have emerged across jurisdictions.[193]

The formulation of the abstract standard of care owed by directors under the duty of care is comparable across legal systems. In City Equitable Fire Insurance Company, the leading case on the duty of care in English law prior to the codification of directors’ duties in the UK Companies Act 2006, it was held that directors must act with ‘reasonable care’, defined as the level of care that ‘an ordinary man might be expected to take in the circumstances on his behalf’.[194] Analogous formulations can be found in the laws of Delaware[195] (‘ordinarily careful and prudent men’), Germany[196] (ordentlicher und gewissenhafter Geschäftsleiter, diligent and conscientious manager), France[197] (administrateur prudent et diligent, prudent and diligent manager) and many other corporate laws around the world, for example Australia (‘reasonable person’),[198] Japan (good manager in compliance with the main objectives of the mandate),[199] Nigeria (‘faithful, diligent, careful and ordinarily skilful director’),[200] and Singapore (‘reasonable diligence’).[201]

Although the standard of care is formulated in a similar manner across different legal jurisdictions, its application by the courts may vary from one jurisdiction to another and even within the same jurisdiction (below, III.B.2.6).[202] Gerner-Beuerle posits that divergent interpretations of the duty of care are influenced by the impact of different local narratives prevalent in different jurisdictions; he suggests that the substantive meaning of the duty of care is a function of non-legal factors and narratives shaped by varying regulatory approaches, historical experiences with the market economy, and schools of thought – in other words, that the meaning of the duty of care is culturally determined and centred on narrative traditions.[203] This indicates that the interpretation of the duty of care may be subject to influence from non-legal norms, such as shareholder primacy (below, III.B.2.4.2).

Gerner-Beuerle and Schuster undertake an attempt at describing the standard of care from a comparative perspective, stating that ‘broadly speaking, and abstracting from the differences in the detailed formulation of the standard of care … it requires directors to make managerial decisions based on sufficient information and after careful assessment of the alternatives and likely outcomes, to ensure that they possess the necessary skills and experience to discharge their duties effectively, to establish information and monitoring systems, and generally to supervise business operations’.[204] This characterisation broadly reflects the key elements of the duty of oversight, which has emerged as a core function of the duty of care across a range of jurisdictions (below, III.B.2.5). It also suggests that the assessment of directorial actions is primarily determined by the quality of the decision-making process rather than its outcome (below, III.B.2.6).

The Open-Ended Nature of the Duty of Care

Across jurisdictions, the duty of care is a standard that deliberately uses ‘relatively open-ended concepts in need of specification and amplification’.[205] Due to its open-ended framing, the duty of care – or more precisely, the standard of care encapsuled in the duty of care – is conceptually capable of evolving with changes in knowledge, market and industry practices, regulations, and social norms.[206] Consequently, the reasonable conduct expected of a director today may differ from that which was considered acceptable ten or even twenty years ago. Therefore, the duty of care may play an important role in helping to establish or reinforce norms of good corporate behaviour.[207]

The notion of reasonableness, which underlies the duty of care (see above, III.B.2.2), fulfils a mediating function in the sense that it is capable of establishing a connection between legal and non-legal developments and the evaluation of directorial behaviour.[208] As with other open-ended legal standards, such as the reasonable person in tort law or the concept of materiality (which refers to the ‘reasonable investor’ or other recipient of information; above, II.C.2.2), changing contexts, facts and developments outside the law may affect how courts assess directors’ duties.[209] Experience suggests that such developments will eventually be consolidated through the legislature, or perhaps earlier through the judiciary.[210] There is evidence that courts’ interpretation of directors’ duties has changed in the past in accordance with evolving social expectations.[211]

In light of the foregoing, the open-ended nature of the duty of care is important in the context of setting expectations concerning reasonable directorial conduct with respect to matters of climate change. The interpretation of the duty of care must take into account advances in scientific knowledge, changing perceptions of climate risk by regulators and supervisors, changing societal views, international legal norms such as the Paris Agreement, and international standards.[212] Mayer observes a ‘rapid evolution of the standard of care applicable to climate change mitigation’.[213] However, societal change tends to occur at a relatively slow pace and, accordingly, the duty of care adapts gradually to these changing circumstances.[214] Consequently, despite its potential, the duty of care may be constrained in its capacity to drive transformative change in directorial behaviour at the pace required in response to the urgency of climate change mitigation.[215] Nevertheless, the emergence of climate change litigation involving corporate directors (below, III.C.4) suggests that a gradual shift in the interpretation of the duty of care may be underway.

Duty Owed to Whom?

Starting Point

If we conclude that the duty of care requires directors to meet a standard of care that is formulated similarly across jurisdictions (above, III.B.2.2), the question arises: to whom is the duty of care owed?[216] In the exercise of their mandate, are directors required to act in the interest of:

the company as a legal entity?

specific constituents of the company (eg the shareholders, employees, creditors, customers, local communities) or specific sub-groups within these constituents (eg majority shareholders, employee representatives, major creditors)?

wider societal or environmental interests (eg the interest in a stable climate as a precondition for life on Earth as we know it)?

The answer to the question will vary in detail from one country to another.[217] And yet, the query raises a more fundamental question: what is the purpose of the company in today’s society?[218] As Clarke states, ‘(t)o meet the imminent challenge of social and environmental sustainability in a post-carbon economy, further rethinking of the corporate purpose, corporate governance, and directors’ duties will be essential’.[219] The concept of the purpose of the company is inextricably linked to that of the interest of the company, and yet these concepts cannot always be clearly distinguished.[220] Arguably, the interest of the company is somewhat easier to analyse on a comparative company law basis because ‘it requires less extrapolation from company law to the broader societal context’.[221] Sjåfjell and others posit that the interest of the company is the ‘means to the end of achieving the societal purpose of companies’.[222] The company interest can generally be described as forming ‘the core of the guidelines according to which the company is to be operated’, representing a ‘crucial touchstone in many legal systems’ framework of the duties and competence of corporate organs’.[223] Accordingly, the company interest gives substance to the duties incumbent upon directors, thereby informing the exercise of the board’s discretion in overseeing the company’s affairs.[224]

Shareholder Primacy v Stakeholderism

Is it in a company’s interest to contribute to climate change mitigation? At present, the law of corporate purpose and directors’ duties is ‘largely agnostic’ on climate change, affording corporate boards flexibility in their approach to climate change mitigation.[225] Comparative research suggests that, in many jurisdictions, company law grants directors the authority to steer companies towards environmentally sustainable practices.[226] However, it appears that the social norm of shareholder primacy has influenced the discourse on corporate law and corporate governance to the detriment of interests other than shareholder wealth, including the consideration of climate change mitigation.[227] To address this study’s research question, it is unnecessary to revisit the entire scholarly debate on corporate purpose. Nonetheless, a grasp of its fundamental aspects remains essential to enable an informed discussion of the duty of care in the context of climate change mitigation.

A corporation is generally free to pursue any lawful purpose and to define this in its purpose clause. Despite this discretion, the available options are often framed as a dichotomy between two opposing approaches: the maximisation of shareholder wealth (‘shareholder primacy’) and the pursuit of a broader purpose aimed at benefiting a wider group of stakeholders (commonly referred to as ‘stakeholderism’).[228] Although it originates not from the principles of corporate law but from law-and-economics theory, the divide between shareholder primacy and stakeholderism has become a pervasive feature of discourse on corporate law and governance.

Shareholder primacy is ‘the idea that corporate management’s primary responsibility is to promote the economic interests of the shareholders’.[229] Its underlying concept can be traced to US economic theory dating back at least to the early 1930s.[230] In the late 1980s, it was incorporated into company law discourse by US law-and-economics scholars.[231] Proponents of shareholder primacy generally conceptualise the corporation as a nexus of contracts, whereby investors provide capital to conduct business.[232] The underlying assumption is that, without assurance that directors will pursue the interests of shareholders as ‘residual claimants’ (or ‘residual risk bearers’),[233] investors would be reluctant to provide capital.[234] In this logic, making directors strongly accountable to the interests of the shareholders serves to mitigate agency problems (above, III.B.2.1).[235] Furthermore, by characterising shareholders as the ultimate ‘owners’ of the company, the theory of shareholder primacy asserts that corporate resources are used most efficiently when the actions of directors and management are aligned with the objective of maximising shareholder wealth, typically measured by share price.[236] Consequently, proponents of shareholder primacy concede only a minimal role for state regulation or intervention, proposing that any negative social impacts of corporate activities (‘externalities’) should be addressed through regimes outside corporate law, such as environmental, human rights, tax, or antitrust law.[237] In essence, shareholder primacy recognises only accountability to shareholders and compliance with the law as core principles of corporate governance, thereby basically equating the interests of the company with those of the shareholders and thus allowing directors to prioritise shareholder interests over all other interests.[238] Originating in the US, shareholder primacy theory has strongly influenced the discourse on corporate law and the interpretation of directors’ duties in other jurisdictions, including many European jurisdictions.[239] The pervasiveness of shareholder primacy across jurisdictions is such that it has been described as a ‘legal myth’ or a ‘quasi-legal social norm’.[240] Influenced by shareholder primacy thinking, securities and stock exchange regulations, as well as corporate governance codes, are generally designed with the primary objective of protecting investors rather than other interests affected by corporate conduct.[241]

Since its inception, the idea of shareholder primacy has provoked opposition.[242] In 1932, Dodd observed that ‘lawyers have commonly assumed that the managers must conduct the institution with single-minded devotion to stockholder profit … but the assumption is based upon a particular view of the nature of the institution which we call a business corporation, which concept is in turn based upon a particular view of the nature of business as a purely private enterprise’; he went on to argue that ‘if we recognize that the attitude of law and public opinion toward business is changing, we may then properly modify our ideas as to … the considerations which may properly influence the conduct of those who direct its activities’.[243] In fact, several theories of the firm, some of which predate the nineteenth century, reject the purely private nature of the firm. In particular, concession theory states that the corporation’s existence and special privileges, such as limited liability and perpetual legal personality, depend entirely on a concession given by the state, making the company subject to public regulation and emphasising its quasi-public purpose.[244] Real entity theory highlights the corporation’s distinct identity as a legal entity, separate from its individual constituents, grounding directors’ duties as obligations owed directly to the corporate entity (not only to the shareholders).[245]

Contemporary scholarship has raised numerous criticisms of shareholder primacy theory. Stout criticises the reference to shareholders as being the ‘owners’ of a company, arguing that shareholders do not own the company, but merely have a contractual agreement with it, a share that carries specific, limited rights; accordingly, boards have legal discretion to serve not only shareholders but also creditors, employees, customers and the community at large.[246] Johnston and others contend that shareholder primacy rests on flawed legal assumptions and that it is the result of short-term pressures on directors exerted by financial markets, hedge funds, activist shareholders, the threat of hostile takeovers, and share-based compensation schemes.[247] Sjåfjell argues that maximising shareholder profit as the sole purpose of a corporation is ‘to a great extent, incorrect as a matter of law’, because it reduces the role of boards and senior management to that of mere agents of the shareholders.[248] In a multi-jurisdictional comparative analysis, Sjåfjell and others find that ‘no system of company law requires the board to maximise returns to shareholders at all costs’.[249] They contend that the social norm of shareholder primacy has evolved in the absence of a clear articulation of the company’s interests and its role within society, concluding that shareholder primacy is the primary barrier in corporate law to the achievement of more sustainable business practices.[250] Based on a review of country reports covering more than 30 jurisdictions, Eccles and Youmans find that ‘without exception … the board director’s primary duty is to the corporation itself as a separate legal person’.[251] Although some jurisdictions, including the US, have adopted a ‘dual primacy’ regime, whereby the director’s duty to the company has ‘equal co-primary standing’ with the directors’ duty to shareholders, Eccles and Youmans conclude that ‘(i)n no jurisdiction … is a director’s duty to shareholders construed as a higher duty than the duty to the corporate entity’.[252] Similarly, Clarke states that ‘contrary to popular myth, corporate law in no jurisdiction internationally requires corporate directors to maximize shareholder value’.[253]

Shareholder primacy is often juxtaposed against theories that advocate for the management of a company in the interests of all stakeholders (stakeholderism). Stakeholders encompass a diverse array of non-shareholder groups, including creditors, customers, employees, suppliers or local communities; the interests of these groups may be affected by the company’s activities, while they, in turn, can also exert influence over the company.[254] Communautaire theory, shaped by civil law traditions and integral to European corporate governance discourse, conceives of the corporation as intrinsically embedded within a social community composed of diverse stakeholders, advocating a broader set of directors’ duties reflecting responsibilities toward this community.[255] In contrast to the monistic foundation of shareholder-centred approaches, stakeholderism adopts a pluralistic perspective, advocating the balancing of all stakeholders’ interests in accordance with changing circumstances.[256] Accordingly, stakeholderism regards shareholders as but one category of stakeholders whose interests must be considered.[257] It is noteworthy that some proponents of shareholder primacy recognise the importance of other stakeholders, but only instrumentally, as a means of furthering shareholder interests.[258]

Stakeholderism, too, has been subject to various criticisms. For example, Jensen contends that, rather than providing a meaningful alternative conception of corporate purpose, stakeholder theory merely reacts to shareholder primacy by directing corporate managers to serve multiple masters, thereby creating confusion, conflict, inefficiency, and potentially even competitive failure (see below, III.B.2.4.3).[259] Another criticism holds that stakeholderism offers merely illusory promises. This critique suggests that corporate managers have little incentive to protect stakeholders beyond what ultimately serves shareholder interests.[260] From this perspective, the necessary incentives should be created by external intervention through regulation and policy design, but not through stakeholderism (see above, II.C.1).

The extent to which shareholder primacy or stakeholder theory is reflected in legislation varies across jurisdictions. Some are commonly portrayed as particularly supportive of shareholder primacy (eg the US,[261] or China),[262] while others are characterised as favouring pluralist approaches (eg Germany, France, the Netherlands, and the Nordic countries).[263] However, rather than a clear divide between jurisdictions adhering strictly to one theory or the other, there exists a spectrum reflecting varying degrees of shareholderism and stakeholderism.[264] Notably, even in legal systems commonly characterised as stakeholder-oriented, the interest of the company has a core economic element.[265] Conversely, even the jurisdictions that are commonly identified as strongly supporting shareholder primacy ‘stop far short of requiring the board of directors to maximise returns to shareholders’.[266] This suggests that the intrinsic value of contrasting shareholder primacy and stakeholderism is limited, rendering the distinction an inadequate starting point for determining the content of the duty of care in the context of climate change (below, III.B.2.4.3).

Some company laws, including those of Brazil,[267] Nigeria[268] and the UK,[269] explicitly require directors to consider environmental and/or social interests when pursuing the best interests or success of the company.[270] In other jurisdictions, a similar orientation can be discerned from case law. For instance, in Canada, the Supreme Court has recognised the ability of directors to consider the interests of a diverse range of stakeholders including shareholders, employees, suppliers, creditors, consumers, governments, and the environment.[271] A unique case is Fiji’s Companies Act 2015, as amended in 2021, which stipulates that, as part of their duty to exercise reasonable care and diligence, directors and officers are required to consider and evaluate climate change risks and opportunities to the extent that they are foreseeable and intersect with the interests of the company (below, III.C.3).[272] At the EU level, despite the Commission’s shift from defining CSR as a purely voluntary commitment to redefining it in 2011 as ‘the responsibility of enterprises for their impacts on society’, progress has been tentative and incremental.[273] This reluctance has been evident in the recent rejection of harmonising directors’ duties through EU regulation (below, III.C.3).

Traditionally, the primacy of shareholders has been strongly reflected in corporate governance codes. These codes are typically issued by industry associations rather than governments. Traditional corporate governance codes prioritise the financial aspects of corporate governance and the accountability of the corporate board to investors over the interests of other stakeholders.[274] The 2015 version of the G20/OECD Principles of Corporate Governance provides a prototypical illustration of this phenomenon.[275] As a result, by promoting a much narrower view of the role of boards than is justified by a comparative company law analysis, corporate governance codes tend to reinforce the social norm of shareholder primacy.[276] Although often expressed in cautious language, modern corporate governance codes increasingly refer to social and environmental considerations. Examples include the corporate governance codes of Germany,[277] Denmark,[278] and Norway,[279] as well as comparable expressions of corporate governance practice (eg the US Roundtable).[280] However, these references tend to be embedded in a shareholder primacy narrative.[281] Marking a significant development, the revised 2023 edition of the G20/OECD Principles of Corporate Governance introduced an entirely new chapter entitled ‘Sustainability and Resilience’.[282] The chapeau of the new chapter acknowledges that countries have made commitments to the transition to net zero in accordance with the Paris Agreement, which ‘will require companies to respond to rapidly changing regulatory and business circumstances’.[283] Further, while recognising that ‘(c)orporate directors are not expected to be responsible for resolving major environmental and societal challenges stemming from their duties alone’,[284] the text emphasises that ‘the corporate governance framework should ensure that boards adequately consider material sustainability risks and opportunities when fulfilling their key functions in reviewing, monitoring and guiding governance practices, disclosure, strategy, risk management and internal control systems, including with respect to climate-related physical and transition risks’.[285] The document makes reference to OECD due diligence standards on RBC as a benchmark for the integration of sustainability factors into risk management and processes (below, IV.A.1).[286]

The Inadequacy of Shareholder v Stakeholder Thinking in the Context of Climate Change Mitigation

The preceding section elaborated that, rather than clear-cut opposites, shareholder primacy and stakeholderism exist along a spectrum, with each theory having inherent limitations. As discussed in this section, the shareholder–stakeholder dichotomy is misconceived in itself and offers limited analytical value for delineating directors’ responsibilities in the context of climate change mitigation.

The shareholder v stakeholder dichotomy has been criticised by corporate law scholars as being an ill-conceived juxtaposition.[287] A main critique is that shareholder v stakeholder thinking tends to exclude corporate law proper from the discussion, thereby reinforcing shareholder primacy theory without a legal basis.[288] In fact, both shareholder primacy and stakeholderism are informed by agency theory mindset rather than actual corporate law (above, III.B.2.4.2).[289] Consequently, the dichotomy distracts from a fundamental principle of company law across legal systems: directors’ responsibility to safeguard the interests of the company (above, III.B.2.4.1).[290] Another issue that frequently arises in the shareholder v stakeholder debate is that of short-termism. Critics of shareholder primacy posit that the prevailing short-term perspective of boards, influenced by external pressures (above, III.B.2.4.2), works to the detriment of climate change mitigation and sustainability in general.[291] Others observe that the perceived tension between shareholder primacy and stakeholderism largely dissipates once it is recognised that considering stakeholder interests aligns with the pursuit of long-term shareholder value.[292] A third perspective contends that environmental degradation is driven not by stock market short-termism, but by companies’ ability to externalise costs onto third parties, a practice that ultimately serves the interests of both short- and long-term investors.[293]

Beyond the general criticisms outlined above, the shareholder v stakeholder dichotomy is insufficient for determining the interests directors must serve when exercising their duty of care in the context of climate change mitigation. Three main reasons support this conclusion.

First, neither shareholder primacy nor stakeholderism adequately addresses the root causes of anthropogenic climate change, namely, GHG emissions and the reduction of carbon sinks. Both frameworks are ill-suited to integrating environmental considerations into managerial decision-making, except where such interests coincide with those of shareholders or other stakeholders. Under shareholder primacy, climate change is treated as a relevant concern for directors only insofar as climate-related risks are deemed financially material (above, III.B.2.4.2). Stakeholder-oriented approaches, in turn, aim to identify and address the specific interests of those adversely affected by a company’s activities, such as supply chain workers and local communities (above, III.B.2.4.2). This level of proximity does not fit well into the context of climate change mitigation, as the diffuse and pervasive impacts of climate change affect essentially everyone and everything. Accordingly, the identification of private interests as proposed by stakeholderism is susceptible to the risk of ignoring the unorganised interests of ‘everyone and everything else’. Therefore, replacing shareholder primacy with stakeholderism is problematic. Climate change and other global challenges to which business is a major contributor will not be resolved simply by identifying potential stakeholders and their private preferences; worse, in a stakeholder primacy model, as an extreme form of stakeholderism, the strongest stakeholders may assume a position of power, setting business strategies and making decisions that serve their own private interests.[294] For example, employees’ interests are likely to focus primarily on their own welfare, with limited attention given to broader global environmental concerns.[295] The inadequacy of focusing on private interests becomes evident once again in the context of conceptualising risk-based due diligence in relation to the impacts of climate change (below, IV.A.2.3).

Second, a comprehensive approach to mitigating the negative impacts of corporate activities must extend beyond the interests of commonly recognised stakeholder groups (including shareholders) to encompass the voiceless interests of future generations, non-human species, and the environment. These interests relate to intergenerational and environmental justice which, although often overlooked in mainstream corporate law discourse, are of paramount importance in the context of climate change mitigation.[296] Several commentators have advocated for a more comprehensive perspective of directorial responsibility, proposing that the function of the board is to serve all the interests involved, including those of society at large and the mitigation of pressures on planetary boundaries.[297] Both shareholder primacy and stakeholderism are limited by their anthropocentric focus on the (current) human participants in the business enterprise. They are therefore ill-equipped to capture the stakeholder constituency that environmental law seeks to protect – the environment in its own right, rather than merely for its instrumental value to specific interest groups – and, indirectly, the species whose survival depends on a functioning ecosystem.[298] Incorporating the natural environment as a stakeholder entails recognising the interests of non-human species, the physical conditions that sustain life on Earth, and the aesthetic value of undisturbed landscapes and wilderness.[299]

Third, climate change differs qualitatively from typical stakeholder interests due to the widely recognised financial risks it entails (above, III.A.6). Stakeholder interests are often regarded as having merely ‘non-financial’ relevance to the company and as imposing additional costs when addressed. While the general dismissal of stakeholder interests as non-financial is itself misguided (see above, II.C.2.2), this view is plainly untenable in the context of climate change (above, III.A.6). Consequently, it would be wholly inappropriate to characterise climate change risks as ‘just another’ stakeholder interest among many others.

In light of the foregoing, if neither shareholder primacy nor stakeholderism governs directors’ conduct, and the company’s interests constitute the relevant legal norm, the question arises as to how this norm can be given concrete meaning. Statutory company law does not generally delineate an overarching interest or purpose that a company must pursue (above, III.B.2.4.2). Arguably, this ambiguity has enabled non-legal theories, such as shareholder primacy, to exert their influence.[300] One potential way of addressing this issue would be to clarify the purpose of the company and by extension the duties of the board, through regulatory reform (above, II.C.1).[301] However, securing the political majority necessary for such a clarification is extremely difficult, perhaps not least due to the continued prevalence of the shareholder primacy mindset. A notable recent example is the failed attempt to incorporate the concept of sustainability into a harmonised understanding of directors’ duty of care within the EU (below, III.C.3).[302]

In comparison to the ill-conceived shareholder primacy v stakeholderism juxtaposition, a more ‘practical’ approach is embodied in the concept of due diligence as popularised through the UNGP and the OECD GL (below, IV.A.2). These standards do not even attempt to define the purpose or interest of the company in abstract terms; rather, they are deliberately focused on implementation (see further below, IV). This approach is based on the view that the fundamental questions of corporate purpose and governance are ‘unlikely to be fully resolved anytime soon’, suggesting that attention should be shifted to risk-based due diligence, which ‘has not been mentioned in this grand debate … but … provides a path towards that end – indeed, one that is already under way’.[303] In other words, ‘(t)he question has shifted … from whether corporate boards should take stakeholder interests into account, to how (they) should do so’.[304]

Based on the foregoing, this study rejects shareholder primacy but does not conceptualise climate change as a stakeholder issue either. Instead, it posits that the interpretation of directors’ duties in the context of climate change should be guided by the interest of the company. To operationalise the (elusive) concept of company interest, this study proposes to draw on the evolving concept of climate change due diligence (below, Ch. IV).

Duty of Oversight

Across legal systems, it is a key responsibility of the corporate board to oversee compliance and risk management.[305] This oversight function is tied to other main responsibilities of the board, in particular, strategy-setting (above, III.B.1).[306] In response to the recurrence of corporate failures resulting from a lack of board oversight, this function has grown in importance in recent years.[307]

While its contours vary across jurisdictions, the duty of oversight (or duty to monitor) is generally considered to be a fundamental element of the duty of care owed by directors.[308] A notable exception is Delaware, where – somewhat counterintuitively[309] – the duty of oversight is viewed as a function of the duty of loyalty (above, III.B.2.1).[310] Notwithstanding the variances between legal systems with regard to the implementation of risk management, the duty of care is widely used to hold directors accountable for the exercise of their oversight function.[311] This may be explained by the fact that risk management is a need that exists in any contemporary corporate law system. From a company’s perspective, the purpose of entrusting the board with an oversight function is to protect the company from risk.[312] The exercise of the duty of oversight determines the types and level of risk that a corporation is willing to accept in pursuit of its objectives, as well as how it will manage the risks created by its operations and business relationships.[313] While a key expression of the duty of care across jurisdictions, board accountability for risk oversight derives from several additional sources, including internal and external monitoring (eg, through shareholders, employees, creditors), gatekeepers (in particular, auditors), self-regulation, reputational incentives, and regulation (eg, mandatory disclosures on risk exposure).[314]

To discharge their duty of oversight, it is essential that board members act on a fully informed basis.[315] Daily management is typically delegated to senior officers who in turn delegate functions to lower levels of management. In this complex system of delegated roles and responsibilities, directors rely on the accuracy of the information provided to them. Therefore, in most legal systems, directors are expected to ensure an adequate flow of information, enabling them to act on a fully informed basis.[316] A key measure to achieve this goal is the establishment and maintenance of internal control systems (ICS), as was already highlighted by the Cadbury Report of 1992.[317] ICS represent a fundamental prerequisite for companies to effectively manage risk. German corporate law, for instance, explicitly stipulates the obligation of the management board to establish an ICS.[318] Overseeing the company’s ICS is an important function of directors.[319] This duty is strictly enforced by German courts, as the landmark Neubürger decision shows.[320] ICS are designed to facilitate the early detection of non-compliance with applicable laws and standards and excessive risk-taking, as well as to ensure the integrity of accounting and reporting.[321] Risk oversight further includes ensuring the integrity, independence and confidentiality of whistleblowing processes and encouraging the reporting of unethical or unlawful behaviour without fear of retribution.[322] Without prejudice to the responsibility of each individual member of the board, dedicated committees – such as the risk or audit committee – are commonly established to oversee the effectiveness and integrity of a company’s ICS.[323] In the financial sector, the concept of risk is strongly informed by investor protection and system stability, which has led to the emergence of complex risk management systems.[324] Cases where an ICS did not exist, or where directors were aware of its inadequacy, are clear indicators of a breach of the duty of oversight.[325]

A more recent development is the integration of sustainability considerations – including those related to climate change – into the board’s risk management function. For instance, the 2023 edition of the G20/OECD Principles of Corporate Governance emphasises that the board ‘should ensure that material sustainability matters are considered’ in carrying out its risk management function.[326] This includes making sure that appropriate processes are in place to deal with ‘significant external company-relevant risks’ such as health crises, supply chain disruptions, geopolitical tensions and climate change, with a view to strengthening the company’s resilience.[327] It further involves assessing how material climate-related risks (physical and transition risks) affect the company’s risk profile and how they are approached by the company (below, III.C.3).[328] With respect to the company’s impacts, risk-based due diligence is proposed as a means to help companies identify and respond to human rights and environmental risks, thereby supporting directors in fulfilling their duty of oversight (below, IV.A).[329]

While partially related, the duties owed by a director are formally separate from the duties owed by the company. International debates on corporate responsibility typically concentrate on the latter.[330] These discussions commonly centre on general standards in tort law (or their civil law equivalents – such as the laws of non-contractual or extra-contractual obligations, or delicts; see above, II.B.4.3), which focus on preventing reasonably foreseeable harm to third parties.[331] Although formally distinct, the legal duties of a company and those of its directors are often closely interrelated in their practical application. For example, when a company causes harm to a third party, the issue of whether its directors have breached their duties typically arises. This reflects the central role directors play within the corporate governance structure (above, III.B.1). The concept of directorial liability is predicated, in particular, on the presence of fault on the part of the director.[332] Fault may arise where corporate misconduct causing harm to a third party goes undetected or unprevented due to a failure of oversight by the company’s directors. In such cases, the company held liable may – through its board or, where applicable, its shareholders by means of a derivative action – seek to recover losses by bringing claims for breach of duty against current or former directors.[333] This phenomenon has been observed repeatedly in practice, particularly in cases involving major oversight failures. For example, in 2021, the supervisory board of the German car manufacturer Volkswagen announced its intention to pursue claims for breach of the duty of care against former members of the management board in the aftermath of the Dieselgate scandal (above, II.B.4.3).[334]

Standard of Review

The standard of review deals with the extent to which business decisions are subject to judicial review (above, III.B.2.1). While market and social factors can influence the behaviour of directors, some form of external discipline, such as the initiation of legal proceedings, must be available.[335] And yet, if business decisions were subject to unconstrained judicial review, directors would potentially be exposed to significant risks of liability whenever a decision turned out to be ‘wrong’ with the benefit of hindsight.[336] For this reason, albeit not necessarily as a formalised concept, many jurisdictions limit judicial review of business decisions.[337] From a functional comparative perspective, similar patterns can be observed across jurisdictions in the formulation and application of the standard of review. Instead of evaluating the substantive quality of a business decision ex post, the standard of review typically focuses on assessing the decision-making process.

Due to the open-ended nature of the duty of care (above, III.B.2.3), the standard of review is significantly shaped by judicial review. A balance must be struck between the legitimate interests of those entitled to pursue breaches of directors’ duties on the one hand and the interests of directors in avoiding excessive litigation on the other.[338] The right to enforce the duty of care against current or former directors is typically vested in the board of directors, which creates an inherent conflict of interest – at least in cases involving current directors. Consequently, many jurisdictions grant specific stakeholders – particularly shareholders and, in the context of insolvency, creditors – the right to initiate derivative suits or class actions against members of the board (above, II.B.4.3).[339] In addition, in some jurisdictions, the duty of care may be subject to public enforcement through criminal or civil proceedings initiated by public authorities, such as securities regulators or public prosecutors (below, III.C.4.2–4).[340]

Rather than dealing with the content (or quality) of a business decision, the standard of review is oriented towards assessing the process of decision making.[341] In jurisdictions where the duty of care is defined in a way that allows judicial review of the substance of a decision – as in the UK, for example – the standard of review tends to be very low, in the sense that it is easily met, except in cases where a director has acted in bad faith or engaged in criminal conduct (see below, III.C.4.4).[342] Notably, some countries including the Netherlands, Luxembourg, and Belgium, grant judges a certain degree of additional discretion when reviewing the substance of a director’s decision.[343]

Across jurisdictions, various legal mechanisms have been developed to shield directors from liability arising from breach of duty claims. These protections include, in particular, pre-trial procedures to determine whether a claim lacks merit, as well as safe harbours such as exculpatory clauses in corporate constitutions, delegation and reliance mechanisms, shareholder approval of directors’ conduct (décharge), and the business judgement rule (BJR).[344] In practice, these protections shape the contours of the standard of review to a considerable extent.[345] Further, risks of liability for breach of duty are commonly mitigated through Directors and Officers (D&O) liability insurance.[346]

Arguably the BJR is the most prominent mechanism limiting judicial review of business decisions. In a series of decisions issued in the early twentieth century, US courts established the principle that, in the absence of bad faith, fraud, unlawfulness, or a conflict of interest, directors are presumed to exercise their business judgment in good faith and in the best interests of the corporation.[347] This rule was further refined in subsequent case law to focus on due process; accordingly, in the absence of evidence of gross negligence in the decision-making process, the unlawfulness of the decision or bad faith, courts will not review business decisions, even in cases of material financial loss.[348] Whether through conscious borrowing from the United States or independent development, many other jurisdictions have adopted analogous approaches.[349] These may be constituted either through a formalised BJR-style rule or case law.[350] Although differences remain regarding the precise scope of judicial restraint, it is widely recognised across jurisdictions that directors enjoy a margin of discretion within which courts will refrain from conducting a full review of business decisions.[351] Overall, irrespective of its precise formulation in a given jurisdiction, the BJR strengthens the discretion of directors to determine what is in the best interests of the company, which makes it difficult to challenge the board’s decisions in court.[352] In the context of climate change, this may indicate a degree of discretion for directors in determining whether they take climate change risks and impacts into account in their decision-making process (see below, III.C). Accordingly, the BJR may offer protection to directors who decide to take climate change considerations into account in their decision-making, at least to the extent that a plausible argument can be made that it is in the interests of the company to do so (below, III.C.3).[353]

With the main exception of substantial financial loss or insolvency, the level of enforcement of directors’ duties is generally perceived to be low (or very low) across jurisdictions, even in countries where shareholders are relatively active in enforcing shareholder rights, such as the US (below, III.C.4.2) and the UK (below, III.C.4.4).[354] A potential outlier is Australia, where (public) enforcement of corporate law is relatively common (below, III.C.4.3).[355] Absent an efficient and effective system for enforcing breaches, the normative force of directors’ duties is significantly weakened. In addition to substantial procedural and practical barriers (including in relation to prohibitive costs, rules on standing, the burden of proof, and collective action problems for minority shareholders), the open-ended nature of the duty of care may also be a possible explanation for the low level of enforcement (above, III.B.2.3).[356] While the duty of care is a flexible standard, its open-ended nature also gives rise to legal uncertainty. This uncertainty may have a chilling effect on shareholders and other stakeholders, deterring them from asserting their interests through breach of duty of care claims. Instead, they may be inclined to pursue alternative, more clearly defined legal avenues, such as the exercise of control rights, or to resort to alternative dispute resolution mechanisms or settlements outside of the court system.[357] Where public enforcement mechanisms exist, an additional disincentive arises from the fact that public officials typically receive no financial benefit from a successful claim against directors.[358] In sum, the duty of care’s open-ended nature paradoxically necessitates judicial clarification, yet such clarification seldom occurs, arguably at least in part because of the duty’s open-ended character.[359] As a result, the behavioural expectations embodied in the duty of care are generally not clearly delineated.[360] Gerner-Beuerle and Schuster conclude that ‘generally speaking the duty of care as a behavioural constraint mainly plays a role in extreme cases, where directors take decisions that are clearly not aligned with prudent management or where there is a complete failure to monitor and address business risks’.[361]

In light of the foregoing, it may be observed that, in practice, enforcement of the standard of review is most likely to succeed in cases involving a clear disregard for due process or situations of insolvency, but is less likely in other circumstances. And yet, the perception of weak enforcement, combined with the limited likelihood of successful claims, does not alter the fundamental character of the duty of care as a legal obligation.[362] Indeed, despite the significant obstacles outlined in this section, both private and, where available, public enforcement of directors’ duties are increasingly being used to challenge mismanagement and inadequate disclosure of climate-related risks, particularly in the UK, Australia, and the US (below, III.C).

The Duty of Care in the Context of Climate Risks and Impacts

Starting Point

In recent years, legal scholars and practitioners in various jurisdictions have advanced the argument that directors who fail to adequately ‘have regard to’, ‘consider’, or ‘take into account’ climate change-related issues may be in breach of their duty of care. The existing body of comparative analyses on this topic is limited and comprises both bilateral and multilateral studies.[363] In the comparative studies reviewed for this study, Australia, the UK, and the US emerge as the most frequently examined jurisdictions, although several other countries are also covered.[364] In addition to comparative research, this study also draws on international guidance, notably the G20/OECD Principles of Corporate Governance.[365] Furthermore, for the purpose of illustration or exploration, the analysis draws on country-specific literature, contributions on the laws of Australia, the UK and the US being particularly prevalent.[366] In addition, the study surveys emerging case law on the interpretation of directors’ duties of care in the context of climate change, focusing on the three jurisdictions where such litigation has already been initiated – namely, Australia, the UK, and the US (below, III.C.4). In the materials reviewed for this study, the primary focus lies on whether directors are required to take climate change risks into account. By contrast, the question of whether directors must also consider the company’s climate impacts (above, III.A) in fulfilling their duties has received significantly less attention in corporate law scholarship. To address this research gap, Chapter IV will draw on international standards – namely, the OECD GL and the UNGP – which focus primarily on how companies should manage their climate impacts (above, III.A.2.5; below, IV.A.3.1–3.2).

The debate on directors’ duties in relation to climate change has gained considerable momentum in recent years, but it is not entirely new. In 2009, Wallace observed that ‘(m)any environmental advocates now assert that substantial certainty about the climate-change threat imposes a “fiduciary duty” on corporate directors and officers to take aggressive ameliorative action’.[367] In a landmark legal opinion of 2016 on Australian corporate law, Hutley and Hartford-Davis concluded that ‘the duty of care and diligence is capable of requiring company directors to consider and disclose their exposure to physical, transition and liability risk associated with climate change’, warning that litigation alleging ‘failure to perceive, disclose or take steps concerning foreseeable climate risks’ that can be demonstrated to have caused harm to a corporation is ‘likely to be only a matter of time’.[368] Indeed, the litigation risks anticipated by Hutley and Hartford-Davis have begun to materialise in Australia, as well as in other jurisdictions (below, III.C.4).

The argument that directors have a responsibility to take climate risks into account is supported by international guidance. The G20/OECD Principles of Corporate Governance, in their 2023 version, state that ‘the corporate governance framework should ensure that boards adequately consider material sustainability risks and opportunities when fulfilling their key functions in reviewing, monitoring and guiding governance practices, disclosure, strategy, risk management and internal control systems, including with respect to climate-related physical and transition risks’ (above, III.B.2.4.2).[369] Crucially, this statement explicitly incorporates the consideration of material climate risks (and opportunities) into the core functions of the board (above, III.B.1). In a similar vein, the pivotal function of the board in addressing climate change risks is underscored in the TCFDR, with a particular emphasis on disclosure (below, IV.A.1). The recognition of the board’s central role in shaping corporate responses to climate change has yet to be reflected in most domestic corporate legislation. At the time of writing, Fiji remains the only country whose codified corporate law explicitly links climate change risks and opportunities to directors’ duties (above, III.B.2.4.2). In other legal systems, this duty may be derived implicitly through interpretation of the open-ended duty of care (below, III.C.3).

While much of the discourse on directors’ duties in the context of climate change has originated from analyses of the laws of Australia, the UK, and the US, it has also gained traction in several other jurisdictions. This expansion is illustrated here by reference to four expert legal opinions on the laws of Hong Kong (2021),[370] Malaysia (2022),[371] the Philippines (2022)[372] and Singapore (2021).[373],[374] These expert legal opinions demonstrate that different jurisdictions share similar views on the issue, suggesting an emerging convergence across legal systems.

The Hong Kong opinion reaches the following conclusion:

‘In light of the extensive and well-established evidence that climate-related risks pose material threats to the interests of a company, and because of the measures taken by the Hong Kong regulatory authorities to address climate-related risks, a reasonable director is legally required to take into account climate-related risks in the discharge of his or her duties to the company, failing which the director can be held personally liable; there may also be adverse reputational repercussions on that director and the company.’[375]

Similarly, the Malaysian legal opinion states that ‘it is no longer possible for directors to ignore climate change considerations as part of their fiduciary duty to act for a proper purpose in the best interest of the company and in their discharge of their duty of care, skill and diligence’.[376]

The legal opinion on Singapore law concludes:

‘directors in Singapore are obliged, when carrying out their responsibilities as directors, to take into account climate change and its associated risks, particularly insofar as those risks are or may be material to the interests of the company. This is required, first and foremost, by the many written laws of Singapore that seek to address environmental sustainability and climate change. It is also necessitated by the duty of care and diligence as well as the requirement to act in good faith … (t)his requires, at the very least, consideration by directors of their companies’ exposure to the physical, transition and liability risks associated with climate change. As and when climate change litigation becomes more prevalent, it will become even more likely that litigation against directors who have failed to properly address or consider climate change risks would arise. Significantly, directors who fail to give due consideration to climate change risks, or who wilfully or recklessly fail to comply with their disclosure obligations, may face the spectre of criminal prosecution by relevant governmental agencies, as well as potential personal liability for their defaults.’[377]

The legal opinion on Philippine law states:

‘With climate change being a grave concern of the country, and of the world community, presenting as it does an existential threat to mankind, and with the recognition that climate change presents physical, transition and litigation risks to Philippine corporations, directors of for-profit corporations are fiduciary bound to take into consideration climate change-related risks in the discharge of their duties of obedience and diligence and to abide by the “rules of good corporate governance” in fulfilling their companies’ long-term economic, moral, legal and social obligations towards their shareholders and other stakeholders, pursuant to the mandate “to maximize the organization’s long-term success, creating sustainable value for its stockholders, stakeholders and the nation”.’[378]

From a functional comparative perspective, the four legal opinions share the following elements:

the issue of dealing with climate risks is framed as a matter of directors’ duty of care (or equivalent duty), particularly insofar as climate risks are or may be material to the company;

the (best) interests of the company are identified as the relevant interest that directors are duty-bound to pursue (see above, III.B.2.4); conversely, the legal opinion on Philippine law makes reference to the obligations of a company towards its ‘shareholders and other stakeholders’;

it is acknowledged that directors who fail to consider climate risks face risks of personal liability.

This thesis distinguishes between two dimensions of the duty of care with respect to climate change. The first is a duty for directors to disclose climate risks and impacts (below, III.C.2), while the second pertains to the duty to address those risks and impacts (below, III.C.3). These duties are interrelated but not congruent. While this study adopts a sector‑agnostic approach, it recognises that directors in highly regulated industries – particularly in the financial sector, including pension funds – may be held to more stringent standards of care.[379]

Duty to Disclose Climate Risks and Impacts

It has become widely accepted that climate change-related information may be material, whether under a financial materiality or a double materiality standard (above, II.C.2.2). As an expression of the duty of oversight, it is a key function of the board to ensure the integrity of the company’s accounting and reporting systems (above, III.B.2.5). Directorial duties related to disclosures naturally extend to recently emerged types of disclosures such as those in relation to climate change issues. Consequently, directors may face risks of personal liability due to a breach of their duty of care if they fail to ensure that the company provides adequate disclosures of its climate‑related risks and, where applicable, its climate impacts.

Across jurisdictions, directors are commonly obliged to approve or certify to the accuracy and completeness of disclosures.[380] Inaccurate or incomplete disclosures may lead to personal liability. In Australia and the UK, for example, misleading disclosure by the company can be regarded as a ‘stepping stone’ to personal liability for directors.[381] Directors of Australian companies are required to exercise due care and diligence in their consideration of the resolution to approve the company’s accounts and reports.[382] Accordingly, a breach of the duty of care may occur where a director causes, permits, or fails to take reasonable steps to prevent the company from making misleading disclosures to the market, including in relation to climate change risks (below, III.C.4.2).[383] In the UK, a successful claim against a company for misleading disclosure provides strong evidence of a breach of directors’ duties.[384] Large companies in the UK are required to disclose a statement explaining how their directors have taken into account various considerations including the ‘impact of the company’s operations on the community and the environment’, which is likely to require a statement on the company’s consideration of its impact on climate change (below, III.C.4.3).[385] With respect to US law, in addition to securities laws and regulations that delineate the information that must be disclosed and the reporting standards deemed acceptable for that purpose, Williams identifies a separate ‘fiduciary duty of disclosure’.[386] Benjamin opines that ‘(d)irectors will breach their duties of care and loyalty if they fail to understand the risks of climate change to their business and, where these risks are considerable, have failed to convey these risks to shareholders’.[387] In France, directors of listed and large non-listed companies may be subject to civil liability and statutory sanctions if the company fails to adequately report on climate risks, or if it fails to disclose, in its annual report how it identifies and addresses serious risks to human rights and the environment (ie potential impacts), which implicitly includes potential climate change impacts (Loi de Vigilance, codified in the French Code de Commerce, and related legislation).[388]

The concept of materiality is of key importance to climate change reporting (above, II.C.2.2). As with any other type of information, the ultimate responsibility for determining the materiality of climate‑related information rests with the board.[389] Defining materiality could thus be described as ‘the essence of directors’ fiduciary duty as overseers of the management of the corporation’.[390] The definition of materiality focuses on the recipient of the information (above, II.C.2.2). The critical role of directors in determining materiality applies to any approach to corporate reporting, whether denoted as financial reporting or under a double materiality approach.[391] Therefore, in evaluating whether climate change-related information must be disclosed, directors must consider the point of view of a reasonable investor or other recipient of the disclosed information (above, II.C.2.2). From a financial materiality perspective, climate change-related information is material if there is a reasonable expectation that it will influence an investor’s assessment of the company’s value, investment, or voting decisions.[392] The level of interest among investors in the manner and extent to which companies assess and manage physical and transition risks has increased (above, II.C.3).[393] Accordingly, the contemporary ‘reasonable investor’ is expected to generally consider climate-related information to be relevant.[394] From a financial materiality perspective, the company’s climate change impacts could be regarded as material only where they are expected to affect the company’s value, for instance by means of liability or regulatory risks (or opportunities).[395] When a double materiality standard is applied, other recipients of disclosed information, especially those without a financial stake in the company, may have an interest in understanding the company’s climate impacts, and the manner in which it intends to address them (above, II.C.2.2).

Assessing whether a piece of information is material requires a materiality assessment. Materiality assessments are case-specific and subject to the changing expectations of the intended recipients of information; furthermore, materiality assessments are entity-specific in the sense that the interests of a given audience of disclosure recipients may vary from one corporation to another, contingent on factors such as corporate strategy, industry, business model, and time horizon (above, II.C.2.2).[396] It is reasonable to assume that many companies encounter a period of adjustment during which they must develop an understanding of which climate issues are material; during this time, they may prioritise the most relevant disclosures.[397] Given the elusive nature of materiality, it falls upon the company (and ultimately its board) to determine its own climate materiality threshold; however, directors must remain within the confines of accepted and evolving standards such as the TCFDR, ESRS or ISSB, as applicable (above, II.C.2.2).[398] In turn, where climate‑related information is deemed material, its disclosure becomes mandatory – regardless of whether this is expressly required by statutory law, set out in a reporting standard, or specified in authoritative guidance.[399] Without prejudice to the responsibilities of individual directors, ensuring the integrity of climate change disclosures may necessitate the appointment of a sufficient number of non-executive directors capable of exercising independent judgement (above, III.B.1).[400] In addition, external assurance from an assurance provider generally enhances the reliability of climate change reporting under both a financial and a double materiality standard; in fact, climate-related disclosures, at least the most relevant, should be verified by an independent and qualified service provider in accordance with an internationally recognised assurance standard.[401]

In what circumstances might the duty to disclose climate risks and impacts arise? In a comparative study based on expert opinions on the laws of Australia, Canada, South Africa, and the UK, Barker and Mulholland identify a range of circumstances that may constitute a breach of duty:[402]

failure to disclose material transition or physical risks;

denial or understatement of risk exposure, or overstatement of strategic preparedness or risk management;

misstatement of balance-sheet values, particularly where there is a risk of asset stranding;

selective use of optimistic demand forecasts or assumptions;

divergence between internal climate risk assessments and external disclosures;

boilerplate risk statements about the expected impact of climate change on the company’s operations and assets.

As the above list illustrates, disclosure obligations implicitly compel directors to exercise due care in various circumstances.[403] Barker and Mulholland’s primary focus is on the (inadequate) disclosure of climate risks to the company. However, analogous situations triggering the duty of care could arise in the context of climate impacts, particularly in instances where a country’s corporate law or pertinent international reporting standards (either explicitly or implicitly) encompass disclosure requirements concerning climate impacts (above, II.C.2.2). Other comparative research[404] and country-specific legal commentary[405] point to similar risks of breaches of duty of care resulting from inadequate or misleading climate disclosures in a broad range of jurisdictions.

Declarations by directors attesting to the accuracy and completeness of disclosures, made in directors’ reports[406] or elsewhere, typically form the basis of allegations of inaccurate or misleading disclosures (below, III.C.4).[407] In addition to a breach of the duty of care (or analogous duty), misleading disclosures may give rise to statutory sanctions in some jurisdictions or even criminal liability for directors.[408] The recipients of disclosed information typically have no direct influence over the board’s materiality assessment other than through legal action, which underscores the importance of judicial review of corporate materiality assessments.[409] Consequently, in addition to standardisation and regulation, case law may facilitate a better understanding of which specific climate-related information is considered material to a reasonable investor or other reasonable recipient of information (below, III.C.4).[410] Liability risks extend to assurance providers in the event that they fail to ensure that there is no omission of material climate information or material misstatement.[411]

Despite the lack of comprehensive comparative research on the subject, this section has identified a general degree of convergence in how jurisdictions approach the emerging duty of directors to disclose climate‑related information. Given that the standard of care owed under the duty of care is shaped through the application of the standard of review (above, III.B.2.6), emerging case law may offer further insights into potential applications of the duty to disclose (below, III.C.4).

Duty to Address Climate Risks and Impacts

The previous section has outlined how directors’ duty of care includes a duty to ensure that the company properly discloses relevant climate change-related information. There are compelling arguments that the responsibility of directors extends beyond ensuring transparency. It follows from the duty of oversight (see above, III.B.2.5), directors are not only obliged to ensure proper reporting, but also to ensure that the company addresses climate-related risks. The contours of this emerging ‘duty to address’, as it is referred to in this study, are taking shape primarily through international guidance, comparative research, and country‑specific scholarship. The limited body of relevant corporate law research has focused primarily on the implications of the duty of care in addressing climate risks, while paying far less attention to its relevance for addressing climate impacts.

In recent years, international guidance has increasingly recognised that boards are responsible for taking appropriate action to address climate‑related risks. As a starting point, directors can reasonably be expected to engage with emerging risks that may affect the business they oversee, in both the shorter and the longer term.[412] For instance, an OECD report from 2020 underscores the importance of continuous adjustments to risk management where ‘new ESG risks emerge or existing ones become more salient’.[413] More specifically, a 2022 OECD report states that ‘(e)vidently … if climate change risks are financially material for a company, they would have to be properly managed by senior executives and overseen by the board as an expression of the duty of care’.[414] The G20/OECD Principles of Corporate Governance 2023 explicitly include the responsibility to consider climate‑related risks and opportunities as part of the board’s core functions (above, III.B.2.4.2; III.C.1), stating that:

‘(t)he corporate governance framework should ensure that boards adequately consider material sustainability risks and opportunities when fulfilling their key functions in reviewing, monitoring and guiding governance practices, disclosure, strategy, risk management and internal control systems, including with respect to climate-related physical and transition risks’.[415]

The recognition that addressing climate change risks is a key responsibility of the board is not yet explicitly reflected in most domestic corporate laws (above, III.C.1), with one exception. The Fiji Companies Act 2015, as amended in 2021, provides as follows:

‘(i)n exercising reasonable care and diligence … directors or other officers of a company must consider and evaluate climate change risks and opportunities to the extent they are foreseeable and intersect with the interests of the company’.[416]

Where statutory company law explicitly requires directors to consider environmental issues more broadly (eg Nigeria or the UK) or mandates disclosures on how directors have had regard to such issues (eg France or the CSRD), the duty to address climate risks and impacts may be implicitly derived (above, III.B.2.4.2; III.C.2). In the EU, efforts have been made to explicitly enshrine in legislation that, in discharging their duty of care, directors are obliged to consider sustainability matters, including climate change. Seeking to ‘clarify, in a harmonised manner, the general duty of directors to act in the best interest of the company’ across EU member states’ national laws, the 2022 proposal of the EU Corporate Sustainability Due Diligence Directive (CSDDD Proposal 2022) included the following provision:[417]

Article 25
Directors’ duty of care
1. Member States shall ensure that, when fulfilling their duty to act in the best interest of the company, directors of companies (…) take into account the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences, including in the short, medium and long term …

In the subsequent legislative process, the proposed Article 25, as well as draft Article 26, which articulated a duty on directors to establish and oversee the implementation of corporate sustainability due diligence processes, and to adjust corporate strategy accordingly, were abandoned.[418] Read in conjunction, these two ‘corporate governance provisions’ would have established an explicit EU-wide framework for personal directorial liability in the event of disregard for climate and other sustainability matters.[419] Arguably, the term ‘consequences’ as used in the draft text of Article 25 is equivalent to the more common term ‘impact’ (ie not ‘risk’; above, III.A.2). Accordingly, the proposed regime would have required directors to have regard to the company’s climate change impacts, not only risks.[420] Seemingly, one of the main reasons for the deletion was a reluctance to enforce sustainable corporate conduct by regulating and harmonising traditional corporate governance norms such as directors’ duties.[421] In addition, Weber and Mittwoch contend that the term ‘sustainability matters’, without definition of sustainability (but instead a list of examples), was vague; the same could be said of the wording ‘taking into account’, which offers no clear indication of the relative priority of sustainability matters compared to other considerations.[422] And yet, the wording ‘taking into account’ would have expressly required a balancing of interests in which climate change and sustainability matters constitute mandatory considerations.

Given the open-ended nature of the duty of care (above, III.B.2.3), interpreting its meaning in the context of climate change issues involves consideration of sources outside of corporate law proper, including authoritative statements by financial regulators and supervisory authorities (above, III.A.6.1). Some authorities have made express statements about the role of the board in considering climate change. For instance, in 2018, the Bank of England Prudential Regulation Authority (BoEPRA) observed that ‘financial risks arising from climate change are sufficiently material to be considered at board level [of banks]’.[423] As another example, the Australian Prudential Regulation Authority (APRA) stated in 2019 that climate change risks are ‘material, foreseeable and actionable now’, stressing that ‘(l)iability risks stem from the potential for litigation if entities and boards do not adequately consider or respond to the impacts of climate change, and may include the potential breaching of directors’ duties’.[424] The recognition by financial supervisors and regulators that climate change may pose financial risks exerts pressure on directors of financial institutions to address climate risks.[425] It is remarkable in this context that in 2025, the ECB issued a first-of-its-kind fine on a Spanish bank for failing to sufficiently identify climate risk.[426]

Given the financial materiality of climate‑related risks (see above, III.A.6), it is imperative that directors take such risks into account, even under theories that (erroneously) adopt a narrowly defined focus on shareholder wealth maximisation (above, III.B.2.4.2).[427] From a traditional corporate law perspective – one that focuses on risks to the company rather than the impacts of its activities (see above, III.A.1) – it is possible, for exploratory purposes, to distinguish three distinct levels of compulsion for directors to consider climate‑related risks:[428]

directors may be permitted to address climate risks if they choose to do so at their discretion.

directors may be obliged to take into account climate risks in the exercise of their mandate but remain entitled to give greater weight to other factors.

the company’s interests may be so implicated by climate risks that the duty of care actually requires directors to cause the company they oversee to mitigate

Scenario (a) mainly concerns the situation where directors are confronted with the assertion that the consideration of climate risks constitutes a breach of their duty of care because the alleged weakening of financial performance resulting from such consideration is purportedly contrary to the interests of the company or its shareholders.[429] If this argument were valid, it would suggest that the duty of care acts as an impediment to climate change mitigation.[430] This conclusion is refuted by three main counterarguments. First, given the widely acknowledged financial materiality of climate‑related risks, it is clearly in the company’s best interests to take these risks seriously and address them appropriately. International guidance supports this view, as discussed above in this section. As an additional example, in 2019, the International Organisation of Pension Supervisors (IOPS) stated that consideration of ESG factors (including climate change issues) in pension fund investment and risk management processes is compatible with fiduciary duties owed by pension fund trustees.[431] Second, there is a mounting body of research finding that the consideration of climate risk is not detrimental to financial performance, particularly in the longer run.[432] Third, as long as the board can establish a plausible link between measures to mitigate climate risks and the interest of the company, the BJR protects directors from liability (above, III.B.2.6).[433] Conversely, inadequate consideration of climate-related risks in decision-making (eg failure to consider a material issue or to obtain adequate information) could be regarded as a procedural failure, rendering the BJR inapplicable.[434] Scenarios (b) and (c) illustrate two levels of increased compulsion to consider climate risks. The determination of the appropriate level of care that can be expected from a reasonable director must be made on a case-by-case basis and measured against the board’s strategic, advisory, and oversight functions (above, III.B.1).

What actions must a reasonable director take to fulfil the duty to address? The G20/OECD Principles of Corporate Governance 2023 point to the relevance of climate risk assessments.[435] Climate risk assessments relate to the question of whether and how climate change affects the company’s risk profile and the board’s approach to climate risks.[436] As part of this responsibility, directors should assess whether the company’s capital structure aligns with its strategic objectives and, through effective oversight, ensure that the company’s lobbying activities and political donations are consistent with its climate goals.[437] In addition, boards should ensure that the remuneration and appointment of key executives align with the company’s climate strategy – for instance, by assessing whether the targets in executive compensation plans are quantifiable, tied to financially material risks, and designed to incentivise a long‑term perspective.[438] With respect to the integration of sustainability factors (including climate change) into risk management systems and processes, the G20/OECD Principles of Corporate Governance 2023 refer to OECD due diligence standards on RBC.[439] Notably, since their ‘targeted update’ in 2023, the OECD GL contain climate change-specific recommendations (below, IV.A.3.2).

The recommendations in the G20/OECD Principles of Corporate Governance 2023 are broadly consistent with the Principles on Climate Obligations of Enterprises (PCOE), a set of principles developed by the Expert Group on Global Climate Obligations.[440] The PCOE provide a valuable reference point for analysing how the duty to address may be interpreted and applied in practical terms. The PCOE, in their second edition, propose that company boards take concrete steps to address climate change risks and opportunities:

24. The board of an enterprise should ensure that it has access to sufficient knowledge, skills, and experience to effectively debate and decide on climate-related risks and opportunities.

25. The board of an enterprise should ensure that:

(a) the management assesses on an ongoing basis the short‑, medium- and long-term materiality of climate change-related risks to the enterprise;

(b) the enterprise’s climate change-related accounting assumptions and reporting procedures are robustly tested;

(c) the enterprise’s adaptive actions and responses to climate change are proportionate to the materiality of climate change to the enterprise;

(d) the enterprise does not engage in lobbying and similar endeavours irreconcilable with the imperative of keeping the increase in global average temperature above pre-industrial levels below 1.75 degrees C.[441]

26. The board shall ensure that executive incentives, such as bonuses, are not linked to profits generated from or otherwise linked to activities or actions that are a violation of these Principles, or activities or actions irreconcilable with keeping global warming below 1.75 degrees C compared to pre-industrial levels.

The PCOE emphasise the importance of climate knowledge, skills and experience at board level (Principle 24). Without these qualities, the board will not be able to make well-informed decisions, which is a prerequisite for successfully fulfilling its oversight function (see above, III.B.2.6). Principles 25 and 26 reaffirm the expectation that boards address climate risks where they are deemed material, based on a materiality assessment, and, in addition, oversee climate lobbying and executive incentives.

The direction set by international guidance is reinforced by comparative research. In their comparative study, Barker and Mulholland posit that climate change ‘triggers directors’ governance duties in the same way as any other financial risk issue’.[442] This view is corroborated by other comparative research.[443] Barker and Mulholland identify a range of illustrative situations in which the duty to address may arise:[444]

inadequate consideration of climate risks (eg failure to obtain information about the company’s exposure to climate risks, failure to make appropriate inquiries or failure to seek qualified and independent expert advice);

failure to critically evaluate expert advice on climate risks;

failure to implement and monitor an adequate ICS that identifies, monitors, and reports on climate risks;

failure to consider foreseeable and material climate‑related risks and opportunities in risk management and strategic planning, or in connection with specific projects or transactions requiring board oversight or approval;

misleading disclosures about the company’s exposure to climate risks (see above, III.C.2).

In the limited body of country‑specific literature – focused primarily on analyses of Australian, UK and US (Delaware) law – there is relatively little discussion of what the duty to address may concretely entail (see also below, III.C.4). Commentators typically argue that directors should establish processes to identify, monitor, manage, and report on climate‑related risks.[445] Barker and others point out that difficulty in assessing climate risk (above, III.A.1) does not relieve directors of their oversight duty.[446] In fact, a range of methodologies are available to address the complexities of climate risk. For example, stress testing and scenario analysis can be used to model risks, opportunities and resilience under a range of plausible scenarios (see below, IV.B.3.1).[447] Benjamin contends that directors’ duties extend beyond merely identifying and assessing climate‑related risks, requiring that such risks be actively considered in the decision‑making process.[448] This could include, for example, directors actively raising climate-related issues with management or, where appropriate, with independent experts.[449] Indeed, a mere acknowledgement of climate‑related risks is, in itself, insufficient. Once climate‑related risks are identified, it is clear that appropriate measures must be taken to mitigate them. As Hutley and Hartford-Davis aptly conclude, ‘(c)ompany directors who consider climate change risks actively, disclose them properly and respond appropriately will reduce exposure to liability’.[450] Summarising key elements of the duty to address, the legal opinion on Hong Kong (above, III.C.1) states that directors are ‘required to set up effective internal risk management systems, perform adequate due diligence, exercise supervision over those to whom they have delegated the monitoring and management of climate-related risks, ensure there is proper disclosure (of asset impairment and fair valuation) in the financial statements, and refrain from making greenwashing statements’.[451]

Overall, regardless of whether domestic corporate law explicitly states that directors must consider climate risks (or environmental risks more broadly), we can safely assume that the duty of care – particularly the duty of oversight – requires directors to address climate risks, provided they are identified as (material) risks to the company. But what about the impacts of the company’s activities on climate change (above, III.A.2.5)? There is little specific discussion of this query in corporate law scholarship. With respect to US (Delaware) law and framing climate change as a stakeholder issue (above, III.B.2.4.2), McDonnell and others argue that ‘a stakeholder-focused duty to monitor would require that boards address severe risks to significant stakeholders and interests impacted by a company’s operations’.[452] They note that such an obligation to monitor climate impacts would go well beyond monitoring compliance.[453] Taking a broader perspective, other commentators argue that the duty of care requires the board to consider all interests involved, including the interests of society at large and the interest of mitigating pressures on planetary boundaries (eg Sjåfjell and Mähönen, Winter; above, III.B.2.4.3). This would imply that a company’s climate change impacts are part of the issues that a director must consider.

In sum, there is broad recognition that directors are required to address material climate‑related risks as part of their oversight duty. However, relatively little research has examined the specific measures necessary to fulfil this duty, particularly the actions to be taken once climate risks have been identified and assessed. In addition, there has been little research into the query of what the duty to address entails in relation to the company’s climate impacts. This study adopts the view that the emerging concept of CCDD, examined below in Chapter IV, offers an appropriate framework for defining the scope and content of the duty of care in the context of climate‑related risks and, in particular, impacts.

Case-Law

Corporate-Law Based Climate Litigation

Across jurisdictions, the level of enforcement of the duty of care is generally perceived to be low (above, III.B.2.6). Nevertheless, within the emerging phenomenon of private climate litigation (above, II.B.4.3), there is a growing body of cases relying on corporate law as a legal basis. These cases typically allege breaches of the duty of care (or equivalent). In many cases, taking legal action can be seen as the ultima ratio of shareholder engagement (above, II.C.3). At the time of writing, corporate law-based private climate litigation was concentrated mainly in Australia (below, III.C.4.2), the UK (below, III.C.4.3) and the US (below, III.C.4.4). In other jurisdictions, merely anecdotal evidence of corporate law-based private climate litigation has been identified (below, III.C.4.5).

The following sections illustrate the phenomenon of corporate law-based private climate litigation by summarising key cases. While some of the highlighted cases were still pending at the end of 2025, examining the range of arguments advanced and remedies requested contributes to delineating the content of the duty of care in relation to climate‑related risks and impacts. Regardless of their outcomes, these cases place sustained pressure on directors to identify, disclose, and proactively manage climate‑related risks, opportunities, and, where relevant, impacts.[454] A similar effect may also arise from cases brought against companies under general tort law (or equivalent legal bases), which are discussed later (below, IV.C.4). Overall, corporate litigation alleging breaches of directors’ duties of care for failing to adequately consider climate risks is expected to increase, thereby amplifying litigation exposure for companies and their boards (above, III.A.4.2).[455]

Most of corporate law-based climate litigation is brought by shareholders in a derivative action (above, II.B.4.3). Further, there is a body of cases brought by pension fund beneficiaries against fund trustees, challenging the management and disclosure of climate‑related financial risks. Arguably, the (presumed) longer-term investment horizon of pension funds makes their trustees (whose duties are comparable to those of company directors) particularly exposed to breach of duty claims (see below, III.C.4).[456] Corporate law–based private climate litigation typically centers on a company’s (or fund’s) exposure to climate risks. In certain cases, plaintiffs seek court orders compelling companies to enhance climate change–related disclosures and/or risk management practices, or to produce relevant documents to facilitate judicial or shareholder review of the company’s climate-related actions (or inactions).

Australia

At the end of 2025, the Australian and Pacific Climate Change Litigation database (above, III.A.4.2) listed 114 cases in the ‘Corporate Accountability’ category, of which the two most frequent sub-categories were ‘misleading and deceptive conduct’ (55) and ‘transparency/disclosure’ (14). The relatively high number of cases may be explained, at least in part, by the fact that this database adopts a relatively broad definition of climate litigation.[457] This section summarises two illustrative examples of breach of duty claims.

In Abrahams and another v Commonwealth Bank of Australia,[458] two shareholders claimed that by omitting to disclose climate change-related risks in its annual reports, the bank had failed to provide a true and fair view of its position and prospects. The plaintiffs sought a declaratory judgment and an injunction requiring the bank to disclose information on climate-related risks. Section 299A of the Australian Corporations Act 2001 (Cth) provides that a directors’ report for a financial year must contain information that shareholders would reasonably require to make an informed assessment of the company’s operations, financial position as well as its business strategies and prospects for future financial years. The lawsuit was withdrawn following the publication of the bank’s 2017 annual report, in which the bank acknowledged climate change as a significant risk (and opportunity) for the bank and committed to conducting a climate change scenario analysis; notably, the report confirmed that the responsibility for overseeing climate change risks rests with the bank’s board.[459] In follow-up proceedings, the plaintiffs petitioned for access to internal company documents with a view to conducting an assessment of the environmental, social and economic impacts of certain fossil-fuel related projects, as well as determining these projects’ alignment with the goals of the Paris Agreement; in April 2023, the Federal Court of Australia ruled that shareholders were permitted to use certain documents obtained from the bank for the purpose of further litigation.[460]

In McVeigh v REST,[461] a member of one of Australia’s largest superannuation funds (the Retail Employees Superannuation Trust, or REST) claimed that he was prevented from making an informed judgement about the fund’s management and financial condition due to the fund’s failure to provide information about its exposure to climate change risks and the measures it was taking to address them. The plaintiff alleged that the trustees of REST had breached their duty of care and diligence[462] and other duties by failing to provide adequate information; accordingly, he sought an injunction ordering REST to provide the requested information.[463] The case was settled in November 2020.[464] The terms of the settlement require REST to implement a series of measures to address climate risks, including:

implementing a long-term objective to achieve a net zero carbon footprint for the fund by 2050;

measuring, monitoring and reporting outcomes on the fund’s climate-related progress and actions in line with the TCFDR;

encouraging the companies in which it invests (investees) to make disclosures in accordance with the TCFDR;

enhancing its consideration of climate change risks in setting its investment strategy and asset allocation positions, including through scenario analysis;

actively considering any climate change-related shareholder resolutions of investees and otherwise continuing to engage with investees and industry associations to promote business plans and government policies to be effective and reflect the climate goals of the Paris Agreement;

conducting due diligence and monitoring of investment managers and their approach to climate risk; and

further developing its management processes and implementing changes to its climate change policy and internal risk framework.

Commentators advise that directors of Australian companies remain vigilant about evolving climate litigation trends and mitigate exposure through measures such as adhering to the TCFDR in disclosures and maintaining robust systems to ensure informed decision-making on climate risks.[465]

United Kingdom

At the end of March 2023, the Grantham Research Institute’s database on climate litigation reported 41 cases in the UK involving a corporation.[466] More recent data was not available, due to a revision of the database.[467]

In addition to earlier cases concerning the discretion of pension fund trustees to consider non-financial interests in investment decisions (notably the controversial Cowan v Scargill decision),[468] the case law on directors’ duties in relation to climate risk (and environmental and social risks more generally) in the UK mainly concerns the interpretation of Sections 172 (duty to promote the success of the company) and 174 (duty to exercise reasonable care, skill and diligence) of the Companies Act 2006.[469] Section 172(1) provides that (emphasis added):

a director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (among other matters) to

the likely consequences of any decision in the long term,

the interests of the company’s employees,

the need to foster the company’s business relationships with suppliers, customers and others,

the impact of the company’s operations on the community and the environment,

the desirability of the company maintaining a reputation for high standards of business conduct, and

the need to act fairly as between members of the company.

Directors are required to prepare a strategic report informing the members of the company how they have performed their duty under Section 172.[470] This arguably necessitates a statement on how the directors have considered the company’s impact on climate change.[471] Although the literal wording of ‘having regard to’ does not readily support this interpretation, section 172 has commonly been understood as subordinating stakeholder interests to the overarching duty to promote the company’s success.[472] It is important to note that the provision does not grant any enforceable rights to the stakeholders listed in Section 172(1)(a) – (f), meaning that these stakeholders are not entitled to enforce a breach against the company or its directors.[473]

In R on the Application of the People and Planet v HM Treasury,[474] an NGO sought a court order directing the majority shareholder (the UK Treasury) to adopt a more interventionist approach by requiring the Royal Bank of Scotland (in which the UK Treasury had become the ultimate majority shareholder in the wake of the 2008 financial crisis) to adopt lending practices and policies that would not finance projects or companies that harm the environment through their carbon emissions or insufficient respect for human rights. Sales J dismissed the application for leave to bring judicial review proceedings, holding that imposing an investment policy relating to combating climate change (and protecting human rights) against the judgement of the bank’s board would have ‘a tendency to come into conflict with … the duties of the … board as set out in Section 172’.[475] The decision subordinates climate concerns to shareholder concerns ‘unless an easy and economic compatibility between the two can be found’.[476] In contrast, subsequent case law emphasises the importance of interests other than maximising shareholder value.[477] In particular, in Stimpson v Southern Landlord Association, Pelling J held that ‘(w)here there is a conflict between promoting the success of the company for the benefit of its members and the achievement of the other objectives [of Section 172], a balancing exercise will be required’.[478]

In ClientEarth v Shell Plc and Others,[479] a shareholder, supported by various institutional investors, brought a derivative claim in February 2023 alleging that Shell’s directors had breached their duties under the Companies Act (in particular, Sections 172 and 174) by failing to adopt and implement a strategy consistent with the Paris Agreement, thereby increasing the company’s exposure to climate risks and threatening its long-term commercial viability.[480] The plaintiffs contended that, despite the adoption of an ‘energy transition strategy’ with an overall target of reaching net zero by 2050, the respondents had failed to implement policies that were reasonably capable of attaining this target; further, the plaintiffs claimed that there was no credible Scope 3 emission reduction target.[481] The claim was rejected by the High Court of England and Wales on the basis that a prima facie case had not been established; Trower J dismissed the application to proceed with the case, holding that the claim sought to impose specific obligations on Shell’s directors as to how the company’s climate risks should be managed, thereby interfering with the legitimate exercise of their discretion.[482] The Court of Appeal refused leave to appeal. The High Court’s decision was sharply criticised by former Supreme Court judge Lord Carnwarth, who identified a ‘missed opportunity’ to ‘examine the operation of the relevant Companies Act provisions, both in general and in the particular context of the fiduciary and due care obligations’.[483]

Another notable case is McGaughey and Anor v Universities Superannuation Scheme Ltd and Others, a derivative claim against the directors of the UK’s largest pension scheme.[484] The plaintiffs argued that the failure of current and former directors to develop a credible plan for exiting fossil fuel investments was detrimental to the success of the company. Notably, the plaintiffs contended that directors’ duties under the UK Companies Act ‘must be construed compatibly with Articles 2 and 8 of the (ECHR) … and must further be construed compatibly with the United Kingdom’s obligations in international law’.[485] In August 2022, the High Court denied the plaintiffs permission to proceed – a decision which was upheld by the Court of Appeal in July 2023.[486] The case was rejected on three main grounds.[487] First, there was no prima facie case that the fund had incurred any loss as a result of the alleged breaches of directors’ duties. Consequently, the action could not be characterised as a derivative claim. Second, it was held that there was no demonstrable causal link between the investment in fossil fuels and the benefit changes affecting the plaintiffs. In fact, it was not alleged that the plaintiffs had suffered any loss. Third, the judges found that there was no suggestion that the directors had acted in bad faith.

In light of the aforementioned precedents, the probability of directors being held personally liable in the UK for mismanagement and inadequate disclosure of climate risk is currently considered to be moderate.[488] Despite the initial optimism that the ‘enlightened shareholder value’ concept, as embodied in Section 172, would bring about a paradigm shift, commentators acknowledge that the 2006 reform may have done ‘little but codify the previous common law’,[489] potentially even reaffirming the social norm of shareholder primacy in the UK.[490] Benjamin opines that, as far as Section 172 is concerned, directors are not obliged to reduce GHG emissions if this is contrary to the profitability motive of shareholders; however, directors are obliged to ‘at least consider the impacts of climate change on their businesses, and obtain expert advice on the issue’.[491] While acknowledging that Client Earth v Shell might have established ‘several barriers’ for climate change-related derivative actions in the UK, Aristova and Nichols posit that there are still avenues for such actions to be pursued, in particular: (i) challenging specific high-emission projects or activities, (ii) targeting directors who completely disregard climate risks, and (iii) focusing on flawed decision-making processes[492]

United States

At the end of 2025, the Sabin Center database (above, III.A.4.2) listed 77 US cases in the category ‘Securities and Financial Regulation’. In different contexts, most of these cases involve allegations of inadequate disclosure and/or management of climate risks.[493]

In Fentress v ExxonMobil Corp.,[494] a class action was filed by employees of ExxonMobil in 2016. The plaintiffs alleged that the company’s senior executives had breached their duty to act with care, skill, prudence and diligence because they knew or should have known (in their capacity as fiduciaries of the company’s savings plan) that the company’s stock price was inflated and that therefore, investing in the company’s stock was an imprudent investment. The company was sued as a co-defendant for failing to monitor and remove the individual fiduciaries. In 2018, the Federal District Court for the Southern District of Texas granted a motion to dismiss the case on the basis that the plaintiffs had failed to demonstrate that climate change risks were not already priced into the stock price; in order to establish a breach of fiduciary duty, the Court held, the plaintiffs would need to establish that an alternative course of action (eg not buying the company’s stock) was available and so clearly beneficial that a prudent fiduciary could not conclude that it would do more harm than good to the fund.[495]

In 2017, a federal securities class action alleging misleading disclosures (securities fraud) was filed by a shareholder in Ramirez v ExxonMobil Corp et al.[496] The lawsuit seeks damages for losses on publicly traded stock suffered between 2014 and 2017 as a result of the failure of several of the company’s (former) directors and officers to disclose to investors the risks associated with climate change and the decline in the value of certain fossil fuel operations (in particular, Canadian tar sands and Rocky Mountain dry gas). In 2018, in the context of a (denied) motion to dismiss, a District Court judge ruled that the plaintiffs had sufficiently alleged material misstatements and loss causation; this ruling can be interpreted as an acknowledgement that information about climate risks could be material to a reasonable investor (above, II.C.2.2).[497] The case illustrates how fiduciary duties could require directors of listed companies to disclose information concerning climate risks.[498]

The insolvency of Pacific Gas & Electric Company (PG&E) following California’s catastrophic 2017–2018 wildfires was described in the media as the first bankruptcy attributable to climate change.[499] In a shareholder derivative suit, the plaintiffs contended that the company’s directors and officers had breached their fiduciary duty to exercise good faith and care by mismanagement and misleading disclosures regarding climate change-related wildfire risks.[500] The same argument was raised in York County v Rambo,[501] a federal securities class action lawsuit filed by bond investors against several of PG&E’s directors and officers with the aim of recovering damages caused by the collapse in the price of PG&E’s bonds. In 2024, a similar shareholder derivative suit was filed in Hawaii against the officers and directors of Hawaii’s electric utility, alleging failures to mitigate wildfire and climate change risks alongside misleading public statements about preparedness for severe weather.[502]

In addition to derivative lawsuits by shareholders and bondholders, there are various instances in which public authorities have pursued allegations of inadequate disclosure and management of climate risks. The Attorney Generals of several states have launched investigations into the reporting practices of companies, with a particular focus on reporting to the Securities and Exchange Commission (SEC).[503] These investigations included an assessment of the conduct of the respective companies’ directors.[504] Some of the proceedings were resolved by an agreement, with settlement terms requiring that the companies in question adjust their disclosure practices.[505] Other cases were rejected. For instance, the matter of New York v ExxonMobil Corp.[506] was dismissed by the New York Supreme Court on the basis that the Attorney General had failed to prove by a preponderance of the evidence that ExxonMobil had made material misstatements or omissions in its climate-related disclosures that would have misled a reasonable investor.[507]

Overall, US courts are reluctant to allow claims for breach of directors’ duties in relation to climate risks to proceed. Although the US has traditionally been viewed as one of the most receptive jurisdictions for private enforcement of corporate law via shareholder litigation, protections shielding directors from legal challenges to business decisions remain very strong (above, III.B.2.6).[508] While highlighting the challenges faced by plaintiffs in sufficiently alleging the materiality of climate-related information, US commentators generally expect to see more of these cases; sometimes it is suggested that the likelihood of success for such claims may be growing, as investors increasingly consider climate change-related information to be material.[509] This underlines the need for directors to take climate risks seriously and to clearly explain how they assess climate-related information, without misleading investors.[510] Williams and Mulholland argue that directors in high-emitting industries or companies operating infrastructure that is particularly vulnerable to climate change impacts ‘could be required to meet an elevated standard of oversight’.[511] Barker posits that fiduciary duties as interpreted by US courts are ‘sufficiently flexible to allow directors to take into account the risks of climate change to their business and take a longer-term perspective on value creation that incorporates the risks and opportunities of energy transitions’ and that, even if (mis)guided by shareholder primacy thinking, fiduciary duties ‘at the very least require directors to be informed of and take into account the risks of climate change to their business’.[512] Barker, Williams and Cooper opine that ‘directors and officers who make no good faith effort to become informed as to climate risks, or who make no conscious decision or judgment regarding climate risks in their consideration of corporate strategy, planning and risk management, or transactions coming before them for approval, are unlikely to discharge (their) fiduciary duty’.[513]

Other Jurisdictions

Most of corporate law-based climate litigation involving allegations of breach of directorial duties is concentrated in the jurisdictions discussed above (Australia, the UK, and the US). Cases in other jurisdictions are rare. There, plaintiffs appear to prefer pursuing other legal avenues, such as general tort law (below, IV.C.4). Presumably, this is related, at least in part, to the fact that enforcing the duty of care is very burdensome in many jurisdictions (above, III.B.2.6).

In Client Earth v Enea, in 2019, the District Court of Poznań annulled a company resolution approving the construction of a 1GW coal-fired power plant (Ostrołęka C).[514] The plaintiff, a shareholder, argued that by failing to properly consider the financial risks associated with climate change, the company’s resolution breached the directors’ duty of care as well as the duty to act in the best interests of the company and its shareholders under the Polish Commercial Companies Code.[515] Specifically, the plaintiff contended that in view of rising carbon prices, growing competition from renewable energy, and the effects of EU energy reforms on EU subsidies for coal-fired power, the project involved unjustifiable financial risks.[516] The Court’s annulment of the company resolution was seemingly based on formal grounds.[517] Reportedly, in 2024, Enea filed a lawsuit against the company’s former directors and its insurers for lack of due diligence in relation to the coal plant investment, which resulted in a loss of more than USD 160 million.[518]

In Germany, in the matter of Church of England Pensions Board et al. v Volkswagen AG, several institutional investors (including large Swedish, Danish and UK pension funds) sued car manufacturer Volkswagen in 2022 for refusing to include the plaintiffs’ proposal on climate lobbying activities as an agenda item at the 2022 annual general meeting.[519] The plaintiffs claimed that although Volkswagen publicly promoted its transition efforts, the company might be involved in lobbying activities that contradicted its stated climate goals, such as through its participation in automotive and business associations.[520] In May 2023, the Higher Regional Court of Braunschweig denied the investors the right to appeal the matter, upholding the lower court’s view that the competence to direct the company lies with the management board (Vorstand), thereby barring shareholders from issuing detailed instructions to the supervisory board.[521]

In France, several climate change-related lawsuits have been brought under the Loi de Vigilance, which is codified in the Code de Commerce (above, III.C.2; below, IV.C.4.3.2). While formally directed against companies, these cases are closely linked to the duties of directors of large and listed French companies, given that French law requires directors to ensure the reliability of the company’s disclosures on its climate risks as well as its climate impacts (above, III.C.2).

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 51–52.

ibid 52.

ibid 52 (emphasis added).

See Nick J. Fox, ‘Postmodern Reflections on “Risk”, “Hazards” and Life Choices’ in Deborah Lupton (ed), Risk and Sociocultural Theory: New Directions and Perspectives (CUP 1999) 12.

Sjåfjell posits that a ‘new understanding of financial risk may turn out to be one of the most important emerging drivers for the integration of sustainability into the core duty of the board, also among those who have a very narrow view of the duty of the board’ (Beate Sjåfjell, ‘Realising the Potential of the Board for Corporate Sustainability’ in Cambridge Handbook of Corporate Law (n 106) 696, 702).

See Donald (n 551) 5–6 (referring to the seminal work of Frank H. Knight).

Paul Sweeting, Financial Enterprise Risk Management (2nd edn, CUP 2017); Virginia Harper Ho, ‘Board Duties: Monitoring, Risk Management and Compliance’ in Afsharipour and Gelter (eds), Comparative Corporate Governance (n 120) 242, 243–44).

Committee of Sponsoring Organizations of the Treadway Commission (COSO) and World Business Council for Sustainable Development (WBCSD), Enterprise Risk Management Applying enterprise risk management to environmental, social and governance-related risks. Executive Summary (2018) <https://www.coso.org/Documents/COSO-WBCSD-ESGERM-Executive-Summary.pdf> 1.

Sweeting (n 546) 103–25.

ibid 113–26; Harper Ho, Board Duties (n 546) 243.

Sweeting (n 546) 103.

ibid 357; Scott Donald, ‘Prudential Regulation and Climate Change’ (2023) ex ante Special Issue 7 (arguing that ‘(h)istorical experience is a poor means of calibrating a model when the underlying processes are evolving – you cannot simply dial up the frequency or the amplitude of the events when path dependency, non-linearity and positive feedback loops are present’).

See Beate Sjåfjell, ‘Taking Finance Seriously: Understanding the Financial Risks of Unsustainability’ in Kern Alexander, Matteo Gargantini, and Michele Siri (eds), The Cambridge Handbook of EU Sustainable Finance (CUP 2025) 22; ibid, Realising the Potential of the Board (n 544) 703.

Martin L. Weitzman, ‘Fat-tailed Uncertainty in the Economics of Catastrophic Climate Change’ (2011) 5 Review of Environmental Economics and Policy 275, 275.

Benjamin, Companies and Climate Change (n 83) 1.

See the wording of Article 15 (‘Combating climate change’) of the Proposal for the EU Corporate Sustainability Due Diligence Directive (CSDDD) (Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 COM(2022) 71 final) (CSDDD (Commission Proposal 2022)), which was revised in the revised version of the directive (Silvia Ciacchi, ‘The newly-adopted Corporate Sustainability Due Diligence Directive: an overview of the lawmaking process and analysis of the final text’ (2024) 25 ERA Forum 29, 41) and deleted altogether in the ‘final’ version of CSDDD adopted at the end of 2025 (see below, IV.A.4).

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 52.

OECD, ‘Building more resilient and sustainable global value chains through responsible business conduct’ (OECD 2021) <https://mneguidelines.oecd.org/Building-more-resilient-and-sustainable-global-value-chains-through-responsible-business-conduct.pdf> 16.

Ans Kolk and Jonatan Pinkse, ‘Market Strategies for Climate Change’ (2004) 22 European Management Journal 304.

Andrew J. Hoffman, ‘Climate Change Strategy: The Business Logic behind Voluntary Greenhouse Gas Reductions’ (2005) 47 California Management Review 21.

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 48.

See eg Karl Schulz and Peter Williamson, ‘Gaining Competitive Advantage in a Carbon-constrained World: Strategies for European Business’ (2005) 23 European Management Journal 383; Jonathan Lash and Fred Wellington ‘Competitive Advantage on a Warming Planet’ (2007) 85 Harvard Business Review 94.

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 53–54.

ibid 52–54.

ibid 48.

While there is a variety of definitions of systemic risk, they are generally viewed as ‘an emergent feature of complex systems in which risks result from poorly understood interactions within the system, when these interactions are more than the sum of their parts and therefore often emerge as surprises’ (Patrick W. Keys and others, ‘Anthropocene Risk’ (2019) 2 Nature Sustainability 667, 667). See generally Rolf H. Weber and Dominic N. Staiger ‘Financial Stability Board: Mandate and Implementation of Its Systemic Risks Standards’ (2014) 2 International Journal of Financial Studies 82, 83.

IPCC, SR1.5, Annex I. Glossary, 557.

ibid, 551–52.

The IPCC’s work is divided into three working groups (WG): WG I (Physical Science Basis), WG II (Impacts, Adaptation, and Vulnerability) and WG III (Mitigation).

IPCC, AR6. SYR. Annex I: Glossary (2023) 128).

ibid, AR6. WGII: SPM (2022), 10-35 (the long list includes a broad variety of adverse effects including food and water insecurity, increases in food-borne and water-borne diseases, physical and mental illnesses, negative economic impacts, contribution to humanitarian crises, and many others).

ibid, AR6. SYR. Annex I: Glossary (2023) 125 (emphasis omitted).

ibid, 128 (emphasis omitted).

ibid, AR6. WGII: SPM (2022), 4.

Keys and others (n 565) 668.

ibid.

Beatrice Crona, Carl Folke and Victor Galaz, ‘The Anthropocene Reality of Financial Risk’ (2021) 4 One Earth 618, 618.

Article 1(1) UNFCCC; Article 1 Paris Agreement.

TCFD, Final Report (n 109) 62 (emphasis added).

Seemingly, this distinction is based on the work of various scholars, including, eg Hoffman, Climate Change Strategy (n 559); Lash and Wellington (n 561); Perry E. Wallace, ‘Climate Change, Corporate Strategy, and Corporate Law Duties’ (2009) 44 Wake Forest Law Review 757, 759–60 (referring to physical risk, regulatory risk, and litigation risk).

TCFD, Final Report (n 109) 5–10; Christa Clapp and others, ‘Shades of Climate Risk – Categorizing climate risk for investors’ (CICERO Center for International Climate Research, 2017), <https://cicero.oslo.no/en/climateriskreport> 14–35; Patrick Bolton and others, ‘The green swan. Central banking and financial stability in the age of climate change’ (Bank for International Settlements, 2020), <https://www.bis.org/publ/othp31.htm> 17–19; Paul Smith, ‘The Climate Risk Landscape. A comprehensive overview of climate risk assessment methodologies’ (UNEP FI, 2022) <https://www.unepfi.org/wordpress/wp-content/uploads/2021/02/UNEP-FI-The-Climate-Risk-Landscape.pdf>; Madison Condon and others, ‘Mandating Disclosure of Climate-related Financial Risk’ (2020) 23 NYUJ Legis. & Pub. Pol’y 745, 749-59; Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 53.

Eg Patrick Bolton and others, ‘The green swan: Central banking and financial stability in the age of climate change’ (2020) <www.bis.org/publ/othp31.htm> 1; Weitzman (n 553).

Andrew Johnston, Climate-Related Financial Disclosures: What Next for Environmental Sustainability?’ (University of Oslo Faculty of Law Legal Studies Research Paper Series No. 2018-02, 2018) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3122259>.)

ibid 29.

See the general critique by Sjåfjell, Taking finance seriously (n 552) 24 (criticising that the TCFDR’s categorisation, although ‘laudable for contributing to awareness-raising of the significance of climate change for business and finance’, (i) fails to explore the financial risks in the form of risks to humans relevant to the business, such as through heatwaves, (ii) omits to explain the potential severity of the financial risks of climate change, and (iii) does not speak about societal risks, including the risk of societal breakdown).

ibid, 30–41.

TNFD, ‘Recommendations of the Taskforce on Nature-related Financial Disclosures’ (2023) <https://tnfd.global/wp-content/uploads/2023/08/Recommendations_​of_​the_​Task​force_​on_​Nature-related_​Financial_​Disclosures_​September_​2023.pdf?v=1695118661>.

ibid 30. See the critique by Sjåfjell, Taking finance seriously (n 552) 24–25.

Christine Kaufmann, ‘From Profit to People and Planet: Rethinking the Purpose of the Corporation’ in Rolf H. Weber and others (eds), Aktuelle Herausforderungen des Gesellschafts- und Finanzmarktrechts, Festschrift für Hans Caspar von der Crone zum 60. Geburtstag (Schulthess 2017).

UNGP, Principles 17 and 18; OECD GL 2023, Commentary on Ch. II, para. 15.

OHCHR, Interpretive Guide (n 594) 15. See also UNGP, Commentary on Principle 17 (‘Human rights risks are understood to be the business enterprises’ potential adverse human rights impacts’) (emphasis added); OECD, Managing Climate Risks and Impacts (n 273) 13.

Jonathan Bonnitcha and Robert McCorquodale, ‘The Concept of ‘Due Diligence’ in the UN Guiding Principles on Business and Human Rights’ (2017) 28 EJIL 899, 900.

OECD GL 2023, Commentary on Ch. VI, para. 68.

See eg Bright and Buhmann (n 133) 5 (‘human rights due diligence focuses on risks to people and society, as opposed to standard corporate risk management due diligence, which aims at preventing the legal, technical and financial risks to the company’ (emphasis added)).

OHCHR, The Corporate Responsibility to Respect Human Rights. An Interpretive Guide (2012) 6–7.

See eg Kaufmann, Respecting Human Rights (n 132) 512; Peter Muchlinski, ‘Implementing the New UN Corporate Human Rights Framework: Implications for Corporate Law, Governance, and Regulation’ (2012) 22 Business Ethics Quarterly 145, 156.

OECD, Managing Climate Risks and Impacts (n 273) 12.

TCFD, Final Report (n 109) 6; Clapp and others (n 580) 28–34; see also Monasterolo, Climate Change and the Financial System (n 59) 302 (referring to physical risks as ‘damages to physical assets, natural capital, and human lives resulting in losses … as a result of climate-induced weather events’).

TCFD, Final Report (n 109) 6; ECB, Financial Stability Review (May 2019) <https://​www.​ecb.​europa.eu/pub/pdf/fsr/ecb.fsr201905~266e856634.en.pdf> 123 (pointing out that when physical risks materialise, they can ‘significantly erode collateral and asset values and have an impact on insurance liabilities in particular’).

Andrew K. Ringsmuth and others, ‘Lessons from COVID-19 for managing transboundary climate risks and building resilience’ (2022) 35 Climate Risk Management 100395.

Sjåfjell, Risks of Unsustainability (n 552).

IPCC, AR6. WG III (2023) 1581; Monasterolo, Climate Change and the Financial System (n 59) 302–4.

Condon and others (n 580) 749–55.

John J. MacWilliams, Sarah La Monaca, and James Kobus, ‘PG&E: Market and Policy Perspectives on the First Climate Change Bankruptcy’ (2019) <https://​energy​policy.​columbia.edu/sites/default/files/file-uploads/PG&E-CGEP_​Report_​081419-3.pdf>. PG&E reached a USD 13.5 bio settlement with wildfire victims, Peg Brickley, ‘PG&E Wins Court Approval of .5 Billion Deal with Wildfire Victims’ (Wall St. J. online, 18 December 2019) <https://www.wsj.com/articles/pg-ewins-court-approval-of-13-5-billion-deal-with-wildfire-victims-11576633923>.

Williams derivatively on behalf of PG&E v Earley (2018) 3:18-cv-07128-EDL (Federal District Court for the Northern District of California); York County v Rambo (2019) 3:19-cv-00994 (Federal District Court for the Northern District of California).

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 55.

Sjåfjell, Risks of Unsustainability (n 552).

Eg Harriet Reuter Hapgood and others, ‘Insuring our Future: 2021 Scorecard on Insurance, Fossil Fuels & Climate Change’ (2021) <https://insure-our-future.com/wp-content/uploads/2021/11/2021-IOF-Scorecard.pdf>; Peter Norwood, ‘Insuring the Uninsurable’ (Finance Watch, 2021) <https://www.finance-watch.org/wp-content/uploads/2021/07/finance-watch-report-insuring-the-uninsurable-july-2021-2.pdf>.

TCFD, Final Report (n 109) 5–6; Clapp and others (n 580) 28–34. Using a narrower definition focusing on the financial sector, Monasterolo describes transition risk as the ‘economic and financial losses arising from the revaluation of carbon-intensive and low-carbon assets induced by a sudden change in policy and/or regulation that cannot be fully anticipated by financial actors’ (Monasterolo, Climate Change and the Financial System (n 59) 304); see also Armour, Enriques, and Wetzer (n 285) 1098.

TCFD, Final Report (n 109) 5–6 (framing ‘litigation or legal risk’ as a subset of ‘policy and legal risks’). Cf Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 52–60 (not using the term transition risk); Financial Stability Board (FSB), ‘The Implications of Climate Change for Financial Stability’ (2020) <https://www.fsb.org/2020/11/the-implications-of-climate-change-for-financial-stability/> 16–17; Sarah Barker, ‘An Introduction to Directors’ Duties in Relation to Stranded Assets Risks’ in Ben Caldecott (ed), Stranded Assets and the Environment: Risk, Resilience and Opportunity (Routledge 2018) 200.

Based on the following sources (slightly adapted): TCFD, Final Report (n 109) 5–6; Clapp and others (n 580) 29–35; Monasterolo, Climate Change and the Financial System (n 59) 304–7.

See also TCFD, Final Report (n 109) 10 (clarifying that the sub-categories of risk are not mutually exclusive and partially overlapping).

ECB, Financial Stability Review (May 2019) 123. Due to its long-term nature (in comparison to common business risks) and a lack of reliable data, pricing transition risk is perceived as particularly challenging (ibid, 125).

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 56.

Michaelowa, Allen, and Sha (n 76) 275–76.

Katharina Baudisch and Dorte Fouquet, ‘Germany's Coal Exit Plan – A Legal and Political Outline on How Germany Plans to Phase out Coal Fired Power Stations by 2038’ (2019) 9 Renewable Energy L & Pol’y Rev 45.

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 56–58; Ganguly, Setzer and Heyvaert (n 368) 844. See also above, I.A.4

Ciacchi (n 555).

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 57–58.

Rosie Frost, ‘More than 1,700 oil and gas lobbyists at COP29: Which European delegations invited them?’ (Euronews, 15 November 2024) <https://www.euronews.com/green/2024/11/15/more-than-1700-oil-and-gas-lobbyists-at-cop29-which-european-del​e​ga​tions-invited-them>.

Javier Solana, ‘Climate Change Litigation as Financial Risk’ (2020) 2 Green Finance 344.

See Setzer and Higham, 2024 snapshot (n 416) 48–49.

Camilla Hodgson, ‘The money behind the coming wave of climate litigation’ (Financial Times online, 5 June 2023) <https://www.ft.com/content/055ef​9f4-​5fb7-​4746-​bebd-​7bfa00b20c82>.

This database, formerly maintained jointly by the Sabin Center for Climate Change Law at Columbia University and Arnold & Porter Kaye Scholer LLP (<http://​climate​case​chart.com/>) was revised in 2025, in collaboration with Climate Policy Radar. On potential geographical bias and other methodological challenges in capturing data on climate litigation, see Joana Setzer and Lisa C. Vanhala, ‘Climate Change Litigation: A Review of Research on Courts and Litigants in Climate Governance’ (2019) Wire Climate Change 11–12.

University of Melbourne, Australian and Pacific Climate Change Litigation <https://​law.​app.​unimelb.edu.au/climate-change/index.php#litigation>. This database seems to adopt a broader understanding of climate litigation than the Sabin Center Database, as the referenced figures include various complaints with advertising standard boards and letters to management.

Eg Jakob Thomä and others, ‘A Burden They Will Carry: The Potential Economic and Financial Cost of Climate Liabilities to Companies and Investors’ (2021) <https://2degrees-investing.org/wp-content/uploads/2021/12/Climate-Litigation-Paper.pdf>; Litigation Risk Model (<https://2degrees-investing.org/eiopa-orsa-guidance/>); Patrick Cleary and others, ‘Turning up the Heat-Climate Risk Assessment in the Insurance Sector’ (Financial Stability Institute insights on policy implementation No. 20, 2019) <https://www.bis.org/fsi/publ/insights20.pdf> 2.

Misato Sato and others, ‘Impacts of Climate Litigation on Firm Value’ (2024) 7 Nature Sustainability 1461 (estimating that companies experience, on average, a 0.41 per cent fall in stock returns following a climate-related filing or an unfavourable court decision, relative to expected values).

Solana, Climate Change Litigation as Financial Risk (n 620).

Eg Joana Setzer and Catherine Higham, ‘Global trends in climate change litigation: 2023 Snapshot’ (LSE, 2023) <https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2023/06/Global_trends_in_climate_change_litigation_2023_snapshot.pdf> 30.

Solana, Climate Change Litigation as Financial Risk (n 620) 346.

ibid 352–53.

TCFD, Final Report (n 109) 6. See generally Julian F. Kölbel, Timo Busch, Leonhardt M. Jancso, ‘How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk’ (2017) 38 Strategic Management Journal 2266.

Graham Readfearn, ‘Adani coalmine: Siemens CEO has ‘empathy’ for environment but refuses to quit contract’ (The Guardian online, 13 January 2020) <https://​www.​the​guardian.com/business/2020/jan/13/adani-coalmine-siemens-ceo-has-empathy-for-environment-but-will-honour-contract>).

Solana, Climate Change Litigation as Financial Risk (n 620) 354–56.

John Armour, Colin Mayer, and Andrea Polo, ‘Regulatory Sanctions and Reputational Damage in Financial Markets’ (2017) 52 Journal of Financial and Quantitative Analysis 1429.

For example, in the context of the Siemens/Adani controversy mentioned in this section, ‘climate activist’ Lisa Neubauer was invited to join Siemens’ board of directors, which she declined (Kate Connolly, Climate activist turns down Siemens’ offer of seat on energy board’ (The Guardian online, 13 January 2020) <https://www.theguardian.com/environment/2020/jan/13/climate-activist-turns-down-siemens-offer-of-seat-on-en​ergy-board>.

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 59–60.

TCFD, Final Report (n 109) 6.

ibid.

ibid.

Runsen Zhang and Shinichiro Fujimori, ‘The Role of Transport Electrification in Global Climate Change Mitigation Scenarios’ (2020) 15 Environ. Res. Lett. 034019.

Jessica Aschemann-Witzel and others, ‘Plant-based Food and Protein Trend from a Business Perspective: Markets, Consumers, and the Challenges and Opportunities in the Future’ (2021) 61 Critical Reviews in Food Science and Nutrition 3119.

TCFD, Final Report (n 109) 6–7, 10–11.

ibid, 8.

IPCC, AR6. WG III (2023) 1580.

See eg the 2006 Stern Review (above, II.B.2). Already in 2001, a UNEP FI document observed that ‘(c)limate change poses a major risk to the global economy … (t)he financial sector has a key role to play in delivering market solutions to climate change’ (UNEP FI, ‘Climate Risk to global economy. CEO Briefing’ (2001) <https://www.unepfi.org/fileadmin/publications/cc/CEO_briefing_climate_change_2002_en.pdf>).

IPCC, AR6. WGIII (2023), 1580–85.

Mark Carney, ‘Breaking the Tragedy of the Horizon – climate change and financial stability’ (Lloyd’s of London, London, 29 September 2015) <https://www.bankofengland.co.uk/speech/2015/breaking-the-tragedy-of-the-horizon-climate-change-and-financial-stability>.

ibid.

IPCC, AR6. WG III (2023) 1580.

See generally TCFD, Final Report (n 109) 1 (noting in 2017 that ‘the current understanding of the potential financial risks posed by climate change – to companies, investors, and the financial system as a whole – is still at an early stage’).

Financial Stability Board (FSB), ‘The Implications of Climate Change for Financial Stability’ (2020), <https://www.fsb.org/2020/11/the-implications-of-climate-change-for-fi​nan​cial-stability/> 1 (‘[t]he manifestation of physical risks … could lead to a sharp fall in asset prices and increase in uncertainty. This could have a destabilising effect on the financial system, including in the relatively short term … A disorderly transition to a low carbon economy could also have a destabilizing effect on the financial system. This could be brought about by an abrupt change in (actual or expected) public policy not anticipated by market participants, including that due to the increased materialisation of physical risks, as well as technological developments’).

Patrick Bolton and others, ‘The green swan: Central banking and financial stability in the age of climate change’ (2020) <www.bis.org/publ/othp31.htm>.

Eg ECB, Climate-related risk and financial stability (2021); ibid, Financial Stability Review (May 2019), 120–34.

IPCC, AR6. WG III (2023) 1550.

ibid.

Tanya Fiedler, ‘Business Risk and the Emergence of Climate Analytics’ (2021) 11 Nature Climate Change 87.

NGFS, ‘First Progress Report’ (2018) <https://www.banque-france.fr/sites/default/files/media/2018/10/11/818366-ngfs-first-progress-report-20181011.pdf> 3.

ibid, 3.

ibid, ‘A call for action: Climate Change as a source of financial risk’ (2019) <https://​www.​ngfs.​net/sites/default/files/medias/documents/ngfs_​first_​com​pre​hen​sive_​report_​-_​17042019_0.pdf> 5.

Basel Committee on Banking Supervision, ‘Principles for the effective management and supervision of climate-related financial risks’ (2022) <https://www.bis.org/bcbs/publ/d532.pdf>.

IPCC, AR6. WG III (2023), 1581; Gregor Semieniuk and others, ‘Stranded-fossil Fuel Assets Translate to Major Losses for Investors in Advanced Economies’ (2022) 12 Nature Climate Change 532.

Ben Caldecott, Nicholas Howarth, and Patrick McSharry, ‘Stranded Assets in Agriculture: Protecting Value from Environment-Related Risks’ (Report by Smith School of Enterprise and the Environment, University of Oxford, 2013) <www.smithschool.ox.ac.uk/pub​li​ca​tions/reports/stranded-assets-agriculture-report-final.pdf> 7; Ben Caldecott, ‘Introduction to Special Issue: Stranded Assets and the Environment’ (2017) 7 Journal of Sustainable Finance and Investment 1, 2.

Stefano Battiston and others, ‘A Climate Stress-Test of the Financial System’ (2017) 7 Nature Climate Change 283, 287; Simon Dietz and others, ‘“Climate Value at Risk” of Global Financial Assets’ (2016) 6 Nature Climate Change 676; see also Economist Intelligence Unit, ‘Resilience to Climate Change?’ (2019) <www.eiu.com/n/global-economy-will-be-3-percent-smaller-by-2050-due-to-lack-of-climate-resilience/>.

IPCC, AR6. WG III (2023) 1549.

Monasterolo, Climate Change and the Financial System (n 59) 300; Battiston and others, Climate Stress-Test (n 663).

IPCC, AR6. WG III (2023), 1549.

Carbon Tracker Initiative, Unburnable Carbon (n 61); Jean-Francois Mercure and others, ‘Macroeconomic Impact of Stranded Fossil Fuel Assets’ (2018) 8 Nature Climate Change 588.

Sjåfjell, Realising the Potential of the Board (n 544) 703; Elizabeth S. Harnett, ‘Social and Asocial Learning about Climate Change among Institutional Investors: Lessons for Stranded Assets’ (2016) 7 Journal of Sustainable Finance & Investment 114.

IPCC, AR6. WG III (2023), 1556.

Wright and Nyberg, Climate Change, Capitalism, and Corporations (n 76) 58.

ibid 1744.

See generally, IPCC, AR6. WG III (2023), 1580–85.

Julia Anna Bingler and others ‘Cheap Talk and Cherry-picking: What ClimateBert has to Say on Corporate Climate Risk Disclosures’ (2022) 47 Finance Research Letters 102776; Krueger, Sautner and Starks (n 514) 1068; Mats Andersson, Patrick Bolton and Frédéric Samama, ‘Hedging Climate Risk’ (2016) 72 Financial Analysts Journal 13, 13–14.

IPCC, AR6. WG III (2023), 1556.

NGFS, ‘A call for action’ (n 659) 4 (‘(t)he NGFS recognises that there is a strong risk that climate related financial risks are not fully reflected in asset valuations’); Irene Monasterolo and Luca de Angelis, ‘Blind to Carbon Risk? An Analysis of Stock Market Reaction to the Paris Agreement’ (2020) 170 Ecological Economics 106571; Krueger, Sautner and Starks (n 514) 1068–69, 1105.

IPCC, AR6. WG III (2023), 1549.

G20/OECD Principles of Corporate Governance 2023, 6.

See generally, IPCC, AR6. WG III (2023), 1567–74.

ibid, SR1.5. SPM (2028), 4.4.5.

Eg European Commission, The European Green Deal (n 55), 16–17.

Monasterolo, Climate Change and the Financial System (n 59) 300.

IPCC, AR6. SYR: SPM (2023), C.7.

Armour and others, What is Corporate Law (n 116) 12.

Sjåfjell, Towards a Sustainable European Company Law (n 106) 45; Sjåfjell and Anker-Sørensen (n 145) 156–57 (with respect to European countries, finding that the jurisdiction-specific differences in the framing of the core responsibilities of the board are ‘broadly speaking matters of nuances’).

Sjåfjell, Towards a Sustainable European Company Law (n 106) 56; G20/OECD Principles of Corporate Governance 2023, V.D.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 286.

Sjåfjell, Towards a Sustainable European Company Law (n 106) 56–57.

See ibid 57. See generally Jonathan R. Macey, Corporate Governance: Promises Kept, Promises Broken (Princeton University Press 2010) 57.

Cf Sjåfjell, Realising the Potential of the Board (n 544) 701.

G20/OECD Principles of Corporate Governance 2023, V.A.

Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Addendum Human rights and corporate law: trends and observations from a cross-national study conducted by the Special Representative, A/HRC/17/31/Add.2 (23 May 2011), para. 54.

Armour and others, What is Corporate Law (n 116) 12–13. In the UK, the Companies Act 2006 grants incorporators wide contractual autonomy, requiring only that there must be at least one director in a private company (or two in a public company), and refers to the board of directors as an abstract organ only in the context of the obligation of approving the accounts and the directors reports (Sections 154, 414, 419, 422 UK Companies Act 2006; see Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 307–9.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 286–87.

De iure directors were validly appointed, while de facto directors’ appointment is tainted by some sort of substantive or procedural defect (Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 288). The relevant condition to be regarded as de facto director is generally whether, in practice, they assume functions of a (de iure) director (ibid 288–89, with references). Shadow directors can be described as persons ‘in accordance with whose directions or instructions the directors of the company are accustomed to act’, as explicitly stated in Section 251(1) UK Company Act 2006 and reflected in similar concepts elsewhere, see, for instance, the dirigeant de fait as recognised by French case law (ibid, 289).

Armour and others, What is Corporate Law (n 116) 12. In two-tier systems, the members of the management board are usually elected by the supervisory board (Hopt, Comparative Corporate Governance (n 146) 29).

Armour and others, What is Corporate Law (n 116) 12.

Corporate board and equivalent terms (above, I.C) are used broadly in this study to include, for instance, both the German Aufsichtsrat and Vorstand or the board of directors under UK company law. In practice, the importance of distinguishing between one-tier and two-tier systems may be limited, as the separation between the two bodies in two-tier systems, despite formal distinction, varies according to industry sector, company size, tradition, and the presence of strong personalities on either board (Hopt, Comparative Corporate Governance (n 146) 30; Paul Davies and Klaus J. Hopt, ‘Corporate Boards in Europe – Accountability and Convergence’ (2013) 61 American Journal of Comparative Law 301).

See eg Sjåfjell, Towards a Sustainable European Company Law (n 106) 46–50; G20/OECD Principles of Corporate Governance 2023, V.E.1; Hopt, Comparative Corporate Governance (n 146). In some countries, such as France, Italy, and Denmark, there is typically a choice between the two systems (ibid, 32).

In Germany, the two-tier board system, consisting of two separate bodies, the Aufsichtsrat (supervisory board) and the Vorstand (management board), makes the distinction between non-executive and executive directors readily visible; supervisory boards are also mandatory in other countries including Austria, China, Poland, Portugal and Taiwan (Hopt, Comparative Corporate Governance (n 146) 29–30).

ibid 30–31 (stating that the predominance of the one-tier system is linked to the historically weaker role of the state in supervising management in these countries).

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 285.

ibid.

ibid 285–86.

Harper Ho, Board Duties (n 546) 255–56.

Carsten Gerner-Beuerle, ‘The Duty of Care and the Business Judgment Rule: A Case Study in Legal Transplants and Local Narratives’ in Afsharipour and Gelter (eds), Comparative Corporate Governance (n 120) 220; David Kershaw, The Foundations of Anglo-American Corporate Fiduciary Law (CUP 2018) 137–38.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 220 (with references).

The law of bailment applies to situations where an individual, the bailee, takes possession of the assets of another, the bailor, on certain conditions (Kershaw (n 705) 138).

Kershaw (n 705) 138–39; Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 222–23; Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 473–74.

Overend and Gurney v Gibb (1871–1872) L.R. 5 H.L. 480, 494; see Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 222–23.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 223–24; Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 467.

ibid.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 224.

See John Armour, Henry Hansmann, and Reinier Kraakman, ‘Agency Problems and Legal Strategies’ in The Anatomy of Corporate Law (n 116) 29, 32–33, 37–38.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 466.

In the terminology used by courts in common law countries today, the importance of partnership and trust law in the development of company law (and, in particular, directors’ duties) is still apparent (ibid 466–67, with references). See below, III.B.2.2.

See Kershaw (n 705); Rosemary Teele Langford, ‘The Duty of Directors to Act Bona Fide in the Interests of the Company: A Positive Fiduciary Duty? Australia and the UK Compared’ (2011) 11 Journal of Corporate Law Studies 215; Cynthia A. Williams, ‘Fiduciary Duties and Corporate Climate Responsibility’ (2021) 74 Vanderbilt Law Review 1875.

Bristol and West Building Society v Mothew [1998] EWCA Civ 533, 18.

As exemplified by German company law, where directors are conceptualised as organs of the company whose duties are codified exhaustively rather than being framed in broader terms as fiduciary duties (Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 467, 470–71). See also Martin Gelter and Geneviève Helleringer, ‘Fiduciary Principles in European Civil Law Systems’ in Evan J. Criddle, Paul B. Miller, and Robert H. Sitkoff (eds), Handbook of Fiduciary Law (OUP 2019) 583.

G20/OECD Principles of Corporate Governance 2023, V.D.1, V.E; See also Rory Sullivan and others, ‘Fiduciary Duty in the 21st Century: Final Report’ (UNEP FI/Principles for Responsible Investment, 2019) <https://www.unepfi.org/publications/investment-publications/fiduciary-duty-in-the-21st-century-final-report/>.

See John Armour, Henry Hansmann, and Reinier Kraakman, ‘Agency Problems and Legal Strategies’ in The Anatomy of Corporate Law (n 116) 29–47; Sjåfjell, Towards a Sustainable European Company Law (n 106) 273–76.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 466; Gerner-Beuerle and Schuster, Mapping (n 120) 14–34; Carsten Gerner-Beuerle and Edmund-Philipp Schuster, ‘The Evolving Structure of Directors’ Duties in Europe’ (2014) 15 EBOR 191, 199; G20/OECD Principles of Corporate Governance 2023, V.A; CCLI/Climate Governance Initiative, Primer on Climate Change: Directors’ Duties and Disclosure Obligations (2021) <https://​ccli.​ubc.​ca/wp-content/uploads/2021/06/Primer-on-Climate-Change-1.pdf> 18 (based on a review of a wide range of common law and civil law jurisdictions, finding that despite variation across jurisdictions, ‘the overarching concepts of loyalty and care in corporate governance are widespread’); see also Sullivan and others (n 719) 12 (‘(w)hile the specific sources of jurisprudence and mechanisms of enforcement differ, there is striking agreement between civil and common law jurisdictions that the most important duties owed by fiduciaries to investors and beneficiaries are the duty to act prudently [ie, the duty of care] and … the duty of loyalty’).

John Armour and others, ‘The Basic Governance Structure: The Interests of Shareholders as a Class’ in The Anatomy of Corporate Law (n 116) 69; Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 466; G20/OECD Principles of Corporate Governance 2023, V.A. (describing the duty of care as requiring board members to ‘act on a fully informed basis, in good faith, with due diligence and care’).

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 466, 551 (noting that these two dimensions of the duty of loyalty are not explicitly distinguished in many jurisdictions and are subject to special rules in some jurisdictions (see, for example, sections 175–77 UK Companies Act 2006); Marco Corradi and Geneviève Helleringer, ‘Board Duties: The Duty of Loyalty and Self-dealing’ in Afsharipour and Gelter (eds), Comparative Corporate Governance (n 120) 200). The G20/OECD Principles of Corporate Governance do not provide a clear concept of the duty of loyalty, stating only that the duty of loyalty ‘underpins effective implementation of other principles’ such as equitable treatment of shareholders, monitoring of related-party transactions, etc (G20/OECD Principles of Corporate Governance 2023, V.A). See also Sjåfjell and others, Shareholder Primacy (n 102) 112.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 230. Compare Solana, who cautions that the term fiduciary duty ‘applies in a wide variety of contexts and is therefore very elusive, especially when one approaches fiduciary duties from a transnational perspective’, arguing further that ‘(e)xamining the duty of reasonable care and skill from this perspective is particularly challenging’ (Solana, Climate Litigation in Financial Markets (n 125) 126, footnotes omitted).

Cf Hopt, who notes that in comparison to the duty of loyalty, the duty of care ‘has been at the forefront’ in continental European countries (Hopt, Comparative Corporate Governance (n 146) 56).

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 466, 551.

John Armour and others, ‘The Basic Governance Structure: The Interests of Shareholders as a Class’ in The Anatomy of Corporate Law (n 116) 69–71.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 287–88 (pointing out that non-executive directors may have less insider knowledge and not the same level of experience, which could necessitate ‘a differentiated interpretation and application of the duty of care in order to develop an adequate standard of liability’).

Armour and others, The Basic Governance Structure (n 727) 69. For instance, in Switzerland, Article 717 Code of Obligations (Federal Act on the Amendment of the Swiss Civil Code, Part Five: The Code of Obligations, of 30 March 1911, SR 220 [Switzerland]) provides that members of the board of directors and third parties entrusted with managing the company (officers) must perform their duties with all due care and safeguard the interests of the company in good faith. With respect to Delaware law, see Gantler v Stephens 965 A. 2d 695, 708-09 (Del 2009) (where it was held that law officers are subject to the same duties as directors). In contrast, in the UK, directors’ duties do not apply to officers who are not directors (Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 285).

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 228.

ibid 220–26; Theis Klauberg, ‘General Case on Directors’ Duties’ in Siems and Cabrelli (eds), Comparative Company Law (n 120) 68–71; CCLI/Climate Governance Initiative, Primer on Climate Change (n 721) 18.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 221.

City Equitable Fire Insurance Company [1925] Ch. 407, 428; see Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 225.

Walt Disney Co. Derivative Litig. 907 A.2d 693, 749 (Del Ch 2005)

§93(1) sentence 1 Aktiengesetz vom 6. September 1965 (BGBl. I p. 1089) [Stock Corporation Act].

Cour de Cassation, 30 March 2010, 08-17841 (Crédit Martiquinais), Revue des Sociétés 2010, 304, note P. Le Cannu (see Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 226).

Section 180(1) Corporations Act 2001 (Cth): ‘[a] director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise’.

Article 644 Civil Code, Act No. 89 of 1896 [Japan]; see Klauberg (n 731) 65.

Article 305(3) Companies and Allied Matters Act, 2020, Federal Republic of Nigeria Official Gazette A2 2020 No. 3.

A director is under a statutory duty to ‘at all times act honestly and use reasonable diligence in the discharge of the duties of his office’ (Section 157(1) Companies Act (Cap 50, 2006 Rev Ed) [Singapore]).

See Klauberg (n 731) 71.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 220–21 (with reference to Robert M. Cover, ‘Nomos and Narrative’ (1983) 97 Harv. L. Rev. 241). Gerner-Beuerle goes on to say that judges are ‘in a privileged position to control and shape these narratives’ (ibid, 222).

Gerner-Beuerle and Schuster, Evolving Structure (n 721) 199 (focusing on EU member states, which at the time still included the UK).

Gerner-Beuerle and Schuster, Mapping (n 120) 15.

Benjamin, Road to Paris (n 129) 347; CCLI/Climate Governance Initiative, Primer on Climate Change (n 721) 18; Sullivan and others (n 719) 12; Barker and Mulholland, Comparative Paper (n 128) 8 (analysing the corporate laws of Australia, the UK, the US, and South Africa).

Osofsky and others (n 129) 638.

See Morgera (n 79) 75 (with respect to international climate change law and its underlying principles more generally).

Williams, Fiduciary Duties (n 716) 1914.

Liburn Mehmetaj and Katja Brunner, ‘ESG and Fiduciary Duties of Investment Managers. Theoretical and Practical Bases for a Modern Interpretation of Fiduciary Duty under Swiss Law’ (2021) 4 GesKR 441, 445.

Woods (n 127) 242, 265–68 (showing various examples concerning the interpretation of fiduciary duty in an investment context in UK and US case law).

Barker and Mulholland, Comparative Paper (n 128); Mulholland and others, Climate Change and Directors’ Duties (n 128); Solana, Climate Change Litigation as Financial Risk (n 620) 361–62. See also Marjanac and Patton (n 423) 293 (stating that improvements in attribution science will increase the foreseeability of harm and thus expand the scope of tort liability). See also Rolf H. Weber, ‘Revisiting the Companies’ Purpose and the Director’s Fiduciary Duties’ in Klaus Mathis and Avishalom Tor (eds), Law and Economics of Corporate Governance (Springer, 2024) 13, 25 (‘the fiduciary and loyalty duties of directors need to mirror the new developments in respect of the broader corporate purpose understanding that materially influences the general ESG-oriented behaviour as well as the specific ESG sustainable investing’).

See Benoit Mayer, ‘The Duty of Care of Fossil Fuel Producers for Climate Change Mitigation’ (2022) 11 TEL 407, 418 (referring to the duty of care in tort law as applied in Milieudefensie et al. v Royal Dutch Shell, see below, IV.C.4.2.2, arguing that ‘more efforts will probably be expected from an average or careful company in 2030 than is expected today’).

ibid 264.

ibid (arguing that ‘without legislative change it will be incremental – and too slow to meet the urgent changes required by climate change’).

See Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 468.

See eg ibid 468–73 (comparing the legal situation in the UK, the US, Germany and France; UK: while directors owe their duties to the company, they must act in the way they consider to most likely ‘promote the success of the company for the benefit of its members as a whole’ (Sections 170(1), 172(1) Companies Act 2006 (c 46) [UK]); US: directors owe fiduciary duties to the company, but it is commonly accepted that they also stand in a fiduciary relationship to the shareholders (‘dual primacy’); Germany: directors owe their duties to the company, not to individual shareholders (§§ 93(2), 116 Aktiengesetz); France: directors’ responsibility for management mistakes as well as violations of the law and the articles of association is aimed towards the company and third parties (‘envers la société ou envers les tiers’), thus including shareholders, employees, creditors, or others (Article L225-251 Code de Commerce). For further comparison, see the examples of Switzerland and Nigeria. Switzerland: Swiss corporate law provides that directors must safeguard the interests of the company in good faith (Article 717 Code of Obligations), see Rolf H. Weber and Andreas Hösli, ‘Corporate Climate Responsibility – aktienrechtliche Haftungsrisiken für den Verwaltungsrat?’ SJZ/RSJ 116 (2020) 605, 606–8. Nigeria: Article 305(3) of the Nigerian Companies and Allied Matters Act 2020 provides that a director shall act in ‘the best interests of the company as a whole’ (Companies and Allied Matters Act 2020, Federal Republic of Nigeria Official Gazette A2 2020 No. 3), discussed by Muriungi (Muriungi (n 128) 71).

Kaufmann, From Profit to People (n 588) 4.

Thomas Clarke, Corporate Governance (CUP 2021) 68.

Sjåfjell and Anker-Sørensen (n 145) 88–89.

Sjåfjell and others, Shareholder Primacy (n 102) 94.

ibid 89, 94 (stating further that ‘the interest of the company is the operational concept most directly relevant to the competence and duties of the company organs’); see also McDonnell and others (n 127) 342–47.

Sjåfjell and others, Shareholder Primacy (n 102) 89.

ibid 95.

Osofsky and others (n 129) 638.

Sjåfjell and others, Shareholder Primacy (n 102) 145. See also Sjåfjell, Beyond Climate Risk (n 433) 50 (finding that ‘(g)enerally, company law across jurisdictions also allows boards to integrate environmental externalities to a greater extent than legal compliance requires, at least as far as the business case argument allows – that is as far as the case can be made that this is profitable for the company in the long run’).

Sjåfjell, Corporate Social Irresponsibility (n 89) 57 (arguing that ‘the conceived primacy of shareholders and of profit maximization for shareholders’ is a barrier to realising the potential for existing technology to reduce GHG emissions); Benjamin, Companies and Climate Change (n 83) 8 (stating that ‘(a)ccording to shareholder primacists, any attempt at environmental protection is mainly viewed as agency cost to be avoided … (d)ealing with climate change reduces shareholder wealth as it diverts assets from other investments that may be more profitable for shareholders’); Benjamin, Responsibilities of Carbon Major Companies (n 97) 354–55, 376.

See eg Elizabeth Pollman and Robert B. Thompson, ‘Corporate Purpose and Personhood: An Introduction’ in Elizabeth Pollman and Robert B. Thompson (eds), Research Handbook on Corporate Purpose and Personhood (Edward Elgar 2021) ix (noting that ‘(p)urpose has become the frontline of a wide-ranging debate over shareholder vs. stakeholder primacy and profit maximisation vs. broader social purposes’); Muchlinski, Implementing (n 595) 162–66.

David Millon, ‘Radical Shareholder Primacy’ (2013) 10 U St Thomas LJ 1013, 1013 (emphasis added). The social norm of shareholder primacy should not be confused with the legal term ‘shareholder value’ as used in some jurisdictions, such as Delaware or the UK, as a duty to promote the interests of shareholders, without excluding the interests of the company as a whole or the interests of other stakeholders (Sjåfjell and others, Shareholder Primacy (n 102) 95, 97–110).

Adolf A. Berle, ‘Corporate Powers as Powers in Trust’ (1931) 44 Harv. L. Rev 1049, 1049; Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property (Macmillan 1932), where Berle and Means elaborate on the property theory model, arguing that when ownership is spread across numerous shareholders while decision-making power sits with managers, property no longer operates as a purely personal, ‘owner‑directed’ right but instead takes on a quasi‑public, institutional character; Ronald H. Coase, ‘The Nature of the Firm’ (1937) 4 Economica 386. See also Milton Friedman, Capitalism and Freedom (University of Chicago Press 1962) 112; ibid, ‘The Social Responsibility of Business is to Increase its Profits’ (The New York Times Magazine, 13 September 1970). Kaufmann highlights that by asserting that managers have a duty to adhere to the fundamental tenets of society, as enshrined in legislation and ethical norms, Friedman did not preclude the consideration of interests beyond shareholder profit (Kaufmann, From Profit to People (n 588) 5).

In particular, Frank H. Easterbrook and Daniel R. Fischel, ‘The Corporate Contract’ (1989) 89 Columbia Law Review 1416.

Frank H. Easterbrook and Daniel R. Fischel, ‘The Corporate Contract’ (1989) 89 Columbia Law Review 1416, 1418.

ibid, The Economic Structure of Corporate Law (Harvard University Press 1991) 11 (referring to shareholders as ‘residual risk-bearers’ as opposed to other stakeholders who either have ‘fixed claims’ protected by contract law and bankruptcy law protections, or no legal claims at all; this is a debatable view, as the claims of other stakeholders are also non-fixed, uncertain and therefore similarly vulnerable to those of shareholders, see Amir N. Licht, ‘Varieties of Shareholderism: Three Views of the Corporate Purpose Cathedral’ in Research Handbook on Corporate Purpose and Personhood (n 767) 387, 390). See also Armour and others, What is Corporate Law (n 116) 23.

Michael C. Jensen and William H. Meckling, ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ (1976) 3 Journal of Financial Economics 305, 310; Henry Hansmann and Reinier Kraakman, ‘The End of History for Corporate Law’ (2001) 89 Geo. L.J. 439, 449; Stephen M. Bainbridge, ‘Director Primacy: The Means and Ends of Corporate Governance’ (2003) 97 Nw. U. L. Rev. 547, 582, 600; see also Ann M. Lipton, ‘What We Talk About When Talk About Shareholder Primacy’ (2019) 69 Case W. Rsrv. L. Rev. 863, 866.

Eg Hansmann and Kraakman (n 773); Beate Sjåfjell and Jukka Mähönen, ‘Corporate Purpose and the Misleading Shareholder v Stakeholder Dichotomy’ (2024) 34 Bond Law Review 69, 77.

See Stout, On the Rise of Shareholder Primacy (n 143) 1173–74.

Eg Hopt, Comparative Corporate Governance (n 146) 41; Armour and others, What is Corporate Law (n 116) 23; Lucian A. Bebchuck and Roberto Tallarita, ‘The Illusory Promise of Stakeholder Governance’ (2020) 106 Cornell Law Review 91, 94.

See William Bradford, ‘Beyond Good and Evil: The Commensurability of Corporate Profits and Human Rights’ (2012) 26 Notre Dame Journal of Law, Ethics and Public Policy 141, 148; Millon, Radical Shareholder Primacy (n 782) 1014–15; Sjåfjell and others, Shareholder Primacy (n 102) 80; Osofsky and others (n 129) 636–37.

Sjåfjell, Towards a Sustainable European Company Law (n 106) 53.

Eg Simon Deakin, ‘The Coming Transformation of Shareholder Value’ (2005) 13 Corp. Governance 11, 11; Stout, On the Rise of Shareholder Primacy (n 143) 1178 (stating that ‘(s)hareholder primacy became a dogma: an omnipresent belief system that was seldom questioned, rarely justified, and so widely accepted that many of those who embraced it could not even recall when they first encountered it’); Sjåfjell, Beyond Climate Risk (n 433) 50; Sjåfjell and Anker-Sørensen (n 145) 158, 168.

Jay Cullen and Jukka Mähönen, ‘Taming Unsustainable Finance. The Perils of Modern Risk Management’ in Cambridge Handbook of Corporate Law (n 106) 100.

See generally Stout, The Shareholder Value Myth (n 143); ibid, On the Rise of Shareholder Primacy (n 143); Beate Sjåfjell and others, ‘Shareholder Primacy: The Main Barrier to Sustainable Companies’ in Sjåfjell and Richardson (eds), Company Law and Sustainability (n 102) 79; Sjåfjell, Realising the Potential of the Board (n 544) 697–99; Frank Partnoy, ‘Shareholder Primacy is Illogical’ in Research Handbook on Corporate Purpose and Personhood (n 767) 186.

E. Merrick Dodd, ‘For Whom are Corporate Managers Trustees?’ (1932) 45 Harv. L. Rev 1145, 1163.

See Jonathan Hardman, ‘The Making of Corporate Legal Concession Theory’ (2024) 44 Oxford Journal of Legal Studies 181.

See Robert Hessen, ‘A New Concept of Corporations: A Contractual and Private Property Model’ (1978) 30 Hastings L. J. 1327.

Stout, The Shareholder Value Myth (n 143) 36–44; ibid, On the Rise of Shareholder Primacy (n 143) 1174–77, with references. See also Sjåfjell and others, Shareholder Primacy (n 102) 144 (stating that ‘(p)rofit for shareholders is but one function of companies’).

Eg Johnston and others, Corporate Governance for Sustainability Statement (n 439) 2. See further Stout, On the Rise of Shareholder Primacy (n 143) 1174–77; John C. Coffee and Darius Palia, ‘The Wolf at the Door: The Impact of Hedge Fund Activism on Corporate Governance’ (2016) 41 J. Corp. L. 545, 553.

Sjåfjell, Beyond Climate Risk (n 433) 49. See also ibid, Towards a Sustainable European Company Law (n 106) 277–78.

Sjåfjell and others, Shareholder Primacy (n 102) 145.

ibid.

Eccles and Youmans (n 478) 40, 46 (all country reports are available at UNGC, Sustainability & The Fiduciary Duties of the Board’ (UNGC 2015) <https://www.unglobalcompact.org/library/3791>).

ibid 40.

Thomas Clarke, Corporate Governance (CUP 2021) 23.

Eg Afsharipour and Gelter, ‘Introduction to comparative corporate governance’ in Afsharipour and Gelter (eds), Comparative Corporate Governance (n 120) 1.

See David Millon, ‘Communitarianism in Corporate Law: Foundations and Law Reform Strategies’ in Lawrence E. Mitchell (ed), Progressive Corporate Law (Routledge 1995) 1.

Licht (n 772) 389–90; Sjåfjell and others, Shareholder Primacy (n 102) 95.

Eg Renée B. Adams, Amir N. Licht and Lilach Sagiv, ‘Shareholders and Stakeholders: How Do Directors Decide?’ (2011) 32 Strategic Mgmt. J 1331, 1332.

Licht (n 772) 389–90.

Michael C. Jensen, ‘Value Maximization, Stakeholder Theory, and the Corporate Objective Function’ (2001) 14 Journal of Applied Corporate Finance 8, 9. See generally Lucian A. Bebchuk and Roberto Tallarita, ‘The Illusory Promise of Stakeholder Governance’ (2020) 106 Cornell Law Review 91.

Bebchuck and Tallarita (n 798) 176–77.

Shareholder wealth maximisation is viewed by Benjamin as the most dominant norm influencing US corporate law which has been guiding the interpretation of directors’ duties for decades; although not reflected in statutory law, the normative power is viewed as considerable, especially in Delaware (Benjamin, Road to Paris (n 129) 6–7, 44–50, with further references). See further Dana Brakman Reiser, ‘Progress is Possible: Sustainability in US Corporate Law and Corporate Governance’ in Cambridge Handbook of Corporate Law (n 106) 131, 134.

China is described by Liu and Pissler as a strong example of shareholder primacy, exemplified by the requirement for companies to have a board of shareholders in addition to the board of directors and the supervisory board (Junhai Liu and Knut B. Pissler, ‘China: Corporate Governance of Business Organizations’ in Fleckner and Hopt (eds), Comparative Corporate Governance (n 120) 157, 162). At the same time, various laws and regulations stipulate that stakeholder interests including environmental protection should be considered by the board (Jianbo Lou and Tian Lei, ‘A Study on Sustainable Companies in the P. R. China’ (University of Oslo Faculty of Law Legal Studies Research Paper Series No. 2013-05 (2013) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=§2218284>).

Sjåfjell and others, Shareholder Primacy (n 102) 101–7.

Licht (n 772) 390 (stating that ‘shareholderism and stakeholderism are … inverse concepts … [b]y referring to high stakeholderism one necessarily connotes lower stakeholderism and vice versa’).

With respect to European countries, see Sjåfjell and Anker-Sørensen (n 145) 158; Sjåfjell, Towards a Sustainable European Company Law (n 106) 54.

Sjåfjell and others, Shareholder Primacy (n 102) 95.

Directors and officers must act in the interests of the company, taking into account the requirements of the public interest and the company’s social function (Article 154 Companies Act (Federal Law n. 6.404/1976), see Sheila C. Neder Cerezetti and Gabriela de Oliveira Junqueira, ‘Brazilian Corporate Sustainability Regulation in the Green Transition: Missing the Forest for the Trees’ (2023) ex ante Special Issue 77, 79).

Directors must have regard to the impact of the company’s operations on the environment in the community where it carries on business operations (Article 305(3) Nigerian Companies and Allied Matters Act, see Muriungi (n 128) 71–72).

Section 172(1)(d) UK Companies Act 2006 provides that as part of the duty to promote the success of the company, directors must have regard to the impact of the company’s operations on the community and the environment (see below, III.C.4.4).

See Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises (n 691) paras 67–69 (finding that ‘in nearly all jurisdictions surveyed corporate law does not explicitly require directors to consider the company’s impacts on non-shareholders, including human rights impacts’).

Peoples Department Stores Inc (Trustee of) v Wise [2004] 3 SCR 461 (SCC), para. 34 (see Janis Sarra and Cynthia A. Williams, ‘Director’s Liability and Climate Risk: Canada – Country Paper’ (CCLI, 2018) <https://ccli.ubc.ca/wp-content/uploads/2021/04/Directors-Liability-and-Climate-Risk-Country-Paper.pdf> 10).

Article 94(1) Climate Change Act 2021, Act No. 17 of 2021 [Fiji], amending Article 106(1) Companies Act 2015, Act No. 25 of 2015 [Fiji].

Beate Sjåfjell, ‘When the Solution Becomes the Problem: The Triple Failure of Corporate Governance Codes’ in Jean J. du Plessis and Chee Keong Low (eds), Corporate Governance Codes for the 21st Century (Springer 2017) 23, 24.

Jukka Mähönen, ‘Integrated Reporting and Sustainable Corporate Governance from European Perspective’ (2020) 10 Account Econ Law 20180048; Sjåfjell, When the Solution Becomes the Problem (n 812).

The G20/OECD Principles of Corporate Governance 2015 state that the board of directors ‘is not only accountable to the company and its shareholders but also has a duty to act in their best interests’, while making only a general reference to the need to ‘take due regard of, and deal fairly with, other stakeholder interests’; they go on to say that ‘(o)bservance of environmental and social standards is relevant in this context’, referring to the OECD GL (G20/OECD Principles of Corporate Governance 2015 (OECD Publishing, 2015) 9–10, 45 (emphasis added)).

Sjåfjell, When the Solution Becomes the Problem (n 812) 33–38; see also, Sjåfjell and Bruner, ‘Corporate Law, Corporate Governance and the Pursuit of Sustainability’ in Cambridge Handbook of Corporate Law (n 106) 713–20,

The German Corporate Governance Code, as amended in 2022, states in its foreword that ‘(s)ocial and environmental factors influence the performance of the company, and its activities have an impact on people and the environment … (t)he Management Board and the Supervisory Board take this into account when exercising their respective management and supervisory roles in the company’s best interests’ (Regierungskommission, ‘Deutscher Corporate Governance Codex’ (2022, English version) <https://dcgk.de//files/dcgk/usercontent/en/download/code/220627_German_​Corporate_​Governance_​Code_​2022.pdf>). The text does not make explicit reference to climate change.

The Danish Recommendations on Corporate Governance, as amended in 2020, state: ‘(t)he Committee assesses that it is essential for the companies’ value creation that companies consider sustainability in a broad sense, i.e. not only in the sense of economic sustainability, but also, for instance, by looking at environmental, employee and social society sustainability’ (Danish Committee on Corporate Governance, ‘Danish Recommendations on Corporate Governance’ (2020, English version) <https://corporategovernance.dk/sites/default/files/media/anbefalinger_for_god_selskabsledelse_engelsk.pdf> 7. The text does not make explicit reference to climate change.

The Norwegian Code of Practice for Corporate Governance, as amended in 2021, states: ‘The board of directors should define clear objectives, strategies and risk profiles for the company’s business activities such that the company creates value for shareholders in a sustainable manner … (w)hen carrying out this work, the board of directors should therefore take into account financial, social and environmental considerations’ (Norwegian Corporate Governance Board, ‘The Norwegian Code of Practice for Corporate Governance’ (2021, English version) <https://nues.no/wp-content/uploads/2021/10/2021-10-14-The-Norwegian-Code-of-Practice-for-Corporate Governance.pdf> 14). The text does not make explicit reference to climate change.

In 2019, the US Roundtable, an association of CEOs of large US companies, released a statement that purported to represent a shift away from shareholder primacy towards stakeholder inclusion, inter alia by committing to ‘protect the environment by embracing sustainable practices across our businesses’ (Business Roundtable, Statement on the Purpose of a Corporation (2019) <https://opportunity.businessroundtable.org/opportunity/commitment>).

See n 816-818; Sjåfjell, When the Solution Becomes the Problem (n 812) 39–48 (with further examples).

G20/OECD Principles of Corporate Governance 2023, Ch. VI.

ibid (Chapeau).

ibid.

ibid, VI.C (emphasis added).

ibid.

Sjåfjell and Mähönen, Corporate Purpose (n 774); Colin Mayer, ‘Shareholderism Versus Stakeholderism – A Misconceived Contradiction: A Comment on “the Illusory Promise of Stakeholder Governance,” By Lucian Bebchuk and Roberto Tallarita’ (2022) 106 Cornell Law Review 1859.

Sjåfjell and Mähönen, Corporate Purpose (n 774) 83.

ibid 82.

ibid 84.

Eg Johnston and others, Corporate Governance for Sustainability Statement (n 439) 1 (‘(t)here is mounting evidence that the practices of shareholder primacy drive company directors and executives to adopt the same short time horizon as financial markets’); Sjåfjell and others, Shareholder Primacy (n 102) 123 (‘(b)y incentivising a focus on the short-term share price … practices and laws discourage members of the board and senior managers from using their discretion to consider issues such as sustainability, which will only be reflected in the share price in the very long term, if ever).

See eg McDonnell and others (n 127) 344–46 (arguing that ‘the prevalent long-term value mantra may go a long way to reconciling the interests of shareholders with other stakeholders, including the interests of all persons in reducing the impact of climate change’).

Mark J. Roe and Roy Shapira, ‘The Power of the Narrative in Corporate Lawmaking’ (2021) 11 Harv. Bus. L. Rev. 233, 236, 248.

See Sjåfjell and Mähönen, Corporate Purpose (n 774) 83–84.

See Sjåfjell and others, Shareholder Primacy (n 102) 102–3 (with references); David Millon, ‘Corporate social responsibility and environmental sustainability’ in Company Law and Sustainability (n 102) 35, 53.

See generally Randall Abate, Climate Change and the Voiceless. Protecting Future Generations, Wildlife, and Natural Resources (CUP 2019); Eccles and Youmans (n 478) 40 (stating that ‘the potential immortality of the corporation implies … that future generations are also stakeholders’).

See eg Sjåfjell, Towards a Sustainable European Company Law (n 106) 58–59 (arguing that if we conclude that the company is a legal entity created by the acceptance of society, then the normative function of the board should be to manage the company in a way that is compatible with the interests of society); ibid, ‘A General Corporate Law Duty to Act Sustainably’ in Hanne S. Birkmose, Mette Neville, Karsten Engsig Sørensen (eds), Instruments of EU Corporate Governance: Effecting Changes in the Management of Companies in a Changing World (Wolters Kluwer 2023) 39; Sjåfjell and Mähönen, Corporate Purpose (n 774) 98 (arguing that ‘the duty to promote the interests of the company should be positioned within an overarching purpose of sustainable value creation and contributing to mitigating pressures on planetary boundaries’); Jaap Winter, ‘Addressing the Crisis of the Modern Corporation: The Duty of Societal Responsibility of the Board’ in Gregor Bachmann and others (eds) Festschrift für Christine Windbichler zum 70. Geburtstag am 8. Dezember 2020 (De Gruyter, 2021) 1191 (arguing for a duty of societal responsibility to complement the duty of care and the duty of loyalty).

Eric W. Orts and Alan Strudler, ‘The Ethical and Environmental Limits of Stakeholder Theory’ (2002) 12 Business Ethics Quarterly 215; see Ong (n 234) 689.

See Orts and Strudler (n 837) 215–16 (with references).

Sjåfjell and Mähönen, Corporate Purpose (n 774) 85 (proposing to reformulate corporate purpose as ‘sustainable value creation within planetary boundaries in order to integrate the research-based concept of sustainability into proposals for regulatory reform’ (with further reference)).

Concerning Europe, see Sjåfjell and Mähönen, Corporate Purpose (n 774) 89 (arguing that ‘(t)o clarify the board’s role in a company, which has been clouded through the influence of the shareholder primacy drive, the basic company law rule, that the core duty of the board is to promote the interests of the company, needs to be explicitly stated’).

See CSDDD (Commission Proposal 2022); Anne-Marie Weber and Anne-Christin Mittwoch, ‘Harmonizing Duties of Board Members in the Anthropocene: When Expectations Meet Reality’ (2023) 52 RECIEL 143, 146; Sjåfjell and Mähönen, Corporate Purpose (n 774) 89.

Gerard Ruggie, Caroline Rees, and Rachel Davis, ‘Ten Years After: From UN Guiding Principles to Multi-Fiduciary Obligations’ (2021) 6 Business and Human Rights Journal 179, 183.

ibid.

Hopt, Comparative Corporate Governance (n 146) 53–54; Harper Ho, Board Duties (n 546) 243 (taking a comparative approach focusing primarily on the US, the UK, several European jurisdictions, China, as well as international guidance); G20/OECD, Principles of Corporate Governance 2023, V.D.2; see also the numerous country reports in Fleckner and Hopt (eds), Comparative Corporate Governance (n 120).

G20/OECD, Principles of Corporate Governance 2023, V.D.2.

Harper Ho, Board Duties (n 546) 242. In the US, disclosure duties are sometimes framed as a separate aspect of fiduciary duty (Williams, Fiduciary Duties (n 716) 1893–94 (referring to a ‘fiduciary duty of disclosure’)).

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 533; Armour and others, The Basic Governance Structure (n 727) 71; Hopt, Comparative Corporate Governance (n 146) 53.

Considering that ‘the failure of directors to monitor employees and provide for effective control systems is closer to the type of behaviour associated with a lack of due care, rather than disloyal behaviour’ (Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 489).

In re Caremark Int’l Inc. Derivative Litig., 698 A.2d 959 (Del Ch 1996); Stone v Ritter 911 A.2d 362, 372–73 (Del. 2006); see Williams, Fiduciary Duties (n 716) 1892, 1903). The classification of oversight as being a matter of duty of loyalty (rather than duty of care) under Delaware law has legal implications, mainly that claims of oversight failures (often referred to as ‘Caremark claims’) cannot be exculpated and that the applicability of the business judgement rule is limited (see Williams, Fiduciary Duties (n 716) 1892).

Harper Ho, Board Duties (n 546) 242 (stating that the board’s oversight role is a responsibility that ‘in most jurisdictions is enforced in part as a matter of fiduciary duty’) 248.

ibid; with respect to bank directors, see Kaufmann, Respecting Human Rights (n 132) 512.

G20/OECD, Principles of Corporate Governance 2023, V.D.2.

Harper Ho, Board Duties (n 546).

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 533; G20/OECD Principles of Corporate Governance 2023, V.A.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 533.

Cadbury Report (n 147) para. 4.32 (‘(s)ince an effective (ICS) is a key aspect of the efficient management of a company, we recommend that the directors should make a statement in the report and accounts on the effectiveness of their (ICS) and that the auditors should report thereon’).

The management board is required to take adequate measures to ensure early detection of developments which threaten the existence of the company, in particular through setting up a monitoring system (§91(2) Aktiengesetz), and, in listed companies, to establish an internal control and risk management system that is adequate and effective in relation to the size and risk profile of the business (§91(3) Aktiengesetz).

G20/OECD, Principles of Corporate Governance 2023, V.D.7.

LG München I, Decision of 10 December 2013 (5 HKO 1387/10 – Neubürger), ZIP 2014, 570 (finding a former member of Siemens’ management board liable for failure to establish an adequate ICS (Organisationsverschulden), ordering him to pay EUR 15 million in compensation to the company).

Armour and others, The Basic Governance Structure (n 727) 71.

G20/OECD, Principles of Corporate Governance 2023, V.D.7-8.

Armour and others, The Basic Governance Structure (n 727) 71; G20/OECD, Principles of Corporate Governance 2023, V.E.2.

Kaufmann, Respecting Human Rights (n 132) 523.

Caremark; see Armour and others, The Basic Governance Structure (n 727) 71.

G20/OECD, Principles of Corporate Governance 2023, V.D.2.

See ibid.

ibid, VI.C.

ibid, V.D.2 (in fine).

See eg Smit and others, Study on Due Diligence (n 228) 156–57; Andreas Rühmkorf and Lena Walker, ‘Assessment of the concept of “duty of care” in European legal systems. Study for Amnesty International’ (European Institutions Office, 2018) on file with the author.

See Muchlinski, Implementing (n 595) 161.

ibid.

Nicolas Kutscher, Organhaftung als Instrument der aktienrechtlichen Corporate Governance (Nomos 2017).

Volkswagen, ‘Volkswagen’s Supervisory Board asserts claims for damages against Prof. Martin Winterkorn and Rupert Stadler’ (Press Release, 26 March 2021) <https://​www.​volks​wagen-​newsroom.com/en/press-releases/volkswagens-supervisory-board-asserts-claims-for-damages-against-prof-martin-winterkorn-and-rupert-stadler-​6916>.

See generally Andrew Keay ‘The Public Enforcement of Directors’ Duties: A Normative Inquiry’ (2014) 43 Common Law World Review 89.

Armour and others, The Basic Governance Structure (n 727) 70 (arguing that unlimited judicial review and ‘aggressively enforcing the duty of care’ could lead directors to prefer ‘safe projects with lower returns over risky projects with higher expected returns’).

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 226 (framing the issue as an economic problem created by the ‘inefficiencies’ that would arise if courts were to fully review business judgments ‘with the benefit of hindsight and, possibly, without the necessary expertise and experience’); Armour and others, The Basic Governance Structure (n 727) 69; Sjåfjell and others, Shareholder Primacy (n 102) 113.

ibid.

Sjåfjell and others, Shareholder Primacy (n 102) 112–13; Armour and others, What is Corporate Law (n 116) 40–41, 260–63.

Armour and others, What is Corporate Law (n 116) 41–42; Luca Enriques and others, ‘Corporate Law and Securities Markets’ in Kraakman and others (n ) 243, 259–60.

Gerner-Beuerle and Schillig, Comparative Company Law (n 120) 466; Sjåfjell and others, Shareholder Primacy (n 102) 114–15 (discussing the US and mentioning Japan and South Africa as further examples).

Section 174(2) UK Companies Act 2006; Courts are very reluctant to review the quality of the business decision by applying a ‘plausibility or rationality test’ or ‘any reasonable director’ standard, according to which ‘second-guessing’ by a court does not occur if and to the extent that at least some directors could have considered the decision to be in the best interests of the company (Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 227–28; Kershaw (n 705) 47–58).

See Sjåfjell and others, Shareholder Primacy (n 102) 117–18 (with further reference).

G20/OECD, Principles of Corporate Governance 2023, II; Jennifer G. Hill and Matthew Conaglen, ‘Directors’ duties and legal safe harbours: a comparative analysis’ in D. Gordon Smith and Andrew Gold (eds), Research Handbook on Fiduciary Law (Edward Elgar 2018) 305 (comparing the US (Delaware), the UK, and Australia).

Hill and Conaglen (n 883).

Eg Armour and others, The Basic Governance Structure (n 727) 70.

Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 228 (referring to Hodge v U.S. Steel Corp., 64 N.J. Eq. 807 (NJ Ct Err & App 1903); Allied Chem. & Dye Corp. v Steel & Tube Co., 122 A. 142 (Del Ch 1923) and other decisions). See generally Kershaw (n 705) 68–92 (showing that elements of the BJR can be identified in decisions as early as 1818).

Zapata Corporation v Maldonado 430 A.2d 779 (Del 1981); Aronson v Lewis 473 A.2d 805, 812 (Del 1984); Williams, Fiduciary Duties (n 716) 1889–90; Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 228–31.

Germany was the first European country to codify the BJR in §93(1) Aktiengesetz, according to which there is no breach of the duty of care if a director could reasonably believe that he or she was acting on the basis of adequate information and in the best interests of the company; additional unwritten requirements are the absence of bad faith and conflicts of interest (see Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 232–33). The BJR is codified in several other continental European states such as Austria, the Czech Republic, Greece, Portugal, Spain and Romania (Luis Hernando Cebriá, ‘The Spanish and the European Codification of the Business Judgment Rule’ (2018) 15 European Company and Financial Law Review 41). As another example, Australia has a clearly worded BJR in Section 180(2) Corporations Act 2001 (Cth). With respect to Switzerland, see Alex Nikitine, Die aktienrechtliche Organverantwortlichkeit nach Art. 754 Abs. 1 OR als Folge unternehmerischer Fehlentscheide: Konzeption und Ausgestaltung der ‘Business Judgment Rule’ im Gefüge der Corporate Governance (Dike 2007).

ibid; Gerner-Beuerle and Schuster, Evolving Structure (n 721) 205–6; Gerner-Beuerle, The Duty of Care and the Business Judgment Rule (n 705) 232.

See eg Sjåfjell and others, Shareholder Primacy (n 102) 114–20 (comparing Delaware, the UK, Australia, various continental European jurisdictions, Indonesia, and Argentina, among others).

ibid 118–19.

See ibid 119.

Klauberg (n 731) 69; Gerner-Beuerle and Schuster, Mapping (n 120) 15; Sjåfjell and others, Shareholder Primacy (n 102) 113; Osofsky and others (n 129) 635 (stating that the likelihood of success for fiduciary duty lawsuits is ‘extremely low’, at least against operating directors and officers).

Michelle Welsh and Vince Morabito, ‘Public V Private Enforcement of Securities Laws: An Australian Empirical Study’ (2014) 14 Journal of Corporate Law Studies 39. However, until Cassimatis (Cassimatis v ASIC [2020] FCAFC 52 (Federal Court of Australia)) actions against directors solely on the ground of a breach of duty of care have not occurred (Luh Luh Lan, ‘Directors’ Duties and Climate Change Risk – Standard of Care, Foreseeability and Enforceability’ in Business Law and the Transition to a Net Zero Economy (n 425) 63, 65).

See eg Gerner-Beuerle and Schuster, Mapping (n 120) 15.

ibid; Sjåfjell and others, Shareholder Primacy (n 102) 119.

Armour and others, What is Corporate Law (n 116) 41 (pointing to the exception of the US, where enforcement authorities are allowed to retain a portion of the sanctions imposed on companies).

Gerner-Beuerle and Schuster, Mapping (n 120) 15 (offering two possible explanations: (a) there are deficiencies in the ‘law on the books’ that make enforcement futile; (b) despite a well-designed legal framework, parties prefer to settle, making enforcement of the duty of care unnecessary).

ibid 15.

ibid 16 (emphasis added).

Sjåfjell and others, Shareholder Primacy (n 102) 95; see further Beate Sjåfjell, ‘Quo vadis, Europe? The significance of sustainable development as objective, principle and rule of EU law’ in Cecilia Marcela Bailliet (ed), Non State Actors, Soft Law and Protective Regimes (CUP 2012) 254.

See n 127–128.

ibid.

G20/OECD Principles of Corporate Governance 2023.

See n 129–131. See also, a comprehensive study on Canadian corporate law (Janis Sarra, ‘Fiduciary Obligations in Business and Investment: Implications of Climate Change’ (CCLI, 2018) <https://ccli.ubc.ca/wp-content/uploads/2021/04/Fiduciary-Obligation-in-Busi​ness-and-Investment.pdf>).

Wallace (n 129) 760.

Hutley and Hartford-Davis, Climate Change and Directors’ Duties (n 131) 22 (emphasis added).

G20/OECD, Principles of Corporate Governance 2023, VI.C (emphasis added).

Ernest Lim, ‘Directors’ Liability and Climate Risk: White Paper on Hong Kong’ (CCLI, 2021) <https://ccli.ubc.ca/wp-content/uploads/2022/02/Directors-liability-and-climate-risk-White-paper-on-HK-FINAL.pdf>.

Tan Sri Zarinah Anwar and To’ Puan Janet Looi, ‘Legal Opinion on Directors’ Duties and Disclosure Obligations Under Malaysian Law in the Context of Climate Change Risks and Considerations’ (2022) <https://commonwealthclimatelaw.org/wp-content/uploads/2022/07/CCLI-Legal-Opinion-on-Directors-Duties-and-Disclosure-Obligations-under-Malaysian-Law-in-the-context-of-Climate-Risks-22-July-2022-w-signatures.pdf>.

Cesar L. Villanueva and others, ‘Directors’ Duties & Responsibilities and Disclosure Obligations under Philippine Law on Climate Change Risks’ (2022) <https://​com​mon​wealth​climatelaw.org/directors-duties-responsibilities-and-disclosure-obligations-under-philippine-law-on-climate-change-risks/>.

Jeffrey W. T. Chan and others, ‘Legal Opinion on Director’s Responsibilities and Climate Change under Singapore Law (2021) <https://law-ccli-2019.sites.olt.ubc.ca/files/2021/04/Legal-Opinion-on-Directors-Responsibilities-and-Climate-Change-under-Sin​ga​pore-Law.pdf>.

It appears that the four legal opinions were all commissioned by the Commonwealth Climate and Law Initiative (CCLI).

Lim (n 909) 26 (emphasis added).

Anwar and Looi (n 910) 52.

Chan and others (n 912) 38 (emphasis added).

Villanueva and others (n 911) 112 (footnotes omitted, emphasis added).

See eg Jill Solomon, ‘Pension Fund Trustees and Climate Change’ Research Report No 106 (Association of Certified Chartered Accountants 2009) <http://www.accaglobal.com/content/dam/acca/global/PDF-technical/climate-change/rr-106-001.pdf>); Scott M. Donald, ‘The Competence and Diligence Required of Trustees of a 21st Century Superannuation Fund’ (2019) 27 Australian Business Law Review 50; Solana, Climate Litigation in Financial Markets (n 125) 129; Noel Hutley and James Mack, Superfund Trustee Duties and Climate Change Risk (Memorandum of Opinion, 2017) <www.envirojustice.org.au/projects/superannuation-trustee-duties-and-climate-risk/>; Barker and Mulholland, Comparative Paper (n 128) 11–12; Barker and others, Climate Change and the Fiduciary Duties of Pension Fund Trustees (n 131) 219–21.

See G20/OECD Principles of Corporate Governance 2023, VI.C; CCLI/Climate Governance Initiative, Primer on Climate Change (n 721) 20.

Barker and Mulholland, Comparative Paper (n 128) 14; Ian Ramsay and Miranda Webster, ‘An Analysis of the use of Stepping Stones Liability against Company Directors and Officers’ (2021) 50 Australian Bar Review 168–98.

Hutley and Hartford-Davis, Climate Change and Directors’ Duties (n 131) 18 (with references).

Barker and Mulholland, Comparative Paper (n 128) 14.

ibid.

Sections 172(1)(e), 414A–C UK Companies Act 2006; James Henry Metter and Christopher Pugh, ‘The Tipping Point? Climate Change and Directors’ Duties’ (Freshfields Bruckhaus Deringer LLP, 2019) <https://riskandcompliance.freshfields.com/post/102ft5x/the-tipping-point-climate-change-and-directors-duties>; Benjamin, Duty of Due Consideration (n 130).

Williams, Fiduciary Duties (n 716) 1893–94; Benjamin, Road to Paris (n 129).

Benjamin, Road to Paris (n 129) 359. Note that under Delaware law, the duty of oversight is an element of the duty of loyalty (above, III.B.2.5).

Loi n_ 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, Journal officiel de la République française); Magnier (n 927) 282–83); Ordonnance n° 2017–1180 du 19 juillet 2017 relative à la publication d’informations non financières par certaines grandes entreprises et certains groupes d’entreprises (2017) Journal officiel de la République française). Additional requirements apply to the financial sector; financial companies are required to report on their management of climate change risks (Article 173 loi n° 2015–992 du 17 août 2015 relative à la transition énergétique pour la croissance verte, Journal officiel de la République française). In terms of civil enforcement, the law defers to fault liability under the general tort of negligence (Article L. 225-102-5 Code de Commerce in conjunction with Articles 1240 and 1241 Code Civil (Code civil, Loi n° 1804-1 du 21 mars 1804, Journal officiel de la République française)). Liability may extend to members of the board of directors as they are responsible for the implementation of the vigilance plan (Magnier (ibid) 282).

Vizcarra, The Reasonable Investor (n 479) 10107–08; see G20/OECD Principles of Corporate Governance 2023, V.D.2 (‘(w)hen fulfilling (its) key functions, the board should ensure that material sustainability matters are considered’).

Eccles and Youmans (n 478) 41.

ibid, 39.

G20/OECD Principles of Corporate Governance 2023, VI.A.1.

ibid.

Vizcarra, The Reasonable Investor (n 479) 10114.

ibid.

ibid 40.

G20/OECD Principles of Corporate Governance 2023, VI.A.

Eccles and Youmans (n 478) 43.

See Armour, Enriques, and Wetzer (n 285) 1108–09.

G20/OECD Principles of Corporate Governance 2023, VI.E.1.

See ibid, VI.A.5.

Barker and Mulholland, Comparative Paper (n 128) 16; see also Mulholland and others, Climate Change and Directors’ Duties (n 128).

Armour and others, The Basic Governance Structure (n 727) 69; Vizcarra, The Reasonable Investor (n 479) 10114.

Barker and Mulholland, Comparative Paper (n 128) 14-17; Corporate Governance Initiative, ‘Primer on Climate Change: Directors’ Duties and Disclosure Obligations’ (3rd ed, 2023) https://hub.climate-governance.org/primer/directors-duties (country reports covering 32 jurisdictions and the EU); Weber and Hösli, Climate Change Liability (n 128) 195–96.

Lim (n 909) 19 (Hong Kong); Muriungi (n 128) 70, 72 (Kenya and Nigeria); Anwar and Looi (n 910) 34–42 (Malaysia); Villanueva and others (n 911) 114 (Philippines); Chan and others (n 912) (Singapore); Weber and Hösli, Corporate Climate Responsibility (n 756) 610 (Switzerland).

For instance, in the UK, Section 415 UK Companies Act 2006.

Eg Hutley and Hartford-Davis, Climate Change and Directors’ Duties (n 131) 6, 18; Sarah Barker, ‘An Introduction to Directors’ Duties in Relation to Stranded Assets Risks’ in Ben Caldecott (ed), Stranded Assets and the Environment: Risk, Resilience and Opportunity (Routledge 2018) 200, 232–33.

Barker and Mulholland, Comparative Paper (n 128) 14.

Eccles and Youmans (n 478) 42; Vizcarra, The Reasonable Investor (n 479) 10108.

See Vizcarra, The Reasonable Investor (n 479) 10107 (arguing that courts’ application of current conceptions of materiality to new types of climate-related information will determine whether climate-related information is effectively integrated into mainstream reporting).

Eg Anwar and Looi (n 910) 40–42 (pointing to the 1MDB scandal as an example of failure to report irregularities in audited financial statements).

Eg Sullivan and others, Fiduciary Duty in the 21st Century (n 719) 12.

OECD, OECD Business and Finance Outlook 2020: Sustainable and Resilient Finance (OECD Publishing 2020) 74.

OECD, Climate Change and Corporate Governance (n 463) 39.

G20/OECD Principles of Corporate Governance 2023, VI.C (emphasis added).

Above (n 811).

CSDDD (Commission Proposal 2022), para. 63 (emphasis added).

Ciacchi (n 555) 44.

ibid.

See Article 26 para. 2 CSDDD (Commission Proposal 2022): Member States shall ensure that directors take steps to adapt the corporate strategy to take into account the actual and potential adverse impacts identified pursuant to Article 6 and any measures taken pursuant to Articles 7 to 9 (emphasis added).

Anne-Marie Weber and Anne-Christin Mittwoch, ‘Harmonizing Duties of Board Members in the Anthropocene: When Expectations Meet Reality’ (2023) 52 Review of European and Comparative Law 143, 148–52. See further, Sjåfjell and Mähönen, Corporate Purpose (n 774) 97–99; Mieke Olaerts and Bastiaan Kemp, ‘Editorial: The World Is Changing’ (2023) 20 European Company Law 4; Radu Mares, ‘Directors’ Duties During the Green Transition under EU Law’ (2023) 6 Nordic Journal of European Law 75.

Weber and Mittwoch (n 960) 151.

BoEPRA, ‘Transition in thinking: The impact of climate change on the UK banking sector’ (2018) 10 <https://www.bankofengland.co.uk/prudential-regulation/publication/2018/transition-in-thinking-the-impact-of-climate-change-on-the-uk-banking-sector>. See also, Financial Conduct Authority (FCA), ‘Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers’ (Policy Statement PS21/24, 2021) <https://www.fca.org.uk/publication/policy/ps21-24.pdf>); Donald, Prudential Regulation (n 551) 11–12.

APRA, ‘Climate Change: Awareness to action. Information Paper’ (2019) 4, 7, 17 (<https://​www.​apra.gov.au/sites/default/files/climate_​change_​awareness_​to_​action_​march_​2019.​pdf> (emphasis added). See also Geoff Summerhayes, ‘Australia’s New Horizon: Climate Change Challenges and Prudential Risk’ (Insurance Council of Australia Annual Forum, Sydney, 17 February 2017) (<https://www.apra.gov.au/news-and-publications/australias-new-horizon-climate-change-challenges-and-prudential-risk>); Donald, Prudential Regulation (n 551) 14–15.

See Donald, Prudential Regulation (n 551) 4.

European Central Bank, ‘ECB imposes periodic penalty payments on ABANCA for failing to sufficiently identify climate risks’ (Press release, 10 November 2025) <https://​www.​bankingsupervision.europa.eu/press/pr/date/2025/html/ssm.​pr251110~​3e0b​6f579e.​en.​html>.

See Sjåfjell, Realising the Potential of the Board (n 544) 702; McDonnell and others (n 127) 339–40).

This distinction was derived and adapted from a speech given by Lord Sales, Justice of the Supreme Court of the UK (Lord Sales, ‘Directors’ duties and climate change: Keeping pace with environmental challenges’ (Anglo-Australasian Law Society, Sydney, 27 August 2019) <https://www.supremecourt.uk/docs/speech-190827.pdf>).

For instance, in the UK, pension funds have often argued that the consideration of non-financial interests is likely to constitute a breach of fiduciary duty (Woods (n 127) 261; below, III.C.4.3). A similar argument was omnipresent in the political ‘ESG backlash’ in some US States since around 2022 (eg Diane-Laure Arjaliès and Tima Bansal, ‘ESG backlash in the US: what implications for corporations and investors?’ (Financial Times online, 11 June 2023) <https://www.ft.com/content/3f064321-138c-4c65-bbb9-6abcc92adead>).

See eg Woods, identifying fiduciary duty as a perceived theoretical and an actual practical barrier to considering climate change for pension fund trustees in the US and the UK (Woods (n 127)).

International Organisation of Pension Supervisors (IOPS), ‘IOPS Supervisory Guidelines on the Integration of ESG Factors in the Investment and Risk Management of Pension Funds’ (2019) <https://www.iopsweb.org/IOPS-Supervisory-guidelines-integration-ESG-factors.pdf> 20 (‘(s)upervisory authorities should clarify to a pension fund governing body or the asset managers, possibly through regulations, rules or guidelines, that the explicit integration of ESG factors into pension fund investment and risk management process is in line with their fiduciary duties’).

See Solana, Climate Litigation in Financial Markets (n 125) 125–26 (with references).

Eg Osofsky and others (n 129) 638 (stating that in circumstances where a plausible link between a more sustainable corporate policy and long-turn returns to shareholders is made, Delaware courts would be ‘quite likely to defer to that business judgment’); Wallace (n 129) 766–67 (pointing out that ‘given that a corporate strategic decision in favour of a more costly, higher GHG-management model would likely be the result of a thorough and considered process, fiduciaries should not be in danger of incurring personal liability’).

Barker and others, Climate Change and the Fiduciary Duties of Pension Fund Trustees (n 131) 226.

G20/OECD Principles of Corporate Governance 2023, VI.C.

ibid.

ibid, VI.C.1-2.

ibid, VI.C.

ibid.

In 2015, the Expert Group on Global Climate Obligations, a group of experts from national and international courts, universities, and organisations from around the world, published the Oslo Principles on Global Climate Obligations (Oslo Principles) as an attempt to formulate detailed and reciprocal obligations for states and companies informed by national and international sources of law (Expert Group on Global Climate Obligations, Oslo Principles on Global Climate Change (Eleven International Publishing 2015); see the discussion by Seck (Sara L. Seck, ‘A Relational Analysis of Enterprise Obligations and Carbon Majors for Climate Justice’ (2021) 11 Oñati Socio-Legal Series: Climate Justice in the Anthropocene 254, 269–75). Building on the Oslo Principles, the Principles on Climate Obligations of Enterprises (PCOE), a set of principles dealing exclusively with the obligations of enterprises, was published in 2018 and a revised second edition was published in 2020 (Expert Group on Global Climate Obligations, Principles on Climate Obligations of Enterprises (2nd ed, Eleven International Publishing 2020). The PCOE draw on a wide range of sources including UN Global Compact reports, corporate governance codes, and literature (ibid, Commentary to the Principles, 220–37).

The authors of the report ‘grumblingly adopted’ a 1.75°C target instead of 1.5°C (see Expert Group on Global Climate Obligations, Principles on Climate Obligations of Enterprises (ibid), General Commentary, 24–25, and Principle 2.2.1(a)).

Sarah Barker and Ellie Mulholland, Comparative Paper (n 128) 8. See also Patricia A. Koval, ‘Board Oversight and Climate Change: What Directors Need to Know’ in The Handbook of Board Governance (n 128) 369.

Eg Muriungi (n 128) 76 (finding that ‘directors’ duties will be deemed to have been breached where they ignore, downplay or fail to take into account (climate risks) … to the extent they affect corporations’); McDonnell and others (n 127) 406 (‘(e)merging best practice in risk management incorporates climate change into the monitoring of company risk … Caremark-style suits, claiming a failure to adequately monitor climate change risk, provide a potential path to push more companies towards better risk management’). On Caremark, see above III.B.2.5.

See Barker and Mulholland, Comparative Paper (n 128) 9–10; See also Barker and others, Climate Change and the Fiduciary Duties of Pension Fund Trustees (n 131) 222–26.

Chan and others (n 912) 38. Similarly, see Benjamin, Road to Paris (n 129) 359–60; Barker, Williams and Cooper (n 129) 8.

Barker and others, Climate Change and the Fiduciary Duties of Pension Fund Trustees (n 131) 223.

ibid 224.

Benjamin, Road to Paris (n 129) 363–65; ibid, Benjamin, Duty of Due Consideration (n 130) 99.

See Barker and others, Climate Change and the Fiduciary Duties of Pension Fund Trustees (n 131) 223.

Hutley and Hartford-Davis, Supplementary Memorandum (n 131) 2–3 (emphasis added).

Lim (n 909) 7.

McDonnell and others (n 127) 406.

ibid 406–7 (noting that such a duty would be ‘extremely unlikely’ to be recognised by Delaware Courts and that ‘law elsewhere may be more open to climate change supervision suits than Delaware is’).

See Benjamin, Companies and Climate Change (n 83) 156–57.

Eg Solana, Climate Litigation in Financial Markets (n 125) 130 (concerning the financial sector).

ibid, 127; Baker and Mulholland, Comparative Paper (n 128) 11–12 (stating that with the ‘considerable overlap in the duties owed by directors to their company, pensions fiduciaries’ liability in relation to climate risk assessment and management could arise in similar circumstances to company directors’).

In particular, the category transparency/disclosure includes various complaints with advertising standard boards and letters to management.

Abrahams and another v Commonwealth Bank of Australia (2017) VID 879/2017 (Federal Court of Australia).

ibid.

Abrahams and another v Commonwealth Bank of Australia (2021) NSD 864/2021 (Federal Court of Australia).

McVeigh v Retail Employees Superannuation Trust (2018) NSD 1333/2018 (Federal Court of Australia). See Esmeralda Colombo, ‘From Bushfires to Misfires: Climate-Related Financial Risk after McVeigh v. Retail Employees Superannuation Trust’ (2022) 11 Transnational Environmental Law 173.

Section 180(1) Corporations Act 2001 (Cth); see McVeigh v REST, Concise Statement (26 July 2018) <http://climatecasechart.com/wp-content/uploads/sites/16/non-us-case-doc​u​ments/2018/20180723_NSD13332018_complaint-1.pdf>).

McVeigh v REST, Complaint, filed on 26 July 2018 (<http://climatecasechart.com/climate-change-litigation/non-us-case/mcveigh-v-retail-employees-superannuation-trust/>).

Retail Employees Superannuation Trust (REST), ‘Statement from REST’ (Press Release, 2 November 2020) <https://equitygenerationlawyers.com/wp/wp-content/uploads/2020/11/Statement-from-Rest-2-November-2020.pdf>.

Eg Prafula Pearce, ‘Duty to Address Climate Change Litigation Risks for Australian Energy Companies – Policy and Governance Issues’ (2021) Energies 14, 7838; Anita Foerster and Jacqueline Peel, ‘US Fossil Fuel Companies Facing Legal Action for Misleading Disclosure of Climate Risk: Could it Happen in Australia?’ (2017) 32 Australian Environment Review 56, 57–58.

Grantham Research Institute on Climate Change and the Environment, Climate Change Laws of the World (<https://climate-laws.org/>). The number (41) includes cases before National Contact Points under the OECD GL (below, IV.C.2) as well as protester and planning law matters. No updated figures were available at the end of 2025.

ibid, <https://climate-laws.org/geographies/united-kingdom>.

Cowan v Scargill [1985] Ch 270, where Megarry J held that ‘when the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interest of the beneficiaries are normally their best financial interests’ (discussed by Woods, Funding Climate Change (n 750) 261–62). Various commentators, including Megarry J himself, later argued that the case has been overly influential and too broadly interpreted (ibid, 262). However, in practice, the misinterpretation of the Cowan v Scargill case has led institutional investors to prioritise short-term profit maximisation, thereby disregarding critical environmental concerns such as climate change (Benjamin, Companies and Climate Change (n 83) 194 with references).

Section 174 UK Companies Act 2006 codifies that directors are subject to a dual objective–subjective standard; according to this standard, the requirement to exercise reasonable care, skill and diligence is determined both by the general knowledge, skill and experience that may be reasonably expected of a person carrying out the functions of the director (objective), but also the general knowledge, skill and experience that the director has (subjective) (see Ekaterina Aristova and Lionel Nichols, ‘Climate Change on the Board: Navigating Directors’ Duties’ (2024) 24 Journal of Corporate Law Studies 479, 484-85).

Section 414C(1), (4) Companies Act 2006.

Metter and Pugh (n 924).

ibid, 5 (explaining that according to the Minister of State for Industry and the Regions at the time, ‘having regard to’ means that directors should ‘think about’ or ‘give proper consideration’ to these factors).

ibid.

R on the Application of the People and Planet v HM Treasury [2009] EWHC 3020.

ibid, para. 5.

Benjamin, Companies and Climate Change (n 83) 73.

ibid, Duty of Due Consideration (n 130) 96.

Stimpson v Southern Landlord Association [2010] BCC 387, 399.

ClientEarth v Shell Plc and Others [2023] EWHC 1137 (Ch); [2023] EWHC 1897 (Ch).

[2023] EWHC 1137 (Ch) [19]–[20]; [2023] EWHC 1897 (Ch) [27], [37]. See Pablo Iglesias-Rodríguez, ‘ClientEarth v Shell plc and the (Un)Suitability of UK Company Law and Litigation to Pursue Climate-Related Goals’ (2023) 35 Journal of Environmental Law 445.

[2023] EWHC 1897 (Ch) [50].

See further [2023] EWHC 1897 (Ch) [64], where Trower J held: ‘the law respects the autonomy of the decision making of the Directors on commercial issues and their judgments as to how best to achieve results which are in the best interests of their members as a whole’. Furthermore, noting that ClientEarth held only 27 shares in Shell, Trower J was not satisfied that the case was brought in good faith (ibid, [92]).

Robert Carnwath, ‘ClientEarth v Shell: What future for derivative claims?’ (Grantham Research Institute on Climate Change and the Environment, 2024) <https://www.lse.ac.uk/granthaminstitute/publication/clientearth-v-shell-what-future-for-derivative-claims/> 5–6.

McGaughey and Anor v Universities Superannuation Scheme Ltd and Others [2022] EWHC 1233 (Ch).

McGaughey, Statement of Claim (Claim no. CR-2021-001966, 26 October 2021), para. 103.

[2022] EWHC 1233 (Ch); [2023] EWCA Civ 873.

[2023] EWCA Civ 873 [171]–[172]. See Aristova and Nichols (1008) 498–99.

Eg Alexia Staker and Alice Garton, ‘Directors’ Liability and Climate Risk: United Kingdom: Country Paper’ (CCLI, 2018) <https://www.smithschool.ox.ac.uk/sites/default/files/2022-04/CCLI-UK-Paper-Final.pdf> 53.

Benjamin, Duty of Due Consideration (n 130) 98.

Eg Janet Dine, ‘Corporate Regulation, Climate Change and Corporate Law: Challenges and Balance in an International and Global World’, 26 European Business Law Review 173 (2015) 185–86; Benjamin, Duty of Due Consideration (n 130); ibid, Companies and Climate Change (n 83) 74. See generally Charlotte Villiers, ‘Directors’ Duties and the company’s internal structures under the UK Companies Act 2006: Obstacles for Sustainable Development’ (2011) 8 International and Comparative Corporate Law Journal 47; Ernest Lim, ‘Judicial Intervention in Directors’ Decision-Making Process: Section 172 of the Companies Act 2006’ (2018) Journal of Business Law 169.

Benjamin, Companies and Climate Change (n 83) 75.

Aristova and Nichols (n 1008) 511–12.

Benjamin, Road to Paris (n 129) 353–63; Solana, Climate Litigation in Financial Markets (n 125) 117–31; Lisa Benjamin and Alexandra Guillot, ‘Global Perspectives on Corporate Climate Legal Tactics: United States of America National Report’ (BIICL, 2024) <https://www.biicl.org/documents/12175_global_perspectives_​on_​corporate_​cli​mate​_​legal_​tactics_-_usa_national_report_​v1.​pdf> 27–30; Weber and Hösli, Climate Change Liability (n 128) 178–80.

Fentress v ExxonMobil Corp No. 4:16-cv-03484 (Fed Dist Ct, Southern Dist of Tex 2016).

Fentress 580, 587; Benjamin, Road to Paris (n 129) 353; Solana, Climate Litigation in Financial Markets (n 125) 128. A similar lawsuit was dismissed on comparable grounds in Lynn v Peabody Energy Corp. No 4:15-cv-00916 (ED Mo 2017), see Solana, ibid, 127–28).

Ramirez v Exxon Mobil Corp. (2016) No 3:16-cv-3111-K (Fed Dist Ct, Northern Dist of Tex 2016). The lawsuit was initiated in response to the October 2016 announcement by ExxonMobil’s announcement in October 2016 of its potential need to write off 20 per cent of its oil and gas assets. See also Sarah von Colditz derivatively on behalf of ExxonMobil Corporation v Woods No 3:19-cv-01067 (Fed Dist Ct, Northern Dist of Tex 2019), in which the plaintiffs alleged that certain of the company’s directors and officers breached their fiduciary duties by misleading the public about climate change and its impact on the company’s business.

Ramirez, 334 F. Supp. 3d 832 (N.D. Tex. 2018); see Vizcarra, The Reasonable Investor (n 479) 10113. At the end of 2025, the case was still pending.

Benjamin, Road to Paris (n 129) 360.

Russell Gold, ‘PG&E: The First Climate-Change Bankruptcy, Probably Not the Last’ (Wall Street Journal online, 18 January 2019) <https://www.wsj.com/articles/pg-e-wildfires-and-the-first-climate-change-bankruptcy-11547820006>.

Williams derivatively on behalf of PG&E v Earley No 3:18-cv-07128-EDL (Fed Dist Ct, Northern Dist of Cal 2018) Apparently, the case was still pending at the end of 2025.

York County v Rambo No 3:19-cv-00994 (Fed Dist Ct, Northern Dist of Cal 2019). Apparently, the case was still pending at the end of 2025.

Assad v Seu No. 1:24-cv-00164 (D Haw., filed 8 April 2024).

Solana, Climate Litigation in Financial Markets (n 125) 119–20. See also some earlier cases referred to by Wallace (n 129) 767–68.

Mulholland and others, Climate Change and Directors’ Duties (n 128).

Solana, Climate Litigation in Financial Markets (n 125) 119; Hana V. Vizcarra, ‘Climate-Related Disclosure and Litigation Risk in the Oil & Gas Industry: Will State Attorneys General Investigations Impede the Drive for More Expansive Disclosures?’ (2019) 43 Vt. L. Rev. 733, 745–54.

New York v ExxonMobil Corp., 65 Misc. 3d 1233(A), 49 ELR 20199 (NY Sup Ct 2019).

According to Vizcarra, the case ‘indicates that companies continue to have leeway in how they consider future transition risks and its impact on their business, as long as their discussion of how they evaluate those risks and incorporate their evaluation into their planning is not misleading’ (Vizcarra, The Reasonable Investor (n 479) 10113–14).

Armour and others, The Basic Governance Structure (n 727) 70 (in addition to the BJR, directors are shielded from liability also through charter provisions waiving directors’ liability for good faith breaches of duty and comprehensive D&O insurance, among other things).

Eg Benjamin, Road to Paris (n 129) 353; Vizcarra, The Reasonable Investor (n 479) 10113–14; Roshaan Wasim, ‘Corporate (Non) Disclosure of Climate Change Information’ (2019) 119 Colum L Rev 1311, 1332, 1339–42; McDonnell and others (n 127) 407 (arguing that for a case in Delaware to have realistic chances of success, climate change ‘would need to pose a great and pressing financial risk to the company, and yet the company would either have to have no system for monitoring climate risk at all or be completely ignoring obvious and multiple red flags about such risk’).

Eg Vizcarra, The Reasonable Investor (n 479) 10114; Williams, Fiduciary Duties (n 716) 1916.

Cynthia A. Williams and Ellie Mulholland, ‘What the Shell Judgment Means for US Directors’ (Harvard Law School Forum on Corporate Governance, 2021) <https://​corpgov.​law.​harvard.edu/2021/07/22/what-the-shell-judgment-means-for-us-di​rec​tors/>.

Benjamin, Road to Paris (n 129) 368, emphasis added.

Barker, Williams and Cooper (n 129) 8.

District Court of Poznań, IX GC 1118/18, 31 July 2019. See Enea, Current Report No. 26/2019 (<http://climatecasechart.com/wp-content/uploads/sites/16/non-us-case-doc​u​ments/2019/20190801_Not-Available_press-release-1.pdf>).

Client Earth, ‘Ostrołęka C: Energa’s and Enea’s Board Members’ Fiduciary Duties to the Companies and Shareholders’ (2018) < Client Earth, ‘Ostrołęka C: Energa’s and Enea’s Board Members’ Fiduciary Duties to the Companies and Shareholders’ (2018) <https://www.clientearth.org/latest/documents/ostroleka-c-energa-s-and-enea-s-board-members-fiduciary-duties-to-the-companies-and-shareholders/>. At the time of writing, the legal grounds for the Court’s decision were not publicly available.

Client Earth, ‘Court Win in World-First Climate Risk Case Puts Future of Ostrołęka C Coal Plant in Question’ (Press Release, 1 August 2019) <https://www.clientearth.org/press/court-win-worldfirst-climate-case-ostroleka-c-future-in-question/>.

The Court held that the resolution approving the construction of the plant was an impermissible instruction to the board of directors (McDonnell and others (n 127) 389; Aristova and Nichols (n 1008) 511).

Client Earth, ‘Polish energy giant sues former directors and insurer over failed coal power plant investment’ (Press reaction, 1 February 2024) <https://www.clientearth.org/latest/press-office/press/polish-energy-giant-sues-former-directors-and-insurer-over-failed​-coal-power-plant-investment/>.

See ibid, ‘Investors turn to courts after VW withholds climate lobbying details’ (Press release, 19 October 2022) <https://www.clientearth.org/latest/press-office/press/investors-turn-to-courts-after-vw-withholds-climate-lobbying-details/>.

Freshfields, ‘Shareholders requesting information about climate lobbying: Volkswagen is facing new kind of ESG-related claims’ (11 January 2023) <https://​sus​tain​abil​ity.​freshfields.com/post/102i4xk/shareholders-requesting-information-about-climate-lobbying-volkswagen-is-facing>.

OLG Braunschweig, Decision of 8 May 2023 – 2W 25/23, MDR 2023, 1195.

4

Climate Change Due Diligence

Specifying Directors’ Duty of Care through Climate Change Due Diligence

Due Diligence within the Regime Complex of Corporate Climate Obligations

The duty of care in corporate law is a norm of national law, but its interpretation in the context of the transboundary problem of climate change must reasonably include an international perspective (above, II.B.3). In recent years, the idea that companies have a responsibility to address climate change has gained strong support. However, the specifics of corporate climate responsibility are not yet established. Most national black letter laws fail to provide definitive guidance on the content of directors’ duty of care with respect to climate change (above, III.C). This turns the focus to international guidance. International standards serve a critical gap-filling function in determining the role of business concerning climate change mitigation.[1] The UNGP and the OECD GL advocate risk-based due diligence as the conceptual framework for operationalising corporate responsibility with respect to the adverse impacts of business activities on people and the planet (below, IV.A.2.1). Building on this established framework as well as on the climate change-specific TCFDR, this study considers Climate Change Due Diligence (CCDD) as the key tool for delineating corporate responsibility and, mutatis mutandis, directorial responsibility in relation to climate change. CCDD is an evolving concept that faces conceptual challenges (below, IV.A.2). Overcoming these challenges is essential to clarifying the duty of care owed by directors in relation to climate change.[2]

International environmental agreements typically contain collective government objectives, but they lack detailed prescriptions for the responsibilities of individual states and private actors in relation to these objectives.[3] This is also the case with respect to the Paris Agreement (above II.A.2). Given that international laws are drafted with the intention of applying to public entities, determining what they mean for private actors requires a ‘translation’.[4] Although the normative relationship between the two spheres cannot be explained in terms of a simple hierarchy, the interpretation of corporate law (in particular, the interpretation of open-ended norms such as the duty of care) is increasingly influenced by international norms and standards.[5] As the legal personality of private actors is not generally recognised in international law (above, II.A.2), quasi-legal norms play an important role in the translation of international goals into frameworks that are directly applicable to corporations (above II.B.3).[6] The gradual internalisation of environmental principles into corporate governance begins at the international level, before gradually ‘hardening’ into domestic legal regimes.[7] Indeed, the contemporary landscape of corporate law has been shaped not only by national law and the ‘invisible hand’ of market dynamics, but also by the subtle (or not so subtle) influence of international organisations, bodies and standard-setters such as the UN, the OECD, and the Financial Stability Board (FSB, the international body that commissioned the TCFDR, see below IV.A.3.3).[8] In fact, mechanisms such as climate change disclosure regimes (above, II.C.2.1) were initially constructed within the international sphere before being implemented in many jurisdictions around the world.[9] International standards may facilitate a consensus that may not be achievable directly through traditional-law making.[10] Accordingly, international standards serve to fill governance gaps, bypassing the gridlock at the intra-governmental level (above, II.B.3).[11] While facilitated through broadly accepted standards of business conduct, any meaningful approach to CCDD must be informed by the science of climate change.[12] In fact, the open-ended nature of the duty of care (above, III.B.2.3) allows for alignment with international standards and climate science. In sum, norms outside of the traditional nation-state framework play a pivotal role in delineating the climate change-related responsibility of corporations and, mutatis mutandis, their directors.

Courts and other enforcement actors may refer to RBC standards in determining the standard of care owed under the duty of care (above, III.C.4).[13] Some jurisdictions are perceived to be more inclined to defer to international standards than others. In the US, for example, international obligations may appear to be ‘too far afield’ to serve as a source of guidance for the interpretation of directors’ duties.[14] However, recent experience in other jurisdictions indicates a different direction. The case of Milieudefensie et al. v Shell illustrates that reference to international standards and climate science as a source of interpretation of national norms is evolving in climate litigation (below, IV.C.4.2).

The recommendations contained in the three selected standards are directed at companies. Given the central function of the board within the corporate governance of a company (above, III.B.1) and the duty for directors to act in the best interest of the company they oversee (above, III.B.2.4), these standards are suitable, at least mutatis mutandis, to interpreting the duty of care owed by directors. To varying degrees, the UNGP, the OECD GL and the TCFDR refer to the responsibility of the board:

UNGP: The text of the human-rights centred UNGP (below, IV.A.3.1) does not explicitly mention the responsibility of the board. However, the analysis of directors’ duties (and corporate law in general) played an important role in the drafting process of the UNGP (below, IV.A.2). A review of numerous jurisdictions carried out as part of the preparatory work identified a ‘lack of clarity in corporate and securities law regarding what companies and their officers are permitted, let alone required, to do regarding human rights’.[15] In addressing this issue, the UNGP provide that states should ensure that their laws and policies governing the establishment and operation of business enterprises, such as company law, do not impede, but rather enable business respect for human rights.[16] Ruggie, Special Representative to the UN Secretary General on Business and Human Rights from 2005 to 2011, pointed out that the UNGP ‘provide good reasons periodically to reexamine corporate law in general and directors’ duties specifically’.[17]

OECD GL: In terms of board responsibility, the OECD GL (below, IV.A.3.2) refer mainly to the G20/OECD Principles of Corporate Governance.[18] In addition, certain references to the board are made in the chapters on disclosures and taxation.[19] As part of their 2023 revision, the G20/OECD Principles of Corporate Governance introduced a new chapter entitled ‘Sustainability and resilience’ comprising several corporate governance recommendations on how companies and directors should address sustainability issues, with a particular focus on climate change (above, III.B.2.4.2). The G20/OECD Principles of Corporate Governance recognise that RBC due diligence standards are designed to help companies identify and respond to environmental and social impacts arising from their operations and supply chains, assisting the board of directors in its oversight of risk management.[20] They refer to the OECD GL as guidance for companies to conduct due diligence on human rights and environmental issues.[21] Accordingly, in terms of the responsibilities of the company and the board in relation to climate risks and impacts, the OECD GL and the G20/OECD Principles of Corporate Governance complement each other.

TCFDR: The TCFDR strongly emphasise the role of the board and especially its strategic and oversight functions (below, IV.A.3.3). Each of the TCFDR’s four focus areas – governance, strategy, risk management, and metrics and targets – addresses core elements of board responsibility. Accordingly, the TCFDR fall ‘well within the ambit of board oversight’.[22] Indeed, the TCFDR ‘begin with the role of the board’.[23] They aim to increase board engagement with climate-related issues – both internally (involving functions such as risk and audit) and externally (with investors) – ensuring that governance and control processes for such information are similar to those for financial disclosures.[24] The recommendations are intended to assist primary users of climate-related financial disclosures (which the TCFDR believes are investors, lenders and insurers) in understanding the board’s oversight of the enterprise’s climate-related issues and the role of senior management in assessing and managing these issues.[25] In light of the emphasis placed on board responsibility, the TCFDR play a pivotal role in delineating the extent of knowledge and inquiry that a reasonable director is expected to demonstrate in order to fulfil the duty of care.[26]

Towards Climate Change Due Diligence

The Origins and Concept of Risk-based Due Diligence

The concept of due diligence has become a widely used reference point in the international discourse and practice on responsible business conduct.[27] Drawing on established practice in corporate law and principles of international environmental law, the 2011 UNGP adopted the concept of due diligence and applied it to the field of responsible business conduct. The OECD GL incorporated the concept as part of their 2011 revision, introducing the term ‘risk-based due diligence’.[28] This last step substantially extended the applicability of due diligence to environmental and most other matters covered by the OECD GL.[29] The primary objective of risk-based due diligence under the UNGP and the OECD GL is not to assess the potential risks to the company, but rather to evaluate the risks of adverse impacts of the company’s activities on people and the planet (above, III.A.2.5; concerning the term adverse impacts, see below IV.A.3.2.1).[30] Nevertheless, risk-based due diligence is also conceptualised as a mechanism for the management of business risks, which reflects the interplay between the risk and impact spheres (above, III.A.2).[31] Neither the OECD GL nor the UNGP explicitly ban certain activities, but they ask for mapping a range of risks to integrate into due diligence, thereby enabling informed and transparent decision-making.[32] Risk-based due diligence has become the cornerstone of executing corporate responsibility with respect to human rights and the environment.[33] This is reflected by the increasing incorporation of risk-based due diligence into regulatory frameworks, particularly in Europe (below, IV.A.4).

Reflecting a ‘pragmatic’ rather than a theoretical approach (above, III.B.2.4.3), the construction of due diligence in the UNGP deliberately built on existing legal standards and established business practices. In considerable part, the UNGP’s framing of due diligence derives from established corporate law doctrine and practice. There, due diligence is understood as a discovery process through which potential risks associated with a transaction, such as the acquisition of company assets, can be identified, assessed and managed.[34] Ruggie’s observations, drawn from exhaustive multi-stakeholder consultations during the UNGP’s drafting process, indicate that due diligence procedures are, as a general rule, already an integral component of corporate operations, because ‘in many countries (companies) are legally required to have information and control systems in place to assess and manage financial and related risks’.[35] Indeed, the duty of oversight, as an element of the duty of care, is a common feature across jurisdictions (above, III.B.2.5). In the course of the multi-stakeholder consultation process that led to the UNGP, one of the workstreams was the Corporate Law Project, a survey-based study covering 39 jurisdictions.[36] A key finding of this project was that regulators generally offer little guidance on how to make decisions that balance business interests with social and environmental interests in the exercise of fiduciary duties.[37] To address this perceived gap, adopting the concept of due diligence was proposed as an ‘overarching analytical framework that can guide corporate policies and management practices in respecting human rights’.[38] Notably, due diligence goes beyond ensuring compliance with the black letter of the law. It aims to identify, assess and, where warranted, mitigate risks even in instances where there is no explicit statutory requirement to do so.[39] Indeed, many companies routinely undertake due diligence processes to evaluate a wide range of risks, including legal, regulatory, political, environmental and social risks which may arise in relation to projects, transactions or acquisitions.[40] While informed by existing concepts and practices, the construct of due diligence under the UNGP and the OECD GL established a distinct framework.[41] Different from due diligence in the corporate law sphere, risk-based due diligence encompasses the identification and mitigation of business activities’ impacts on people and the planet, regardless of whether those impacts are perceived as posing business risks to the company. (above, III.A.2.5).[42]

In addition to corporate law, risk-based due diligence in the UNGP and the OECD GL also draws on established concepts developed in the field of environmental law, in particular the concepts of environmental management systems (EMS), environmental impact assessments (EIA), and stakeholder engagement (see below, IV.B.1, IV.B.3.2; IV.B.4.5).[43] Although expressed in different terminology, these concepts serve a similar function to that of corporate law due diligence, namely to identify and manage risks.[44] Notably, the focus of environmental law, of which climate law is a sub-division, is primarily on the protection of the environment and thus on the prevention of negative impacts on the environment (above, III.A.2.3; below, IV.A.3.2.2).

Risk-based due diligence can be integrated into wider risk management systems, provided that its remit extends beyond the identification of risks to the company to encompass the company’s adverse impacts.[45] Indeed, in recent years, it has become increasingly common to include environmental and social considerations within the scope of ‘conventional’ corporate law due diligence.[46] This emerging phenomenon, typically referred to as ESG due diligence, indicates a shift towards a more comprehensive understanding of business risks and opportunities. Notably, the emergence of ESG due diligence indicates that investors are increasingly aware of the potential materiality of sustainability issues, resonating with similar developments in reporting, where sustainability information is progressively deemed to be material (above, II.C.2.2).

While not providing a strict definition, the UNGP and the OECD GL refer to due diligence as a process by which companies can identify, prevent, mitigate, and account for how they address their actual and potential adverse impacts.[47] Bonnitcha and McCorquodale posit that the UNGP set out two distinct concepts of due diligence: a process for identifying and managing risks on the one hand, and a standard of conduct to discharge an obligation on the other.[48] The latter is reminiscent of the tort of negligence (and its civil law equivalents).[49] According to Bonnitcha and McCorquodale, the fact that the UNGP do not explain how the two concepts relate to each other leads to confusion.[50] Rejecting this critique, Ruggie and Sherman argue that the concept of due diligence under the UNGP exists ‘over and above’ legal requirements.[51] Indeed, both the UNGP and the OECD GL clearly state that business responsibility is distinct from legal liability, the latter being primarily a matter of national law (below, IV.C.4).[52] And yet, despite the emphasis on process, executing a process alone is not sufficient in itself.[53] Thus, rather than a purely procedural obligation (obligation of means), due diligence is more appropriately described as a context-specific standard of care that resonates with existing legal standards in corporate law, tort law and environmental law across legal systems.[54] Macchi and Bright comment that ‘whilst constituting a standard of conduct, (due diligence) must be clearly targeted towards the achievement of the intended results’.[55] In any event, it is broadly recognised that merely executing a process with a ‘tick the box’ attitude does not satisfy the required due diligence standard.[56]

Drawing upon the OECD GL and the UNGP, the OECD has issued several guidance documents with the aim of translating the concept of risk-based due diligence into operational terms (below, IV.A.3.2.2).[57] Emphasising that they are not meant to represent an exhaustive ‘tick box list’, the 2018 OECD Due Diligence Guidance for Responsible Business Conduct identifies six ‘practical actions’ for due diligence:[58]

[picture]

Fig. 10: Six Practical Actions of Due Diligence (OECD Guidance)[59]

The six practical actions outlined in the 2018 OECD Due Diligence Guidance for Responsible Business Conduct (Fig. 10) are broadly consistent with the UNGP’s conception of due diligence. Notably, under the UNGP, the expectation to have in place a policy commitment (practical action 1) and remediation (practical action 6) are not technically part of due diligence.[60] The six practical actions will be elaborated in concrete terms within the context of CCDD (below, IV.B).

Although often perceived as risk-focused, burdensome, and costly, risk-based due diligence can yield economic benefits for businesses and boards – including reduced operating and insurance costs, lower compliance and liability exposure, energy and resource efficiencies, enhanced resilience, improved access to capital and talent, and stronger public relations.[61]

Applying Due Diligence to Climate Change

Over the past decade, the idea that risk-based due diligence should extend to climate change-related issues has gradually consolidated, leading to the idea of Climate Change Due Diligence (CCDD). Neither the UNGP nor the 2011 version of the OECD GL explicitly address climate change. The situation changed with the targeted update of the OECD GL in mid-2023, which introduced specific climate-change related recommendations (below, IV.A.3.2). Despite widespread broad support for the general idea of CCDD, its exact scope and content have yet to be fully defined. As Kaufmann notes, ‘unanimity on business’ responsibility to respect fundamental moral and ethical values does not imply an agreement on its concrete content’.[62] Applying due diligence to climate change presents several conceptual challenges, which is mainly attributable to the large-scale and ubiquitous nature of climate change risks and impacts (below, IV.A.2.3).[63]

The UNGP have not been amended since their adoption in 2011 (below, IV.A.3.1.1). Accordingly, the text of the UNGP does not reflect major developments that have taken place in the international environmental agenda since then, including the Paris Agreement of 2015.[64] Similarly, apart from rather peripheral references to the need for GHG reductions (below, IV.A.3.2.2), the OECD GL 2011 did not include ambitious and specific due diligence standards on climate change.[65] Stocktaking exercises carried out in 2021 and 2022 for both the UNGP and the OECD GL identified that climate change-related aspects must be addressed by the two standards.[66] In 2022, the OECD Working Party on Responsible Business Conduct began to work on a targeted update of the OECD GL with the objective of reflecting emerging views on responsible business conduct; a consultation draft was published in early 2023.[67] The targeted update was completed in summer 2023. It included the adoption of specific recommendations concerning climate change as a key feature (below, IV.A.3.2.2). The OECD GL posit that MNEs should undertake due diligence with respect to all matters covered by the Guidelines, which since 2023 expressly includes climate change.[68] Accordingly, the OECD GL now explicitly recognise climate change as an issue to be addressed by companies through risk-based due diligence.[69] Notably, already prior to 2023, there was a general consensus that climate change-related aspects are covered by the scope of the OECD GL, albeit mostly implicitly (below, IV.A.3.2.2). In consequence, the 2023 update confirmed adhering governments’ expectations towards companies in terms of dealing with climate change and, to a certain extent, institutionalised the norm of CCDD.[70]

Drawing on the UNGP and the OECD GL, the view that companies should – and ultimately must – undertake CCDD has gradually consolidated over the past decade.[71] This view is reflected by numerous reports and statements (see also below, IV.A.3.1.2):

In a 2014 report, the IBA Task Force on Climate Change Justice and Human Rights discussed how to integrate climate change concerns into due diligence under the UNGP.[72] The report recommends that the OHCHR develop a model internal corporate policy that would commit corporations to take a number of concrete steps in line with the UNGP including (i) due diligence of corporate projects, extending ‘as far as reasonably practicable’ to the environmental practices of major contractors and suppliers, (ii) the implementation of due diligence processes to identify, prevent, mitigate and account for climate change impacts, and (iii) the implementation of remediation processes that allow for engagement with the most affected stakeholders.[73]

In 2015, shortly before the adoption of the Paris Agreement, Nieuwenkamp, then chair of the OECD Working Party on Business and Human Rights, said: ‘(a) well-hidden secret is that under the (OECD GL) businesses are expected to do their due diligence on environmental impacts such as climate impacts’, adding that ‘(t)his concerns not only their own negative environmental impacts, but also the impacts in their value chain’.[74]

A 2017 OECD guidance document for institutional investors promotes due diligence as beneficial for investors and the planet: ‘(b)y carrying out due diligence in line with the (OECD GL), investors will not only be able to avoid negative impacts of their investments on society and the environment, but also avoid financial and reputational risks, respond to expectations of their clients and beneficiaries and contribute to global goals on climate and sustainable development’, adding that ‘(i)ncreasing(ly), failing to consider long-term investment value drivers, which include (ESG) issues, in investment practice is seen to be a failure of fiduciary duty’.[75]

In his 2019 ‘Safe Climate Report’ (below, IV.A.3.1.2), Boyd, then UN Special Rapporteur on Human Rights and the Environment, emphasises that compliance with the UNGP includes conducting corporate human rights due diligence in relation to climate change.[76]

An OECD Background Note of 2019 points out that implementing due diligence ‘helps companies prioritise and address key climate risks and impacts, as well as the actions they are best placed to take in positively contributing to climate solutions’.[77]

In a resolution adopted by the European Parliament in 2021 entitled ‘Corporate due diligence and corporate accountability’, it is stated that ‘any corporate due diligence legislation must be in line with the Paris Agreement’ and must extend to businesses’ impact on climate change.[78]

According to a 2021 OECD report, scientific and policy developments highlighting the need to essentially halve GHG emissions by 2030 to reach net zero by 2050 have ‘significant implications for business in terms of both mitigation and adaptation’.[79] Recognising the importance of both mitigation and adaptation, the report stresses that businesses ‘have a responsibility to both: (i) reduce (GHG) emissions and thereby the adverse climate related impacts of their operations on people and the planet; and (ii) strengthen the climate resilience of companies and their supply chains in order to address and adapt to the physical impacts of climate change on their direct operations and their supply chains – including impacts on workers, local communities and the natural environment’.[80]

An Information Note issued by the UN Working Group on Business and Human Rights in 2023 posits that States should ‘(e)nact legislation that requires business enterprises to conduct human rights and environmental due diligence to identify and address human rights and environmental impacts, including climate change-related impacts, covering the entire value chain’;[81] moreover, the document states that corporate responsibility encompasses ‘the responsibility to act in regard to actual and potential impacts related to climate change’ including by integrating climate change considerations in all aspects of the HRDD process throughout their operations’.[82]

A 2023 OECD due diligence guidance document focused on how institutional investors should deal with climate risks and impacts points out that the OECD GL and related OECD due diligence guidance ‘lay out the expectation that business, including investors, avoid and address impacts of their activities on society and the environment (including climate change), throughout their own activities and business relationships, by carrying out due diligence’.[83]

As the above-listed statements illustrate, CCDD must (i) address both the climate change-related risks for and impacts of a company’s activities and (ii) extend beyond the company’s own operations to its products and services as well as its supply chain.[84] Further, it is essential that CCDD is informed by climate science (above, IV.A.2.1) and international climate change law (in particular, the Paris Agreement). While recognising that some international agreements set out collective goals for governments rather than prescriptive descriptions of the responsibilities of individual enterprises, the OECD GL state that relevant regulatory frameworks, national policies, widely accepted environmental management standards, and scientific evidence are important reference points for delineating corporate responsibility.[85]

In sum, the precise meaning of CCDD has not yet been fully established, but its core elements are gradually emerging through parallel and partly interrelated developments in standard-setting (below, IV.A.3), regulation (below, IV.A.4), litigation (below, IV.C), and academic research.[86] The purpose of CCDD is to provide a framework that companies can use to identify, assess and address climate risks and impacts, including those that are or may become financially material.[87] Mutatis mutandis, this framework is also applicable to defining the climate change-related responsibility of directors when fulfilling their duty of care.

Conceptual Issues

CCDD is an emerging concept and thus confronts conceptual challenges. The first challenge concerns addressing partial contributions to cumulative impacts: while a single company’s actions may appear relatively minor in isolation, the aggregate effects of multiple companies’ activities prove profoundly serious.[88] The second issue concerns whether CCDD should be integrated within the broader frameworks of human rights and environmental due diligence (HREDD) or human rights due diligence (HRDD), or construed as a distinct concept.

Climate impacts have been collectively caused by a wide range of actors, encompassing both state and non-state actors, over many decades (above, I.A). Further, climate impacts are almost ubiquitous and can be complex in nature, unfolding over decades and centuries. Accordingly, assigning responsibility for climate change impacts demands a higher level of abstraction than assessing more readily attributable impacts (as likely envisaged by the UNGP and OECD GL) – such as a garment factory’s effects on the local environment or community.[89] Moreover, the impacts of climate change are not fully remediable, let alone by a single actor.

This study addresses these conceptual issues by proposing a concept of CCDD that is distinctly oriented towards mitigation (prevention), meaning the reduction of GHG emissions or enhancement of carbon sinks (above, I.C). This choice is corroborated by the focus on prevention in the OECD GL’s Environment Chapter (below, IV.A.3.2.2). There, carrying out risk-based due diligence is framed as the key element of the responsibility to establish and maintain an environmental management system (EMS) appropriate to the enterprise and its operations, products and services over their full life cycle.[90] Crucially, the OECD GL understand environmental management in the broadest sense to include consideration of the company’s share of cumulative impacts.[91] In that sense, they recognise that corporate responsibility extends to circumstances where many corporations collectively contribute to cumulative environmental impacts, as is demonstrably the case with climate change (and many other environmental problems such as water, air, and soil pollution).[92] Notably, from a longer-term perspective – which is essential in the context of climate change (above, I.A) – addressing the underlying causes of climate change is central to preventing future symptoms or, at minimum, mitigating their severity. While the primary focus of CCDD as construed in this study is on mitigation, it also encompasses a remediation component addressing adverse climate impacts that have already occurred (below, IV.B.7).

While recognising that the two concepts are distinct,[93] the emerging literature on CCDD tends to conceptualise it as a dimension (or integral part) of HREDD or HRDD.[94] Taking a slightly different approach, this thesis seeks to apply and operationalise existing risk-based due diligence concepts to interpret directors’ duty of care in the context of climate change. The concept of CCDD proposed in this thesis focuses ‘narrowly’ on climate change, with a main emphasis on climate change mitigation.[95] There are three reasons for this choice:

First, the OECD GL allow due diligence to focus on climate change risks and impacts ‘directly’, that is, without requiring a link to adverse human rights impacts. The basic construct of risk-based due diligence under the UNGP is generally designed to address specific and identifiable impacts of specific and identifiable companies (below, IV.A.3.1.2). This approach is ill-suited to dealing with the large-scale, widespread and partly irremediable impacts of climate change, which affect virtually everyone and everything.[96] Requiring a ‘human rights nexus’ risks unduly restricting the scope of CCDD. This tension may diminish in the future, following the 2022 UN General Assembly Resolution 76/300, which recognises the human right to a clean, healthy, and sustainable environment.[97]

Second, attempting to fit the plethora of social and environmental issues into a single concept of HR(E)DD carries a risk of rendering CCDD overly complex, thereby potentially undermining its efficacy. In an ideal scenario, due diligence should be comprehensive, with CCDD and HR(E)DD operating not in silos but as complementary elements.[98] For instance, Macchi posits that environmental law and human rights law principles are ‘not only compatible, but, in many respects, mutually reinforcing’, concluding that CCDD ‘should be integrated as much as possible into HRDD’.[99] Further, it is sometimes argued that ‘just transition’ concerns (above, I.A.4) should be incorporated into any due diligence concept relating to climate change.[100] However, fully incorporating CCDD into HRDD is problematic. First, the added complexity is unnecessary because, as noted above, the OECD GL do not require a link between climate change and adverse human rights impacts. Second, a full integration triggers complex trade-offs. This dilemma is a practical expression of the policy challenge of balancing mitigation (prevention) and adaptation (including compensation for loss and damage), which are normatively equal goals of global climate policy and law.[101] Arguably, the focus on adaptation runs the risk of neglecting the underlying causes – which, if left unaddressed, will only exacerbate the symptoms.[102] The approach adopted in this study does not entail a judgement on the relative priority of possibly colliding interests. Rather, it proposes that interests potentially conflicting with climate change mitigation be evaluated separately and, if found truly conflicting, balanced at a subsequent decision-making stage.

Third, given the scale, scope and partially irremediable character of climate change impacts, corporate responsibility should place particular emphasis on prevention and mitigation.[103] The Environment Chapter of the OECD GL is underpinned by the principles of precaution and prevention (below, IV.A.3.2.2).[104] General principles of national and international environmental law, in particular the two just mentioned, are ‘likely to be influential in the interpretation of any due diligence standard of care relating to the environment’.[105] These core principles of environmental law are broadly consistent with the notion of due diligence in the OECD GL and the UNGP, which emphasise the prevention of irremediable harms and prioritise intervention in relation to the severity of risks.[106] As mentioned, the construct of risk-based due diligence drew on established principles and concepts of environmental law (above, IV.A.2.1). Notably, the expectation that companies should assess and take into account the ‘foreseeable environmental and environmentally related health consequences of their activities’ is expressed in the OECD GL since their 1991 version (below, IV.A.3.2.1).[107]

The conceptual issues raised in this section are discussed further below in this Chapter (below, IV.B.3.2.1). The consolidation of CCDD, including by clarifying conceptual issues, may contribute to overcoming major legal challenges, including the individual responsibility of large corporate emitters and, ultimately, related issues of causation, supply chain obligations and the provision of remedies for climate-related damage.[108]

Standards in Focus

This section provides a brief overview of the three standards under consideration, focusing on their relevance to CCDD. The history of the UNGP and the OECD GL need not be reiterated at length here.[109] As a more recent standard, the TCFDR will be introduced in slightly more detail (below, IV.A.3.3).

UN Guiding Principles on Business and Human Rights

Origin and Nature

Following a series of unsuccessful attempts to regulate business activities at the UN level since the 1970s,[110] a significant turning point was reached in 2011 with the unanimous adoption of the UNGP by the Human Rights Council (HRC).[111] The adoption of the UNGP, the first inter-governmental UN instrument on corporate responsibility and accountability, marked the culmination of a six-year multi-stakeholder consultation process (above, IV.A.2.1).[112] The UNGP are informed by a human rights-based approach,[113] which was developed in the 1990s in parallel with the so-called ‘partnership approach’.[114] One principal argument for adopting a human rights-based approach to advance the international responsible business conduct agenda was that the human rights regime generally provides established enforcement mechanisms.[115] The UNGP operationalise the 2008 ‘Protect, Respect, Remedy’ Framework, which comprises three pillars: states’ duty to protect against human rights abuses committed by third parties, including by businesses (Pillar I, Principles 1–10), corporate responsibility to respect human rights (Pillar II, Principles 11–24), and access to remedy for victims (Pillar III, Principles 25–31).[116]

The UNGP apply universally to all businesses – regardless of size, sector, operational context, ‘ownership’[117] and structure of a company – and irrespective of whether or not a company has formally committed to them.[118] Although not legally binding stricto sensu (see above, II.B.3), the UNGP represent the international community’s first consensus on business responsibility for human rights and enjoy wide recognition among states and businesses alike.[119] As Kaufmann points out, the UNGP represent a significant departure from traditional conceptualisations of responsible business conduct.[120] By incorporating the perspective of rights-holders, the UNGP challenged the narrow, business-centric view that has long dominated the field.

Climate Change Content

In contrast to prior (unsuccessful) UN initiatives – which included a largely convergent environmental dimension – the UNGP remained silent on environmental issues.[121] In order to facilitate consensus within the HRC, Ruggie deliberately narrowed the scope of the instrument to a short list of internationally recognised human rights that companies should respect.[122] Notwithstanding the absence of an explicit reference to a multilateral environmental agreement, the UNGP incorporated concepts developed within the field of environmental law, including impact assessments (above, IV.A.2.1).

In recent years, a significant body of argument has emerged in favour of applying the UNGP to define corporate responsibility in relation to climate change.[123] Already in 2008, the HRC acknowledged that ‘climate change poses an immediate and far-reaching threat to people and communities around the world and has implications for the full enjoyment of human rights’, while pointing to the UNFCCC as the ‘comprehensive’ global framework for addressing climate change.[124] Following the adoption of the UNGP in 2011, there has been a growing recognition of the adverse impact of climate change on the enjoyment of a wide range of human rights, including the right to life, the right to health, the right to food, the right to water and sanitation, the rights of the child, and the human right to a clean, healthy and sustainable environment.[125] Reflecting the UNGP’s three-pillar architecture (above, IV.A.3.1.1), statements by relevant actors typically address the partially interrelated responsibilities of states and businesses (see also above, IV.A.2.2):

In 2015, the OHCHR’s submission to COP 21 (where the Paris Agreement was adopted) argued that ‘(s)tates must take adequate measures to protect all persons from human rights harms caused by businesses; to ensure that their own activities, including activities conducted in partnership with the private sector, respect and protect human rights; and where such harms do occur to ensure effective remedies’, stating further that ‘(b)usinesses are also duty-bearers … they must be accountable for their climate impacts and participate responsibly in climate change mitigation and adaptation efforts with full respect for human rights’.[126]

In 2015, a UNEP report on human rights and climate change stated that ‘private actors also have obligations to address the human rights implications of climate change and should refer to the (UNGP) to ensure that they fully respect human rights in all activities.[127]

A 2015 report by a UN working group identifies a need for guidance for both states and businesses with regard to climate issues.[128]

Since 2017, the issue of climate-related business responsibility has assumed an increasingly prominent role at the annual UN Forum on Business and Human Rights.[129]

Several states have included references to climate change in their National Action Plans under the UNGP.[130]

In 2019, five UN human rights treaty bodies issued a joint statement on human rights and climate change, addressing states’ obligations in this regard.[131] Among other things, the statement notes that states ‘must regulate private actors, including by holding them accountable for harm they generate both domestically and extraterritorially’.[132]

The Safe Climate Report of 2019 by Special Rapporteur Boyd states that the responsibility of states’ includes a procedural obligation to ‘enable affordable and timely access to justice and effective remedies for all, to hold States and businesses accountable for fulfilling their climate change obligations’ and a (negative) substantive obligation ‘not (to) violate the right to a safe climate through their own actions … (and) protect that right from being violated by third parties, especially businesses’ and, to that end, ‘establish, implement and enforce laws, policies and programmes to fulfil that right’.[133] Referring to the (first edition of) the PCOE (above, III.C.3), the report identifies five ‘main responsibilities of businesses specifically related to climate change’: (i) reducing GHG emissions from their own activities and their subsidiaries, (ii) reducing GHG emissions from their products and services, (iii) minimising GHG emissions from their suppliers, (iv) publicly disclosing their GHG emissions, climate vulnerability and stranded asset risks, and (v) ensuring that people affected by business-related human rights violations have access to effective remedies.[134]

In June 2023, the UN Working Group on Business and Human Rights published an Information Note aimed at clarifying the climate change-related responsibilities of states and businesses under the UNGP.[135] The Information Note recognises that in light of legal, scientific and political developments since the adoption of the UNGP in 2011 (including the Paris Agreement), ‘it is clear that States and business enterprises have obligations and responsibilities with respect to climate change, and with respect to the impacts of climate change on human rights’.[136] The document posits that as part of their duty to protect against foreseeable impacts related to climate change, states should ‘set out clear expectations for all business enterprises domiciled or operating in their territory and jurisdiction to take effective measures to combat climate change and related impacts on human rights’.[137] Further, it emphasises that the climate change-related impacts on rightsholders (rather than the risks to business) should be at the centre of all climate change goals, policies, programmes, and actions.[138] Moreover, the Information Note states that corporate responsibility under Pillar II includes the ‘responsibility to act in regard to actual and potential impacts related to climate change’.[139] It is worth noting that the Information Note occasionally refers to adverse human rights and environmental impacts of business activities,[140] seemingly interpreting the UNGP in a broad manner to encompass environmental impacts.

In 2023, the UN Special Rapporteur on the promotion and protection of human rights in the context of climate change published his first report; the report delineates corporate accountability as a matter for ‘new climate change legislation’ that should (i) ensure that businesses, corporations and financial institutions (including insurance and reinsurance companies) provide full disclosure of their investments in GHG intensive industries, (ii) ensure that businesses, corporations and financial institutions provide full disclosure of their exposure to climate change risks associated with climate change impacts; (iii) establish direct personal criminal liability for directors and CEOs of businesses, corporations and financial institutions for failing to address the life-cycle climate change impacts of their respective activities, and (iv) ensure that businesses, corporations and financial institutions provide full details of any claims of climate neutrality or net-zero emissions and provide regular updates on progress towards achieving those claims.[141]

As the above list illustrates, there is strong support for the idea of applying the UNGP to climate change issues. Proponents of this view typically contend that the separation between international climate change law and international human rights law is outdated, given the inextricable linkage between the two legal domains.[142] While it is increasingly accepted that climate change negatively impacts on the enjoyment of many human rights, applying this conclusion to the context of a specific company through the lens of risk-based due diligence raises conceptual and practical challenges, mainly due to the requirement of a human rights nexus (above, IV.A.2.3).[143] It is beyond the scope of this study to take a position on the fundamental debate on the relationship between the international human rights regime and international climate change law. However, as noted, this study posits that for CCDD to be effective and practically feasible, it should focus distinctly on climate change mitigation, without requiring a human rights nexus (above, IV.A.2.3; below, IV.B.3.2.1). This position does not render the UNGP obsolete for the purpose of delineating the concept and scope of CCDD (below, IV.B). Given their instrumental role in establishing risk-based due diligence and their close alignment with the OECD GL in this regard (above, IV.A.2.1), the UNGP serve as an important reference point despite lacking explicit references to climate change.[144]

This study does not elaborate further on the responsibility of states under Pillars I and III to adopt measures requiring corporations to address consider climate change issues and to provide for remedy. Suffice it to say here that the acknowledgement of states’ duties under the UNGP is gradually manifesting through the adoption of due diligence legislation, although these laws rarely make explicit reference to climate change (below, IV.A.4).

OECD Guidelines for Multinational Enterprises on Responsible Business Conduct

Origin and Nature

The OECD GL have a much longer history than the UNGP. In the 1960s, the agenda of the OECD was mainly concerned with encouraging – and where necessary regulating – the process of liberalising capital movement for cross-border business activities.[145] In the following decade, a milestone was reached in 1976 with the adoption of the OECD GL as part of the Declaration on International Investment and Multinational Enterprises (the Declaration).[146] Although emphasising the positive economic impact of multinational enterprises (MNEs), the 1976 version of the OECD GL also reflected a growing recognition of the negative impacts of MNEs on economic, social and environmental issues.[147] By the end of 2025, all 38 OECD members and 14 non-OECD countries have adhered to the Declaration, which integrates the OECD GL.[148]

Instead of a precise definition, the OECD GL use a broad concept of MNEs that includes state-controlled enterprises.[149] Rather than imposing precise and binding obligations, the role of the OECD is more accurately described as providing a forum for conditional agenda-setting through regular meetings of state agencies and experts, thereby framing issues for future consideration and providing a source of inspiration for legislative initiatives at the national levels.[150] The OECD GL are a living instrument, subject to regular review and revision:[151]

In 1984, the OECD Council decided that adhering states should establish National Contact Points (NCPs) with a mandate to deal with inquiries on all matters covered by the OECD GL.[152]

Influenced by growing concern about the negative impact of business on the environment, the 1991 revision of the OECD GL introduced a new chapter on environmental protection.[153]

About a decade later, the 2000 revision incorporated explicit references to the protection of human rights.[154] The 2000 revision also introduced the possibility of formally lodging complaints with NCPs concerning alleged non-observance of the OECD GL (so-called ‘specific instances’); although the mandate and responsibilities of the NCPs remained largely at the discretion of adhering states, the obligation to promote the OECD GL and to handle complaints through NCPs represented a step toward ‘hardening’ of the formally non-binding OECD GL.[155] In 2007, the first specific instance related to climate change was filed (below, IV.C.2).

The 2011 revision was strongly influenced by the adoption of the UNGP the same year (above, IV.A.3.1.1), leading to the introduction of a fully-fledged chapter on human rights.[156] The 2011 revision adopted the concept of due diligence from the UNGP, extending its scope to most matters covered by the OECD GL (above, IV.A.2.1).[157] A further key feature of the 2011 revision was the abandonment of the investment nexus as a condition for the applicability of the OECD GL.[158] This allowed NCPS to assess alleged violations of the OECD GL regardless of any link to an investment.

Since 2011, with the aim of providing a more concrete interpretation of the OECD GL, the OECD published a series of guidance documents, including the sector-agnostic 2018 Due Diligence Guidance for Responsible Business Conduct (above, IV.A.2.1) and several sector-specific due diligence guidance documents (below, IV.A.3.2.2).

It was not until the ‘targeted update’ in June 2023 that the OECD GL explicitly addressed climate change (above, IV.A.2.2; below, IV.A.3.2.2), along with new references to other pressing issues including biodiversity, deforestation, and (at least in a narrow context) animal welfare.[159] The 2023 update was the result of a another decade of experience, reflecting the need to respond to ‘urgent social, environmental, and technological priorities facing societies and businesses’ including the implementation of the Paris Agreement (below, IV.A.3.2.2).[160]

The OECD GL express the expectation of adhering states that MNEs operating in or from their territory address and avoid adverse impacts of their activities on people and the planet.[161] Covering a wide range of pertinent issues (human rights, labour rights, environment, bribery, consumer interests, disclosure, science and technology, competition and taxation) and requiring adhering countries to establish an NCP, the OECD GL are the only multilaterally agreed and comprehensive RBC instrument with a (non-judicial) grievance mechanism (below, IV.C.2).[162] Another important feature of the OECD GL is the involvement of institutional stakeholders, in particular the Trade Union Advisory Committee to the OECD (TUAC), Business at OECD (BIAC) and OECD Watch.[163]

Adhering states are obliged by a legally binding decision of the OECD Council to promote and support the implementation of the OECD GL; the OECD GL can thus be described as a ‘voluntary’ instrument that States have a ‘hard law’ obligation to promote.[164] They provide ‘voluntary principles and standards for (RBC) consistent with applicable laws and principles’; these principles and standards may be the subject of domestic law or international commitments but they may also go beyond what enterprises are legally required to comply with.[165] In that sense, they are ‘distinct from matters of legal liability and enforcement’.[166] Nonetheless, the OECD GL are an authoritative source for interpreting the meaning of other international instruments as well as national laws.[167]

Climate Change Content

Since 1991, the OECD GL have included a chapter on environmental protection (the ‘Environment Chapter’), which broadly reflects principles and objectives of international environmental law (above, IV.A.3.2.1). However (above, IV.A.2.2), prior to their targeted update of 2023, the OECD GL did not contain comprehensive or ambitious recommendations concerning climate change. Consolidating developments at multiple levels, the 2023 update provided welcome clarifications on the application of the OECD GL concerning climate change, thereby contributing to the solidification of CCDD.[168] One of the main updates – or arguably the key one – in the 2023 revision was the introduction of recommendations for businesses to align with internationally agreed climate change goals.[169] Rather than setting new standards, the 2023 revision sought to advance international coherence by referencing to the existing consensus and international agreements, including the 2015 Paris Agreement.[170]

Even before the 2023 revision, broad consensus existed that the OECD Guidelines apply to climate change issues.[171] This is corroborated, for instance, by various authoritative statements (above, IV.A.2.2), as well as by the fact that several NCPs have accepted specific instances related to climate change (below, IV.C.2). Notably, the 2011 version of the Environment Chapter already included a recommendation to perform environmental due diligence and highlighted the need to reduce GHG emissions in the enterprise’s own operations as well as across its value chain.[172] However, before the 2023 update, there was a lack of specific guidance on how companies should address climate change (above, IV.A.2.2).[173] Somewhat surprisingly, despite the adoption of the Paris Agreement in 2015, OECD due diligence guidance documents published prior to 2023 addressed climate change only tangentially, if at all.[174] As the Australian NCP observed in 2021, there was ‘limited specificity in the [OECD GL’s] wording about climate change and what companies should do’.[175]

The 2023 update of the OECD GL marked a notable shift in the instrument’s language and content with respect to climate change. The revised Environment Chapter opens with a clear statement: ‘(e)nterprises play a key role in advancing sustainable economies and can contribute to delivering an effective and progressive response to global, regional and local environmental challenges, including the urgent threat of climate change’.[176] Moreover, the chapeau of the Environment Chapter acknowledges that enterprises can be implicated in a non-exhaustive list of adverse environmental impacts (above, III.A.2.5), including climate change, biodiversity loss, degradation of land, marine and freshwater ecosystems, deforestation, pollution of air, water, and soil, as well as mismanagement of waste, including hazardous substances.[177] In relation to climate change, the OECD GL recognise the responsibility of companies to achieve net zero GHG emissions in alignment with internationally agreed temperature targets:

‘Enterprises have an important role in contributing towards net-zero (GHG) emissions and a climate-resilient economy, necessary for achieving internationally agreed goals on climate change mitigation and adaptation. During the process of transitioning to net-zero (GHG) emissions, many business activities will involve some level of emissions of (GHGs) or reduction of carbon sinks. Enterprises should ensure that their (GHG) emissions and impact on carbon sinks are consistent with internationally agreed global temperature goals based on best available science, including as assessed by the (IPCC).’[178]

The Environment Chapter is underpinned by established environmental principles and objectives – including those contained in the Rio Declaration[179] and the UN 2030 Agenda for Sustainable Development[180] – while aligning with relevant standards set forth in a variety of other instruments, including ISO standards for environmental management systems (above, I.C), the UNFCCC, the Paris Agreement, and other international and regional instruments on biodiversity, public participation, and access to information.[181] Importantly, the OECD GL are based on the premise that enterprises should act as soon as possible, and in a proactive manner, to avoid adverse environmental impacts (above, III.A.2.5; see also above, IV.A.2.3).[182] The purpose of the Environment Chapter is not to establish new precedents or commitments for governments, but to provide recommendations regarding the implementation of the precautionary approach at the enterprise level.[183] Accordingly, the OECD GL state that enterprises should not use the lack of full scientific certainty or pathways[184] as a reason for postponing cost-effective measures to prevent or minimise the risk of serious or irreversible environmental damage.[185]

In terms of practical measures, the Environment Chapter recommends that MNEs establish and maintain an environmental management system (EMS) appropriate to the enterprise, covering its operations, products and services over their full life cycle, including by conducting risk-based due diligence for adverse environmental impacts (above, III.A.2.5).[186] Further, a series of additional actions are proposed, including stakeholder engagement, maintaining a contingency plan, continuously improving environmental performance with regard to technologies used, products and services offered, promoting customer awareness, training employees, supporting suppliers and other business relationships, and contributing to the development of public environmental policy (eg through partnerships or initiatives).[187]

The Commentary on the Environment Chapter adds concrete climate change-specific recommendations, in particular:

the adoption and implementation of science-based mitigation and adaptation policies, strategies and transition plans; and

the adoption, implementation, monitoring and reporting of science-based short‑, medium- and long-term mitigation targets (see further, below, IV.B.2).[188]

Crucially, the text emphasises the need to reduce GHG emissions and to prioritise mitigation over offsetting, compensating or neutralising measures (see further, below, IV.B.4).[189] Various additional references to climate change-related aspects are contained in other chapters of the OECD GL, in particular in the chapters on employment and industrial relations,[190] consumer interests,[191] as well as science, technology and innovation.[192] In terms of reporting, the 2023 OECD GL call for disclosure of material ‘sustainability-related information’ as part of enterprises’ responsibility to carry out due diligence (below, IV.B.6), emphasising the importance of climate-related information.[193]

Overall, the introduction of climate change-specific recommendations as part of the 2023 update of the OECD GL had the effect of embedding the sphere of RBC more firmly within the global climate change regime complex.[194] It provided a consensus-based foundation that would not have been achievable through traditional lawmaking.[195] Although not delivering a comprehensive framework, the OECD GL 2023 offer authoritative guidance on some of the key elements of CCDD (below, IV.B).[196]

TCFD Recommendations

Origin and Nature

The TCFDR were developed by an industry-led task force under a mandate from the Financial Stability Board (FSB). The FSB was established in the aftermath of the 2008/2009 global financial crisis with the objective of providing a more structured approach to the coordination of international standard-setting in the area of financial regulation.[197] Its main objective is to reduce systemic risk by enhancing the coherence and quality of relevant standards, including those issued by the Basel Committee on Banking Supervision (BCBS).[198] Given that insufficient transparency on climate risk raises concerns about global financial instability (above, III.A.6), promoting coherence in companies’ reporting on climate risks falls within the FSB’s mandate. In April 2015, the finance ministers and central bank governors of the G20[199] requested that the FSB engage in consultations with private and public sector stakeholders to investigate the ways in which the financial sector might address climate-related transparency concerns.[200] During COP21 in December 2015, the FSB announced the formation of an industry-led task force, with the objective of developing ‘voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders’.[201] The TCFD can thus be seen as an expression of private climate governance (above, II.A.2).

In June 2017, the TCFD delivered its Final Report, a document consisting of the TCFD’s recommendations (the TCFDR) and accompanying guidance.[202] The TCFDR are the result of some 18 months of consultation with ‘a wide range of business and financial leaders’, ‘various other stakeholders’ such as industry participants, trade associations, NGOs, and experts in the field of climate change (in particular, experts in scenario analysis).[203] The Task Force comprised 31 members, including representatives from major financial and non-financial companies (including major fossil fuel, chemical, energy, and manufacturing companies), consulting and accounting firms, as well as credit rating agencies.[204] While the FSB initially envisaged a broader target audience for the TCFDR (see above in this section), the TCFD limited it to what it regarded as the ‘primary users’ of climate-related financial disclosures, namely investors, lenders, and insurance underwriters.[205] The information needs of ‘other stakeholders’, including clients, beneficiaries, regulators, and oversight bodies, are only briefly addressed in the context of disclosures by asset managers and asset owners.[206] It appears that, in contrast to the consultation process for the UNGP (above, IV.A.3.1.1), the consultation process for the TCFDR did not provide an opportunity for the legal profession to contribute its views.[207] In fact, the TCFD largely avoided addressing legal issues, including the key question of materiality (above, II.C.2.2), instead merely stating that reporting entities should consider the legal definition of materiality in their respective jurisdictions.[208] The mandate of the TCFD was extended beyond the delivery of the Final Report, resulting in the publication of several additional implementation guidance documents, status reports, and other materials.[209]

The TCFDR recognise climate change as ‘(o)ne of the most significant, and perhaps most misunderstood, risks that organizations face today’ (above, III.A.2.4).[210] They acknowledge that achieving the goals of the Paris Agreement implies a transition away from fossil fuel energy and related assets.[211] Further, the TCFDR caution that transition risks and associated opportunities (above, III.A.5) could have ‘significant, near-term financial implications’ for companies across all sectors of the economy, but particularly for those involved in the extraction, production, and use of fossil fuels.[212] Nevertheless, many organisations mistakenly perceive the implications of climate change to be long-term.[213] Consequently, the valuation of assets may not adequately account for the potential impact of climate change, leading to concerns about capital misallocation and stranded assets (above, III.A.6.1).[214]

The TCFD was aware of the challenges associated with measuring climate risks for companies, yet confident that disclosure practices and techniques would ‘evolve more rapidly’ as climate-related issues gained prominence in mainstream financial reporting.[215] After their publication in 2017, the TCFDR rapidly became a key reference point for a broad spectrum of stakeholders, including companies, investors, national regulators, and financial supervisory authorities.[216] Following the publication of a final status report in 2023, the TCFD was formally dissolved.[217] In said report, the TCFD observed that 19 jurisdictions (representing nearly 60 per cent of global GDP in 2022) had either adopted or proposed a TCFD-aligned disclosure requirement; furthermore, the report noted that 4,800 organisations had expressed their support for the TCFDR.[218] In addition to national legislation, the TCFDR were incorporated into emerging sustainability reporting standards, in particular the ISSB and ESRS (above, II.C.2.2).

Content

Drawing on a variety of sources, including existing reporting regimes, the TCFD sought to develop an accessible and principles-based framework for voluntary climate-related disclosure.[219] While designed to be applicable across a range of industries and jurisdictions, the TCFDR place particular emphasis on financial sector organisations (including banks, insurers, asset managers and asset owners) and four non-financial sectors that are considered to be particularly exposed to climate risk: energy, materials and buildings, transportation, as well as agriculture, food, and forest products.[220]

Echoing earlier findings by the International Organization of Securities Commissions (IOSCO) on the systemic risk posed by intransparency on climate risk,[221] the TCFDR call upon organisations to disclose the likely financial impact of climate change on their business (ie climate risks).[222] Guided by the principle of financial materiality (above, II.C.2.2), the ambition of the TCFDR is to ensure that the effects of climate change become routinely considered in business and investment decisions; they also aim to encourage companies to demonstrate accountability and foresight in their climate-related strategies and to facilitate a more efficient and sustainable allocation of capital.[223] This approach seeks to support the transition to a low-carbon economy, thus helping to prevent an abrupt economic shock (above, III.A.6.1). The TCFDR explicitly recognises that climate risks may constitute material information.[224] Where this is the case, the relevant information must be included in mainstream annual financial filings, as required by the corporate laws of the respective jurisdictions.[225] In that sense, rather than introducing new requirements, the TCFDR aim to provide guidance on the interpretation and clarification of existing financial disclosure obligations.[226] However, due to the absence of guidance in the TCFDR on the criterion of materiality in respect of climate change disclosures (above, II.C.2.2; IV.A.3.3.1), it can be argued that they failed to do just that.

The TCFDR are structured around four thematic areas: governance, strategy, risk management, and metrics and targets:

[picture]

Fig. 11: Four areas of climate-related financial disclosures (TCFD)[227]

The four areas are presented as core elements of how organisations operate.[228] The onion structure reflects the overarching function of governance. Each of the four areas is spelled out by a total of 11 ‘Recommended Disclosures’ (below Fig. 12), which are further specified by guidance applicable to all sectors, as well as by additional guidance for specific sectors, namely the financial sector and the four non-financial sectors that are particularly exposed to climate risk.[229]

[picture]

Fig. 12: Recommended Disclosures TCFD (as amended in 2021)[230]

As shown in Fig. 12, the TCFDR advise that disclosures concerning strategy and metrics and targets should be made ‘where such information is material’, whereas disclosures on governance and risk management should be made in any case (ie irrespective of a materiality assessment).[231] As mentioned, the TCFDR do not provide further guidance as to what constitutes material climate change-related information.

Regulatory Developments

Reflecting a shift ‘from voluntary to mandatory’,[232] the concept of risk-based due diligence as established through the UNGP and the OECD GL is increasingly being transposed into laws and regulations.[233] This development is consistent with the growing expectation – or, arguably, obligation – under international law that states must regulate the adverse impacts of companies on people and the planet, including in relation companies adverse impacts on the climate (above, II.A.1; IV.A.3.1.2; IV.A.3.2.2). Indeed, regulation may contribute to the specification of CCDD.[234] However, existing due diligence laws vary in scope and content, and none offer much clarity on the precise nature of companies’ obligations regarding climate change.

Several European jurisdictions have adopted due diligence laws over the past decade. Notable examples include the French Loi de Vigilance of 2017, amendments to the Swiss Obligationenrecht (Code of Obligations) of 2020,[235] the German Lieferkettensorgfaltspflichtengesetz (LkSG, Supply Chain Due Diligence Act) of 2021,[236] and the Norwegian åpenhetsloven (Transparency Act) of 2021.[237],[238] In the Netherlands, proposed legislation would have identified climate change as a key element of due diligence obligations – introducing climate-specific requirements (notably, a general duty of care to prevent adverse human rights and environmental impacts, an obligation to adopt climate transition plans, and civil liability as a remedy) – but it was not yet adopted at the end of 2025.[239] Rather than self-standing laws, due diligence laws are often amendments to a country’s codification of corporate law (eg in France and Switzerland).

The personal scope of application of due diligence legislation has gradually expanded – from a few very large companies to a much larger number, including medium-sized companies.[240] Drawing on the UNGP and the OECD GL’s due diligence model of, these laws typically require companies to identify, assess, mitigate, and report on human rights and environmental risks and impacts associated with their operations and value chains.[241] Accordingly, a significant number of companies (in particular, suppliers and other business partners) are indirectly affected by due diligence laws. Some due diligence laws focus on specific issues, such as child labour, deforestation, or conflict minerals and metals, while others are framed to cover human rights and environmental concerns more broadly. A special approach was taken in the Netherlands. The Dutch Government entered into several so-called Covenanten (‘International RBC Agreements’) with trade unions, civil society organisations, and a multitude of industries (including garment and textile, banking, food products, and forestry).[242] Counterintuitive to their name (‘agreement’), these instruments are voluntary in the sense that they rely on collaboration between the signatories.[243] Due diligence laws rely on public enforcement (such as administrative supervision), whereas some – including the French Loi de Vigilance – permit private actors to pursue enforcement through civil actions (above, III.C.2). As different states adopt varied approaches to designing due diligence laws, transposing RBC expectations into national frameworks has led to jurisdictional fragmentation.[244]

The ‘hardening’ of due diligence into legislative frameworks can be attributed, at least in part, to regulatory activity at the EU level.[245] Partly in response to concerns about fragmentation across European states, the European Commission proposed a comprehensive due diligence directive in 2022, the CSDDD.[246] After a protracted and arduous political process, a supposedly definitive text of the CSDDD was formally adopted in July 2024 (CSDDD 2024).[247] This text significantly deviated from the original proposal, particularly due to last-minute amendments that substantially narrowed the Directive’s personal and material scope.[248] With respect to risk-based due diligence, the CSDDD 2024 explicitly referred to the UNGP and the OECD GL.[249] Before entering into force, the CSDDD 2024 – as well as the CSRD 2023 – was revised again amid substantial lobbying within the European Commission’s Omnibus I package, yielding a significantly revised CSDDD text adopted in December 2025 (CSDDD 2025).[250]

Despite the adoption of the Paris Agreement in 2015, current due diligence laws rarely, if ever, expressly deal with climate change. Accordingly, they provide very limited guidance on the scope and content of CCDD.[251] In countries where due diligence legislation is designed to cover environmental issues broadly, as is the case in France, it can be argued that climate change is implicitly included.[252] The situation is different in countries with more narrowly framed due diligence laws. For example, the German LkSG covers environmental concerns only if they have a negative impact on the enjoyment of human rights, or by reference to a very narrow list of international environmental agreements that notably does not include the Paris Agreement.[253] Similarly, the Dutch Covenanten focus on specific matters, in particular human rights, but to a lesser extent climate change.[254] Nevertheless, even in countries with a narrow due diligence scope (such as Germany), climate change may be indirectly covered – for example, through air pollution requirements that intersect with it.[255] Although claiming to actively promote the global implementation of the UNGP and the OECD GL, including through the advancement of relevant due diligence standards,[256] the CSDDD 2024 appeared to exclude climate change from the scope of due diligence. Similar to the approach taken in the German LkSG, the term ‘adverse environmental impact’ is narrowly defined in CSDDD 2024 to include only those adverse impacts resulting from the breach of a select group of international environmental agreements listed in the Annex to the Directive, which does not include the Paris Agreement.[257] Ignoring calls to incorporate climate change as an essential component of due diligence (above, IV.A.2.2), particularly through including a reference to the Paris Agreement in the Annex, the CSDDD 2024 instead addressed climate change through a separate provision entitled ‘Combating climate change’ (Article 22), which mandates that in-scope companies adopt and put into effect a transition plan (below, IV.B.2.2).[258] However, Article 22 was deleted entirely in the CSDDD 2025. In sum, analogous to the LkSG, it can be argued that climate change is indirectly covered by other requirements of the CSDDD, particularly the requirement to conduct due diligence with respect to human rights-related adverse environmental impacts such as those related to access to drinking water or health and safety.[259]

Literature points to several limitations and shortcomings of current due diligence laws.[260] Commonly, there is a certain degree of ambiguity regarding the precise scope and content of due diligence obligations, as just discussed. Further, current due diligence laws often stipulate due diligence obligations that are less rigorous than those envisaged by the UNGP and the OECD GL. In addition, the means of enforcement are generally perceived as poor.[261] Moreover, the specialised RBC literature tends to underestimate the risk of unintended consequences of regulatory processes. Recent experience demonstrates that legislative outcomes can substantially diverge from the original intentions of the initiative. The restriction of the scope and content of the CSDDD serves as a prime example. As another example, the EU Taxonomy[262] under certain conditions permits the classification of nuclear energy and natural gas as environmentally sustainable activities, which would likely surprise any external observer.[263] Notably, due diligence laws may even introduce new legal defences shielding companies from liability for adverse impacts – potentially including those from their GHG emissions.[264] Considering these shortcomings, Rajavuori, Savaresi and van Asselt argue that due diligence laws may ‘thwart attempts to promote corporate climate accountability through litigation’, while also recognising the potential gap-filling function of due diligence laws.[265] In light of the foregoing, especially the recent experience with due diligence laws across Europe, this study does not assume that regulatory developments alone will provide a comprehensive and convincing construct of CCDD. Instead, regulation will be considered alongside other factors, particularly standard-setting and case law (above, II.B; below, IV.B, IV.C).

The present state of due diligence legislation illustrates the incremental ‘solidification’ of risk-based due diligence. However, national legislators have adopted divergent approaches in designing their due diligence laws, leading to fragmentation. Further, the existing due diligence laws offer minimal guidance on CCDD. In fact, some due diligence laws appear to exclude climate change from their scope of application. We can only speculate about the reasons. At least in part, the apparent exclusion of climate change may be attributable to the absence of climate change-specific recommendations in the UNGP and the pre-2023 OECD GL (above, IV.A.2). Time will tell whether the 2023 update of the OECD GL contributed to a (re)integration of climate change into domestic due diligence laws. In any event, the absence of guidance on CCDD in current domestic due diligence laws (as well as the lack of any specific due diligence law in countries that have not adopted such a law) does not imply that companies are not subject to CCDD obligations. Due diligence laws do not provide for a comprehensive framework for corporate climate obligations, as has been recognised, for instance by the Court of Appeals in Milieudefensie et al. v Shell.[266]

Elements of CCDD

Overview

The elements of risk-based due diligence, as developed by the UNGP and the OECD GL since 2011, are well established (above, IV.A.2.1). However, what they entail specifically in the context of CCDD is not yet clearly defined (above, IV.A.2.2). An emerging body of specialised research explores different ‘features’,[267] ‘facets’,[268] ‘measures’,[269] ‘steps’[270], or ‘elements’[271] of CCDD, but a comprehensive understanding has not yet been achieved. In other words, there is broad consensus that companies should conduct CCDD, though clarification is needed on its implementation. In the absence of a comprehensive framework, the elements of CCDD are taking shape through parallel – and partly interrelated – developments in standard-setting, regulation, and enforcement.

Conducting CCDD enables companies to fulfil their critical function in contributing towards the achievement of the net-zero goal (above, II.A.2).[272] While CCDD draws conceptually on the risk-based due diligence elements in the OECD Guidelines and UNGP, the specific nature of climate change risks and impacts calls for adjustments (above, IV.A.2). Part of this adjustment involves incorporating the TCFDR, which clarify certain aspects of CCDD.[273] Another important reference are the climate-change specific recommendations introduced as part of the 2023 revision of the OECD GL (above, IV.A.3.2.2).[274] Drawing on the general elements of risk-based due diligence (above, IV.A.2.1), the concept of risk-based environmental due diligence in the OECD Guidelines’ Environment Chapter, the TCFDR, and various authoritative guidance documents (particularly those published by the OECD or the UN), this study proposes the following six elements of CCDD):[275]

embedding climate change considerations into policies and management systems, including by adopting transition plans and targets (below, IV.B.2);

identifying and assessing climate change risks and impacts (below, IV.B.3);

addressing climate change risks and impacts through prevention and mitigation (below, IV.B.4);

tracking and measuring implementation (below, IV.B.5);

communicating how climate risks and impacts are addressed (below, IV.B.6);

remediation (below, IV.B.7).

As mentioned, the construction of due diligence under the UNGP borrowed from the established concept of environmental management systems (EMS) in international environmental law (above, IV.A.2.1). Accordingly, the elements of CCDD are aligned with the elements of risk-based due environmental diligence as outlined in the OECD GL’s Environment Chapter, which include:[276]

identifying and assessing adverse environmental impacts (above, III.A.2.5) associated with an enterprise’s operations, products or services, including through collection and evaluation of adequate and timely information regarding the adverse impacts associated with their operations, products and services and where activities may have significant adverse environmental impacts, preparing an appropriate environmental impact assessment;

establishing and implementing measurable objectives, targets and strategies for addressing adverse environmental impacts associated with their operations, products and services and for improving environmental performance; targets should be science-based, consistent with relevant national policies and international commitments, goals, and informed by best practice;

regularly verifying the effectiveness of strategies and monitoring progress toward environmental objectives and targets, and periodically reviewing the continued relevance of objectives, targets and strategies;

providing the public, workers, and other relevant stakeholders with adequate, measurable, verifiable (where applicable) and timely information on environmental impacts associated with their operations, products and services based on best available information, and progress against targets and objectives;

providing for, or co-operating in, remediation as necessary to address adverse environmental impacts the enterprise has caused or contributed to, and using leverage to influence other entities causing or contributing to adverse environmental impacts to remediate them.

A slight difference between the framing of (general) risk-based due diligence and environmental due diligence appears to be that the latter begins with identifying and assessing, whereas in the former, this is the second ‘step’. And yet, rather than a ‘tick-the-box’ process to be followed in strict chronological order, the elements of risk-based due diligence constitute complementary parts of a systematic approach designed to guide companies in identifying, assessing and addressing climate change-related risks and impacts in a methodical, coherent and transparent manner. While OECD Guidance tends to present due diligence as a sequential process, it also clarifies that completing a tick-the-box process is not sufficient in and of itself (above, IV.A.1). The complementary nature of the elements of CCDD is more emphasised in the TCFDR, where – albeit without the use of due diligence language – the four core areas are presented as forming different layers of the same ‘framework’, conceptualised in an onion structure (above, IV.A.3.3.2).

The elements of CCDD are designed in this study to be applied, in the first place, at the organisational level (company or group of companies), covering the organisation’s entire value chain. Consequently, the application of CCDD encompasses all of the company’s activities, with a focus on the areas where climate risks and impacts are greatest. CCDD should be applied in specific contexts, such as decisions regarding the approval of a new major project or investment, and periodically in the sense of an ongoing monitoring (eg throughout the course of a business relationship).[277] Further, the scope of CCDD should be proportionate to the size of the enterprise, the degree of involvement in an adverse climate impact, and the severity of that impact (below, IV.B.3).[278] The severity of impacts is determined by their scale, scope and irremediable character.[279] A risk-based approach also means taking into account the likelihood of an adverse impact.[280] The application of CCDD will depend on the circumstances of the enterprise, and may be limited due to the lack of availability of relevant data or technologies.[281]

Embed into Policies and Management Systems

In General

Embedding climate change considerations into the company’s internal policies and management systems is fundamental to CCDD. The corporate governance structure must ensure that directors give due consideration to climate change issues in the performance of their key functions and duties (above, III.B.2.5). Incorporated into policies and management systems, CCDD becomes an essential element of corporate governance.[282] Crucially, the integration of CCDD into policies and management systems must reflect that CCDD is not limited to identifying, assessing and addressing climate change risks, but also climate change impacts.[283] This does not necessarily imply a need to implement additional processes.[284] To ensure consistency with internationally agreed global temperature goals, the OECD GL recommend that companies adopt and implement science-based policies, strategies and transition plans, and set science-based short‑, medium- and long-term mitigation targets (below, IV.B.2.2).[285]

The integration of CCDD into the policies and management systems of the company begins with a policy commitment that articulates the company’s expectations of its employees, business partners and other parties directly linked to its operations, services and products; the statement should be approved by the board and communicated internally and externally.[286] The policy commitment represents a formal acknowledgement of the company’s responsibility to contribute to climate change mitigation and should include a commitment to reduce GHG emissions across the company’s full value chain.[287] To enhance accountability and enforceability, the policy commitment should be incorporated, as adequate, into the organisational documents (such as the articles of association) and relevant contracts (see also IV.B.7).

Reflecting several elements of CCDD, international guidance identifies a range of measures to integrate climate change considerations into policies and risk management:[288]

revising existing and/or adopting new policies to articulate the organisation’s climate change-related commitments, including its approach to CCDD; making these policies publicly available where appropriate or required;

setting climate targets at enterprise/group level as well as at sub-levels (eg at the product level);

maintaining contingency plans to prevent, mitigate and control major environmental incidents, including accidents and emergencies;

incorporating CCDD expectations and requirements into business relationships, including through engagement with business partners or contractual means such as supplier codes of conduct;

promoting employee awareness of company policies related to CCDD;

providing incentives and safeguards for reporting corporate misconduct related to CCDD;

adopting policy commitments to refrain from greenwashing and inappropriate lobbying against climate action;

providing for adequate remedial action to sanction breaches of CCDD-related policies (eg reprimands, fines, or termination of business relationships).

Given their oversight duty (above, III.B.2.5), directors have a key role with respect to embedding climate change considerations into policies and management systems. Several measures, many of which are expressions of the duty to address climate risks and impacts (above, III.C.3), should be considered, for instance:[289]

integrating climate change considerations into board and committee structures, eg by ensuring that climate change issues are discussed by relevant committees (in particular, risk, audit, nomination, or remuneration), by establishing a dedicated climate change committee composed of internal and external experts, or by ensuring, eg through board nomination requirements, that the board is sufficiently skilled, knowledgeable, and experienced with respect to climate change issues;

ensuring an adequate process and frequency with which the board and relevant board committees are informed about CCDD;

ensuring that the board monitors progress against climate targets by linking board and executive remuneration incentives to the achievement of set climate targets;

assigning climate-related responsibilities to senior management, where adequate and permitted;

describing the process by which the board is informed about climate-related issues and how it monitors climate-related issues.

Transition Plans and Targets

Transition plans are the strategic fundament of CCDD. If adequately designed, a transition plan provides the yardstick against which the company’s progress on climate change mitigation can be measured, both internally and externally. A key component of transition plans consists of company-set climate targets and the measures identified to achieve them. There is currently no generally accepted methodology for translating carbon budgets at the global or national level into carbon budgets and corresponding transition plans and GHG reduction targets for enterprises (above, II.C.2). However, guidance is gradually emerging from various international standards, private climate governance initiatives, regulation, and enforcement.[290] In particular, the TCFDR and the OECD GL provide important reference points.

While no universal definition exists, the TCFD describes transition plans as ‘an aspect of an organization’s overall business strategy that lays out a set of targets and actions supporting its transition toward a low-carbon economy, including actions such as reducing its GHG emissions’.[291] This description underscores the pivotal strategic importance of transition plans. It also clarifies that transition plans must be viewed not only as an outline of the company’s transition strategy, but also as a detailed roadmap of the specific actions the company intends to implement. Further, it confirms that reducing GHG emissions forms a core element of organizations’ climate strategies.

The ultimate purpose of transition plans is predicated on three fundamental pillars:

Climate change mitigation: mitigating the company’s adverse impact on climate change by reducing adverse climate impacts (below, IV.B.3) in alignment with a science-based net zero pathway;[292]

Climate change adaptation: enhancing the company’s resilience to growing physical and transition risks;

Opportunities: helping the company attract funding by enabling investors to evaluate the alignment of the company with net zero transition pathways.[293]

The TCFD recommends that transition plans are:[294]

a part of, and aligned with, the organisation’s overall business strategy;

anchored in quantitative elements, including climate-related metrics and targets, in line with science-based pathways;

subject to effective governance processes (including a description of the role of the board and senior management in overseeing the transition plan);

actionable and specific (including short-term and medium-term plans and descriptions of how related actions address material sources of GHG emissions);

credible (including description of supporting financial plans and budgets as well as significant limitations and uncertainties);

subject to periodical reviews and updates;[295] and

reported publicly (or, depending on the circumstances, at least to stakeholders) on an annual basis (including a report on progress).

The OECD GL clarify that risk-based due diligence entails setting science-based objectives, targets and strategies for addressing adverse environmental impacts associated with their operations, products and services, consistent with relevant national laws and international commitments, goals, and informed by best practice.[296] Accordingly, transition plans must cover a company’s activities comprehensively. Taking financial companies as an example, this involves having financed emissions (above, II.B.1.3) reflected in the transition plan.[297]

The recommendations for transition plans are beginning to be implemented into regulatory frameworks. For instance, broadly in alignment with the TCFD, but more specific in some regards, Article 22(2) CSDDD 2024[298] provided that the transition plan shall contain:

‘(a) time-bound targets related to climate change for 2030 and in five-year steps up to 2050 based on conclusive scientific evidence and, where appropriate, absolute emission reduction targets for greenhouse gas for scope 1, scope 2 and scope 3 (GHG) emissions for each significant category;

(b) a description of decarbonisation levers identified and key actions planned to reach the targets referred to in point (a), including, where appropriate, changes in the product and service portfolio of the company and the adoption of new technologies;

(c) an explanation and quantification of the investments and funding supporting the implementation of the transition plan for climate change mitigation; and

(d) a description of the role of the administrative, management and supervisory bodies with regard to the transition plan for climate change mitigation.’

In CSDDD 2025, Article 22 was deleted entirely, without good reasons.[299] However, under CSRD 2025, companies must report on their transition plans, which implies that they have adopted one.

Given its strategic importance, the transition plan should be approved by the board or an appropriate board committee.[300] Reflecting its oversight function, the board is also responsible for overseeing the implementation of the transition plan.[301] Depending on the circumstances, it may be appropriate for the plan to be subject to independent review or third-party assurance.[302]

Targets are a key component of transition plans. The TCFD describes climate-related targets as referring to a specific level, threshold, quantity, or qualitative goal to meet over a defined time horizon.[303] Properly set, targets constitute the benchmark against which the company’s and the board’s efforts to prevent and mitigate adverse climate change risks and impacts can be evaluated.[304] The OECD GL recommend that targets are science-based, consistent with relevant national policies and international commitments, goals, and informed by best practice.[305] Accordingly, the yardstick for assessing the appropriateness of a companies’ climate change mitigation target is the 1.5°C goal of the Paris Agreement.[306]

According to the TCFD, climate targets should be:[307]

aligned with strategy and risk management goals;

linked to relevant metrics (see below in this section);

quantified and measurable;

clearly specified over time (including the definition of the baseline time period against which reductions will be measured, as well as the short, medium and long time horizon, and interim targets at appropriate intervals);

understandable and contextualised (including use of clear language and description of limitations, underlying methodology and assumptions);

periodically reviewed and updated (at least every five years); and

reported annually (including on progress).

Consistent with the TCFD, the OECD GL recommend the adoption of short, medium and long-term GHG mitigation targets.[308] Mitigation targets should be science-based, include absolute and, where relevant, intensity-based GHG reduction targets, and take into account Scope 1, 2, and, to the extent possible based on best available information, Scope 3 GHG emissions (see above II.B.1.3).[309] Absolute reductions refer to the ‘actual’ reduction or avoidance of a given number of tonnes of CO₂eq in comparison to a baseline year (see also below, IV.B.4.3). Relative reductions, in turn, are commonly measured by ‘carbon intensity’, a widely used metric that expresses the ratio of a company’s GHG emissions in absolute terms to a related business metric such as unit of production, number of employees, or value-added.[310] Notably, even so-called ‘absolute’ reductions are relative, as they relate to a baseline year. They are thus distinct from negative emissions (removals; above, II.B.1.1). Recognising growing industry experience in measuring and reporting, the TCFD strongly encourages all organisations to disclose Scope 3 emissions (above, II.B.1.3), especially where they represent a significant proportion of the organisation’s total GHG emissions (ie 40 per cent or more).[311] Consequently, at least where Scope 3 emissions are significant, a company’s climate targets should encompass them.

An important issue in target setting is whether offsetting and compensation – broadly equivalent terms denoting the acquisition and retirement of carbon credits (see IV.B.4.3) – can count toward achieving a company’s climate targets. The TCFD recommends that the transition plan should be transparent about the relative contribution of actual reductions, removals and offsets.[312] Taking a stricter stance, the OECD GL state that offsets should be considered only as a last resort to address unabated emissions, thereby unequivocally prioritising the reduction of GHG emissions (below, IV.B.4.3).[313]

The selection of metrics is of critical importance in the context of setting climate targets and related reporting. In fact, the TCFD considers metrics to be the ‘connective tissue’ between its four thematic areas (strategy, governance, risk management, metrics and targets).[314] In addition to GHG emission reduction or enhancement of carbon sinks, quantitative targets can relate to a variety of other metrics. These include transition risks, physical risks, climate-related opportunities, capital deployment, internal carbon price, energy usage, opportunities, and remuneration.[315] Commonly used metrics include the following:

Table 5: Examples of Cross-Industry Climate-Related Metrics and Targets (TCFD)[316]

Metric Category | Unit of Measure (common example) | Examples | Example Target
GHG Emissions | Tonnes of CO2eq | Absolute Scope 1, Scope 2, Scope 3 emissions Financed emissions by asset class | Reduce net Scope 1, Scope 2, and Scope 3 GHG emissions to zero by 2050, with an interim target to cut emissions by 70 per cent by 2030, relative to a 2019 baseline
Transition Risks | Amount or percentage | Volume of real estate collaterals highly exposed to transition risk Concentration of credit exposure to carbon-related assets percentage of revenue from coal mining | Reduce percentage of asset value exposed to transition risks by 50 per cent by 2030, relative to a 2019 baseline
Physical Risks | Amount or percentage | number and value of mortgages in 100-year flood zones revenue associated with water withdrawn from regions of high baseline water stress | Reduce percentage of asset value exposed to acute and chronic physical climate-related risks by 70 per cent by 2050, relative to a 2019 baseline

The TCFD states that metrics should be decision-useful, clear and understandable, reliable, verifiable and objective, consistent over time, and forward looking.[317] Using a combination of multiple metrics can be helpful to provide a comprehensive picture.[318] To illustrate, the measurement of relative reductions may be used to enhance efficiency, providing a useful comparative metric across organisations.[319]

Traditionally framed as a voluntary private climate governance initiative – but increasingly as a matter of regulatory compliance or investor demand – many companies have adopted net-zero targets as part of their transition plans (above, II.B.1.2). However, these plans often lack detail and interim targets, whilst relying heavily on unproven technologies such as CCS (above, I.A.3). This makes it difficult for outsiders to assess the feasibility of the company’s plans and to monitor progress against self-imposed targets (above, II.B.1.2).[320] Private initiatives have emerged to assess the credibility of GHG reduction targets. A prominent example is the SBTi, which, however, has been subject to criticism (above, II.B.1.2). Relying on a private standard may be a useful tool for a company to formulate its targets and monitor progress. However, it must be emphasised that private certification alone is insufficient to satisfy the requisite CCDD standard. Emerging regulatory requirements for transition plans may alleviate this problem.

Mirroring their key strategic relevance, both the transition plan and the related targets should be approved by the board.[321] Accordingly, the board must ensure that the enterprise’s transition plan and corresponding GHG reduction targets are science-based, credible, continuously reviewed and adjusted as necessary. To facilitate accountability and comparability, it is essential that transition plans and climate-related targets are made public (below, IV.B.6).

Identify and Assess

CCDD requires the systematic identification and assessment of the organisation’s climate‑related risks and impacts. With respect to assessing the company’s exposure to climate risks (outside-in perspective), the TCFD recommends taking a forward-looking approach, using scenario analysis (below, IV.B.3.1). To identify and assess climate impacts (inside-out perspective), companies should conduct climate change impact assessments (CCIA; below, IV.B.3.2). Scenario analysis and CCIA are fact-finding exercises that establish the foundation for the company to address its climate risks and impacts (below, IV.B.4).[322]

Scenario Analysis

The TCFDR recommend that companies use scenario analysis to assess the potential impacts of climate change on their business, strategy, and financial performance (ie climate risks).[323] Scenario analysis relates to both physical and transition risks (above, III.A.3–4).[324] Traditionally, companies’ planning horizons are aligned with the lifetime of their assets and liabilities, which is much shorter than that of climate scenarios (above, II.C.1).[325] While recognising that climate change is already affecting businesses today, the TCFDR emphasise that for many organisations, the most significant effects of climate change ‘are likely to emerge over the medium to longer term and their timing and magnitude are uncertain’.[326] Accordingly, the focus of climate risk analysis should be forward looking (above, III.A.1).[327]

Scenario analysis is as a method for identifying and assessing the potential implications of a range of plausible future states under conditions of uncertainty.[328] Its origins can be traced back to strategic studies used during World War II; subsequently, during the 1960s and 1970s, it was adopted for the analysis of environmental impacts.[329] In the aftermath of the 2008/2009 global financial crisis, stress testing (a form of scenario analysis) was used by many financial regulators and supervisors to assess the resilience of financial institutions to financial stability risks.[330] Popularised by the publication of the TCFDR in 2017, using scenario analysis to assess climate-related issues in a business context is a relatively new concept. And yet, large financial institutions and some non-financial companies (particularly in the extractive sector) have decades of experience applying climate change scenario analysis.[331] Further, large companies publicly disclose their climate-related scenario analysis in financial filings.[332] Demonstrating the relevance of scenario analysis to both individual companies and financial stability assessments, the NGFS (above, III.A.6.1) advocates the use of climate stress testing by financial supervisors.[333] Scenario analysis can be quantitative (using numerical data and models), qualitative (using descriptive narratives, especially when data is limited), or a hybrid of both.[334] It typically builds on climate scenarios to develop descriptions of future conditions (above, II.B.1.1).[335]

The use of scenario analysis serves two main purposes. First, it expands decision-makers’ thinking across a range of plausible scenarios, including those in which climate-related risks are significant.[336] Second, it helps investors and other stakeholders to better understand the robustness of the organisation’s strategy and financial planning under different climate-related scenarios, its readiness to mitigate or adapt to climate-related risks, its likely ability to take advantage of emerging opportunities, and its ability to think strategically about longer-term climate-related risks and opportunities.[337]

Scenario analysis as recommended by the TCFD consists of six elements:[338]

integrating scenario analysis into governance structures (strategic planning and enterprise risk management systems);

assessing materiality of climate-related risks (physical and transition risks);

identifying and defining a range of scenarios;

evaluating business impacts;

identifying potential responses;

documenting and disclosure.

While exclusively concerned with climate risks (outside-in perspective), the elements of scenario analysis as listed above broadly mirror the elements of CCDD. The TCFD recommends that organisations should consider using scenario analysis both at the enterprise level and, particularly in the financial sector, at the level of individual assets or investments.[339] Notably, the TCFDR recognise that identifying potential responses (an element of scenario analysis) may require changes to the business model.[340]

Scenario analysis as proposed by the TCFD has several limitations:

First, the quantification of future climate outcomes is a highly complex process, which calls into question whether present climate forecasting methods are adequate for economic planning.[341] Scenario analyses (and the climate scenarios on which they are built) are typically developed for global or macro-level assessments of climate risk.[342] Thus, translation into a business context requires conversion, yet no universally accepted methodology currently exists.[343] The TCFD refrained from developing standardised scenarios. The Task Force anticipated a process of experiential learning for companies, including through collectively developing tools, data sets, and methodologies, and working to set standards.[344] Although the scenarios developed by the IPCC and IEA (above, II.B.1.1) are mentioned as possible references,[345] the TCFDR allow companies full flexibility in the selection and design of scenarios. The TCFDR encourage companies to determine their own time frames based on the life cycle of their assets, their risk profile, and the sectors and geographies in which they operate.[346] This is unsatisfactory because, as the TCFDR themselves recognise (see above in this section), the temporal dissonance between corporate planning cycles (typically one to five years) and the time horizons of climate scenarios (often extending to 2050 and beyond) is problematic. As a further option, the TCFDR mention using a scenario that is aligned with the NDC of the country in which a company operates.[347] However, in many circumstances, this option is also not viable. In particular, the state-based scope of NDCs is inadequate to capture the full scope of an MNE’s activities, which by definition extend across multiple jurisdictions. In addition, most states report only their territorial, production-based emissions (broadly comparable to corporate Scope 1 and 2 GHG emissions), but not their extraterritorial, consumption-based emissions (broadly comparable to corporate Scope 3 emissions).[348] Moreover, as the TCFDR acknowledge, most NDCs are not aligned with a 1.5°C pathway, rendering them an inadequate benchmark for companies (above, II.A.1).[349] Consequently, using an NDC-based scenario as a reference point would likely prove insufficient in many cases for capturing the full scope required for a comprehensive CCIA. Johnston argues that a significant contribution of the TCFDR was the recommendation to use scenario analysis.[350] And yet, the TCFD’s proposal largely reflected existing practice in sectors with significant exposure to physical and transition risks – most notably the extractive and financial industries – accompanied by a recommendation for laggards to follow suit.

Second, the wide discretion companies have in selecting from a broad range of scenarios makes it difficult to compare disclosures on scenario analysis across firms.[351] In order to address this issue, the TCFDR propose that companies, particularly those with a heightened exposure to climate-related risks, should provide transparency regarding the critical assumptions and key parameters that materially impact the conclusions drawn in their scenario analysis.[352] Key parameters include assumptions about carbon pricing, energy demand, as well as technological and regulatory developments.[353]

Third, the considerable flexibility afforded to companies in formulating their own scenarios risks producing an overly optimistic outlook.[354]

Other challenges include limited availability and quality of relevant data.[355] Finally, current scenario analyses typically do not include regulatory and litigation risks, despite their growing financial implications (above, III.A.4.1–4.2).[356]

As stated, rather than aiming to standardise scenario analysis, the TCFD relied on the industry to do so. This represents a significant shortcoming, particularly given that the TCFD itself was established as an industry‑led initiative (above, IV.A.3.3.1).[357] Against this background, it is unsurprising that companies have been slow to adopt the recommendation to conduct scenario analysis and disclose key parameters.[358] Notwithstanding its inherent limitations and the absence of standardisation, scenario analysis remains an indispensable tool for strengthening corporate resilience to climate risks and, indirectly, supporting overall financial stability.[359] However, the current lack of standardised, methodologically robust climate scenarios is a major concern and has prompted calls for regulatory intervention.[360] The increasing incorporation of the TCFD Recommendations into binding regulatory frameworks (see above, IV.A.3.3.1) may, in time, help to change this situation.

Due to its duty of oversight, primary responsibility for scenario analysis rests with the board. This responsibility includes, in particular, ensuring the integrity of the analyses (for example, through the selection of appropriate scenarios) and of the related reporting.

Climate Change Impact Assessment (CCIA)

Concept

As part of risk-based due diligence, corporations are expected to conduct impact assessments, meaning the identification and assessment of ‘potential’ and ‘actual’ adverse impacts of their business activities on the environment and human rights (above, III.A.2.5).[361] An actual impact (sometimes referred to as realised risk) is one that has already occurred or is occurring, whereas a potential impact (sometimes referred to as risk) may occur in the future but has not yet materialised (above, III.A.2.5). The fact that impact assessments include the identification and assessment of potential impacts reaffirms the preventive and precautionary approach of risk-based due diligence (above, IV.A.2.2).[362] In the context of climate change impact assessment (CCIA), a preventive approach is imperative, given the severe, widespread and partially irreversible nature of climate impacts. Importantly, impact assessments are not of a normative, but of a factual nature.[363] The objective of CCIA is to facilitate a comprehensive understanding of the climate change-related impacts related to the organisation’s activities, but not to attribute responsibility.[364] And yet, the determination of a company’s degree of involvement in climate impacts directly influences the expectations placed upon the company to address (below, IV.B.4) and, if necessary, remedy (below, IV.B.7) such impacts.

The OECD GL define impact assessments as a process of identifying and assessing the actual and potential adverse impacts associated with an enterprise’s operations, products, and services.[365] Accordingly, the impact assessment must encompass the entire value chain of an organisation. As noted, the OECD GL and the UNGP adopted the concept of impact assessment from environmental law (above, IV.A.2.1). In the Environment Chapter, the OECD GL recommend that companies identify and assess the adverse environmental impacts (above, III.A.2.5) associated with their operations, products, and services, including through the collection and evaluation of adequate and timely information and, where activities may have significant adverse environmental impacts, through the preparation of an appropriate environmental impact assessment (EIA).[366] The OECD GL point out that EIAs may include a broad and forward-looking ex ante assessment of potential environmental impacts of the enterprise’s activities.[367] For states, EIAs have been recognised as an international law obligation, particularly in situations where there is a risk of significant transboundary harm.[368] Crucially, in its 2025 Advisory Opinion, the ICJ held:

‘While the Court is aware that the cumulative and diffuse nature of GHG emissions may involve some difficulty in risk assessment, it considers it important that all States provide for and conduct EIAs with respect to particularly significant proposed individual activities contributing to GHG emissions to be undertaken within their jurisdiction or control, on the basis of the best available science. Such specific climate-related assessments could identify previously unknown information about possibilities for reducing the quantity of GHG emissions by relevant proposed individual activities’.[369]

Many states have begun to employ EIAs as a climate mitigation tool, providing a basis for informed political decision making on proposed projects.[370] In some cases, this has led to the halting or re-evaluation of large-scale GHG emitting projects. For instance, an impact assessment informed the UK government’s announcement in 2024 on bringing forward the date to phase out coal-fired electricity.[371] For businesses, CCIA serve the same main purpose: providing a basis for informed decision making. For directors, acting based on a sound information basis is essential in the discharge of their duty of care (above, III.B.2.5). To fulfil its purpose, CCIA should be conducted at regular intervals, both at the organisational level and at relevant sub-organisational levels such as specific projects, products, business relationships, or portfolios.[372] Further, the CCIA process should be verifiable and informed by input from experts.[373]

While recognising climate change as an adverse environmental impact (above, III.A.2.5),[374] the OECD GL do not provide a precise concept of CCIA.[375] In alignment with this study’s framing of CCDD (see above, IV.A.2.3), CCIA is predicated on the concept of impact assessment as outlined in the OECD GL and the UNGP, albeit with modifications:

First, CCIA is characterised by a more limited scope than that of EIA and Human Rights Impact Assessment (HRIA). CCIA is specifically focused on climate change mitigation, whereas EIA and HRIA cover a broader range of issues. Accordingly, CCIA is not concerned with identifying and assessing all potential adverse human rights and environmental impacts that may result from the net-zero transition, such as potential adverse impacts that a renewable energy project may have on local communities or local ecosystems.[376] Such impacts are not exclusive to climate change, as they can occur in the context of any large-scale construction project. Consequently, they are already captured by either HRIA or EIA.[377] In theory, CCIA, HRIA, and EIA ‘should not exist in separate silos, but rather feed into each other in a way that ensures coherence and mutual reinforcement’.[378] In practice, however, the consideration of various, possibly divergent, interests in a single impact assessment may dilute its focus, thereby impairing its efficacy. Balancing exercises entail judgement, which is not part of the fact-finding exercise that is CCIA (above in this section). The emphasis on climate change mitigation is corroborated by the observation that climate change mitigation can generally be measured by using a limited number of established metrics (such as GHG emissions), whereas climate adaptation indicators are typically diffuse, complex, and not well-established in standard-setting and evolving regulation.[379] Despite its focus on climate mitigation, CCIA provides the factual foundation for remedial actions (below, IV.B.7). An alternative approach would be to identify population groups that are disproportionately vulnerable to the risks and impacts of climate change.[380] Indeed, climate change ‘does not only give rise to diffuse effects, but also to identifiable impacts on identifiable victims’.[381] A human rights lens calls for climate action to pay particular attention to the disproportionate impacts on the most marginalised and vulnerable.[382] This approach is tested in human rights-based climate litigation, where plaintiffs rely on scientific evidence showing that certain populations are at an elevated risk from climate change impacts (above, II.B.4.2).[383] Given the aforementioned reasons (see also above, IV.A.2.3), however, the identification of specific populations that are particularly affected is not considered a viable approach for the purpose of CCIA.

Second, given the cumulative contribution to and ubiquitous nature of climate change impacts, it is typically not feasible for a company to identify and assess its specific involvement with a specific climate change impact (see below, IV.B.3.2.2). There may be exceptions, in particular situations where localised climate impacts can be attributed the activities of one or a small number of companies (see possible examples discussed below IV.B.3.2.3). In consequence, rather than determining specific impacts, CCIA is concentrated on the identification of the principal sources of GHG emissions (and reduction of carbon sinks) associated with the organisation’s activities. Accordingly, the degree of a company’s involvement with climate change impacts is mainly contingent upon the assessment of its GHG emissions and reduction of carbon sinks.[384] This is broadly consistent with the approach taken by the District Court of The Hague in Milieudefensie (below, IV.C.4.2) and the ECtHR in KlimaSeniorinnen (above, II.B.4.2).[385] It also resonates with the approach taken in the CSRD.[386]

In light of the above, CCIA as conceptualised in this study comprises two key elements: the identification of the principal sources of GHG emissions (and reduction of carbon sinks, respectively) arising from the organisation’s activities (below, IV.B.3.2.2), and the assessment of the organisation’s level of involvement in climate change impacts based on its GHG emissions (below, IV.B.3.2.3).

Step 1: Identify

The initial step of CCIA is the identification of all areas within the organisation where the impacts are most likely to be severe, encompassing all operations and business relationships, including those within the supply chain.[387] The objective of this scoping exercise is to provide an initial prioritisation of the most significant areas for further assessment and action (risk-based prioritisation).[388] Based on this prioritisation, the company can carry out more in-depth assessments (enhanced due diligence).[389] In line with the concept of CCIA as framed in this study (above, IV.B.3.2.1), identifying adverse climate impacts is focused on prevention, and thus on identifying the areas within the organisation where GHG emissions and reductions of carbon sinks are greatest.

The severity of impacts is determined by their scale, scope and irremediable character.[390] Affecting virtually ‘everyone and everything’, climate change is a prime example of a large-scale impact.[391] Where there are a large number of expected adverse impacts, companies should identify the general areas in which the expected adverse impacts are most severe.[392] Companies can focus primarily on scale, meaning the volume of GHG emissions (or reduced carbon sinks), as the scope and irremediable character of climate change impacts are relatively equivalent across activities.[393] Companies have a certain flexibility in prioritising risk areas, but should follow science-based approaches and accepted definitions of priority sectors for climate change mitigation.[394] Given its comprehensive scope (above, IV.B.3.2.1), CCIA involves identifying the full range of GHG emissions associated with an organisation’s activities (Scope 1, 2, and 3).[395] Taking an investor as an example, this means identifying the GHG emissions and reduction of carbon sinks associated with individual assets, asset classes, sectors or portfolios.[396] The scoping exercise could result in an investor initially prioritising investments and assets related to fossil fuel extraction for further in-depth assessment.[397] A risk-based approach entails identifying activities or areas that warrant enhanced due diligence, meaning they should be prioritised. Such areas may include activities damaging carbon sinks such as high carbon stock forests or peatlands, activities that rely heavily on fossil fuels for their energy needs, or activities leading to lock-in of GHG intensive assets.[398] Where the assessment relates to products or services, the company should consider the known or reasonably foreseeable circumstances associated with the use (or reasonably foreseeable improper use or misuse) of the product or service.[399]

CCIA requires the collection and evaluation of adequate and timely information on GHG emissions and reduction of carbon sinks from a variety of internal and external sources.[400] Depending on the nature of the operation, product or business relationship, compiling the relevant data can be complex and may necessitate estimates based on experience and best practice (above, II.B.1.3; II.C.3).[401] According to the precautionary principle, which underpins the Environment Chapter of the OECD GL (above, IV.A.2.3), CCIA does not require perfect data. In contrast, imperfect data must not be used as an excuse to delay necessary actions for which sufficient data is available. Notably, due to disclosure requirements and data requests from investors (above, II.B.2), most large companies already have a sufficient understanding of which of their activities generate significant GHG emissions (and reductions in carbon sinks).[402] To facilitate comparability and aggregation, companies should use an established standard such as the GHG Protocol (above, II.A.2).[403] If a company’s GHG emissions are predominantly Scope 3, one method of improving the availability of relevant information is to engage in individual and joint efforts to obtain more information from business partners.[404] In addition to backward-looking data such as current GHG emissions, companies may also draw on forward-looking approaches using scenario analysis (above, IV.B.3.1) to identify and prioritise activities associated with severe climate impacts.[405]

Step 2: Assess

The second step of CCIA is to assess the organisation’s involvement in climate impacts, including potential impacts. Risk-based due diligence distinguishes three levels of business involvement in adverse impacts. A company may cause adverse impacts, it may contribute to adverse impacts, or it may be directly linked to adverse impacts.[406] This ‘trichotomy of involvements’[407] has implications for defining what is expected of a company in terms of addressing the adverse impacts it is involved in (below, IV.B.4). Rather than a clear-cut distinction, the trichotomy is an expression of different degrees of involvement that are placed on a continuum. In light of the nature of climate change impacts, determining the extent of a company’s involvement entails specific complexities.[408]

Distinguishing the three different levels of involvement is relevant because it determines the degree of a company’s responsibility to address the adverse impacts (below IV.B.4).[409] The Commentary to the OECD GL’s Environment Chapter delineates the three levels of involvement in an adverse environmental impact (above, III.A.2.5), of which climate change impacts are a key example,[410] as follows:

an enterprise causes an adverse environmental impact if its activities (which include both actions and omissions)[411] on their own are sufficient to result in the adverse impact;

an enterprise contributes to an adverse environmental impact (i) if its activities, in combination with the activities of other entities cause the adverse impact (referred to here as ‘direct contribution’), or (ii) if its activities cause, facilitate or incentivise another entity to cause the adverse impact (referred to here as ‘indirect contribution’);

an enterprise’s business operations, products or services through a business relationship can also be directly linked to adverse environmental impacts, even if the enterprise does not contribute to those impacts.[412]

Similarly, the OHCHR’s 2012 interpretive guidance defines the three levels of involvement as follows:[413]

Cause: According to OHCHR guidance, the term ‘causing’ is narrowly defined, referring to situations where the activities of a company are the sole or at least the main cause of an adverse impact, with the consequence that (only) that company can remove the impact fully (or at least to a large extent).[414] Establishing a direct causal relationship in the context of CCIA is challenging, due to the fact that the impacts of climate change are generally not attributable to the actions of a single actor, and in most cases, that actor is unable to remove them alone.[415] However, there may be exceptions in the case of localised climate impacts, as will be discussed below in this section.

Contribute: At the ‘medium’ level of involvement, a company may contribute to adverse impacts through its own activities, either directly alongside other entities or ‘through some outside entity (government, business or other)’.[416] According to the OHCHR, contribution implies ‘an element of causality’, for instance by making an impact more likely.[417] This criterion may be interpreted as necessitating a substantial contribution, thereby excluding ‘minor or trivial contributions’.[418]

Directly linked: The term ‘directly linked’ was inserted at the very last stage of the UNGP’s drafting process, out of concern that the scope of business responsibility might otherwise be framed too broadly.[419] It is a reminiscence of the company’s ‘sphere of influence’, a concept that has been extensively debated over several decades within the context of corporate responsibility for human rights.[420] In view of the failure of all efforts to precisely define the sphere of influence, the UNGP deliberately avoided any reference to it.[421] However, instead of clarifying the scope of business responsibility, the term ‘directly linked’ added a new layer of complexity.[422] The term business relationship is defined broadly to include relationships with business partners, subcontractors, franchisees, investees, and joint venture partners; it further encompasses entities in the supply chain that provide products or services that contribute to the enterprise’s own operations, or that receive, license, purchase or use products or services from the enterprise, and any other entity (state or non-state) directly linked to its operations, products or services.[423]

Contribute v directly linked: As noted above, the precise interpretation of the term ‘directly linked by a business relationship’ remains somewhat ambiguous. This ambiguity primarily concerns the distinction between direct linkage and contribution, an issue discussed extensively in the literature, particularly regarding the activities of banks and investors.[424] The distinction requires a case-by-case analysis involving several factors, including (i) the degree of involvement of the company (the extent to which the company enabled, encouraged, or motivated the adverse impact), (ii) the foreseeability of the impact (the extent to which the company could or should have known about it, or actually knew about it), and (iii) the quality of the measures the company has taken to address the adverse impact.[425] As the last criterion suggests, an organisation that persistently fails to address its adverse impacts may transition to a higher level of involvement (eg from direct linkage to contribution) and vice versa.[426] The Commentary to the Environment Chapter of the OECD GL recognises that any attempt to assess the extent to which an enterprise is contributing (sic!) to an adverse environmental impact should consider the extent to which its activities are consistent with widely recognised standards, environmental management processes and safeguards regarding good environmental practice, benchmarks and standards established in applicable environmental rules and regulatory frameworks, relevant international agreements, as well as scientific evidence.[427]

The above-described trichotomy contributes to determining the appropriate level of corporate responsibility for addressing adverse climate change impacts? Depending on the circumstances, environmental harms may be collective and interlinked or relatively isolated; further, they may be localised or transboundary in nature.[428] In some situations, it will be possible to determine the extent to which a company is involved in adverse environmental impacts based on best available science and information, while in other cases this will be difficult.[429] Due to the ubiquity of both the causes and the impacts of climate change, it is in most cases difficult to establish a direct causal link between a specific corporate action (or inaction) and a specific climate impact (above, IV.B.3.2.1).[430] The phenomenon of anthropogenic climate change has been collectively caused by the actions and inactions of countless subjects, including both state and non-state actors, over the course of decades and centuries (above, I.A.2).[431] Many corporations (along with other actors) collectively contribute to climate change impacts, either ‘directly’ by their own operations, or ‘indirectly’ through providing services and products to others.[432] Accordingly, the level of proximity envisaged by the UNGP in terms of identifying the enterprise’s impacts (‘the purpose of [HRIA] is to understand the specific impacts on specific people, given a specific context of operations’)[433] is in most cases not achievable for CCIA.[434] But this does not exempt companies from identifying and assessing their impacts on climate change.[435] Crucially, the OECD GL’s Environment Chapter acknowledges that environmental management includes taking into account the enterprise’s share of cumulative impacts.[436] Notably, if we assume, for the purposes of CCIA, that each tonne of CO₂eq contributes equally to climate change, it is not even necessary to link a specific corporate activity to a specific climate change impact. A company’s level of involvement is determined by its degree of GHG emissions (and reductions in carbon sinks) and the actions – or lack thereof – it takes to address them. The categorisation of direct and indirect GHG emissions (Scopes 1, 2, 3) as established through the GHG Protocol is a useful factor in determining the degree of involvement in adverse climate change impacts. There may be exceptions to the general determination of the level of involvement just described. In the case of localised climate impacts, such as those arising from black carbon or aircraft‑induced condensation trails,[437] it is possible to draw a more direct correlation between the specific acts or omissions of particular companies and specific climate impacts. For instance, climate change impacts from black carbon accumulation on Arctic ice may be directly attributed to shipping companies operating in the region, while those from aircraft-induced condensation trails can be linked to specific aircraft operators.

To illustrate the varying degrees of a company’s involvement in climate change impacts, the following section discusses two categories of cases. The first (Category A) relates to companies whose GHG emissions are predominantly Scope 1. The second category (Category B) comprises companies whose GHG emissions are predominantly Scope 3 – a fossil fuel producer (B.1), and a financial company (B.2). The differentiation between the three levels of involvement, this study suggests, can primarily be grounded in two factors: (i) the total volume of GHG emissions of a company, disaggregated into direct and indirect emissions (Scopes 1, 2 and 3), and (ii) the relative proportion of these scopes within the company’s overall emissions profile. The categorisation may apply, mutatis mutandis, to products and services.

Category A: Mostly Scope 1 Emissions

Companies with operations generating substantial direct (Scope 1) GHG emissions – for example, fossil fuel‑powered production of electricity, steel, cement, or plastics – are likely to fall within the contribution category.[438] By producing substantial amounts of GHG emissions, such a company, along with others, makes a causal contribution to adverse climate change impacts within the meaning of risk-based due diligence. There is no strict threshold above which GHG emissions are deemed substantial.[439] In general, a substantial contribution is one that is not ‘minor or trivial’ (above in this section). Consequently, all absolute levels of GHG emissions surpassing that threshold qualify as substantial. Trivial or minor emissions may arise, for example, from a small company not engaged in highly GHG-intensive activities.[440] Further, the foreseeability criterion also indicates contribution, as climate change impacts are clearly foreseeable for all companies given the current state of knowledge. In addition, account must be taken of the measures a company has implemented (or failed to implement) to address its climate impacts (see IV.B.4 below), along with its consistency with widely recognised standards, environmental management processes, and safeguards for good environmental practice, benchmarks, and standards. Overall, a high proportion of Scope 1 emissions, in conjunction with a substantial total volume of GHG emissions, indicates (direct) contribution.[441]

Category B: Mostly Scope 3 Emissions

For companies whose GHG emissions are predominantly Scope 3 – such as those in fossil fuel extraction, banking, investment, insurance, real estate, or technology (see II.C.3 above) – distinguishing between contribution and direct linkage requires nuance. The business models of enterprises in this category vary. In some cases, the majority of GHG emissions result from the use of a company’s products (eg a car manufacturer using fossil fuel-fired engines), while in other cases circumstances are more complex (eg a bank may be involved in GHG emitting activities in various ways, such investing or lending).[442]

Case B.1: Fossil Fuel Producer

In the so-called ‘Carbon Majors Inquiry’ conducted by the Human Rights Commission of the Philippines, the petitioners argued that carbon majors collectively contribute (directly and indirectly) to current or future adverse human rights impacts through the extraction and sale of fossil fuels (and through activities that undermine climate action by engaging in campaigns to deny and confuse the findings of climate science).[443] As mentioned, ‘contribution’ is understood to include indirect contributions, meaning instances in which the activities of an enterprise result in, facilitate or incentivise another entity to cause an adverse impact. Further, the OECD GL recognise that environmental management includes the consideration of the enterprise’s share of cumulative impacts (above in this section). By selling its products, a fossil fuel producer facilitates the production of GHG emissions by others and makes them more likely to occur. Even if a single entity accounts for a relatively small fraction of total global industrial GHG emissions (see above I.A.1), the contributions of a major fossil fuel producer could certainly not be regarded as ‘minor’ or ‘trivial’. In terms of foreseeability, it has been known to fossil fuel companies for decades that the use of their products contributes to the adverse effects of climate change (above, I.A.5); it is also common knowledge that achieving the peak temperature goal of the Paris Agreement requires significant reductions in fossil fuel production.[444] As a result, the core business activities of major fossil fuel producers tend to fall into the contribution category.[445]

Case B.2: Financial Company

Given the diversity of activities conducted by financial companies (eg banks, investors, insurers), the distinction between contribution and direct linkage requires additional nuance.[446] As a matter of principle, it is clear that the activities of financial actors, which include not only their own operations but also their products and services, fall within the scope of risk-based due diligence. There is no basis for special treatment or exemption; rather, the specific characteristics of the financial industry need to be taken into account when formulating due diligence requirements.[447] In general, providing a financial product or service establishes a business relationship.[448] Even a relatively small contribution, such as a minority shareholding, may constitute a business relationship.[449] However, the mere existence of a business relationship alone does not constitute a direct linkage or contribution.[450] By investing in, lending to, or insuring companies or projects that are involved in GHG-intensive activities (or activities that substantially reduce carbon sinks), is a company directly linked to, or contributing to adverse climate change impacts? In other words, does the provision of assistance to a cumulative impact constitute a contribution to that impact?[451]

To illustrate this point, consider the example of a bank. A bank’s involvement in climate impacts arises primarily through the provision of products and services that generate GHG emissions or reduce carbon sinks (from the bank’s perspective, typically Scope 3 emissions). Ruggie made it clear that banks may contribute to adverse impacts not only through their own operations, but also through their products and services.[452] Indeed, as mentioned, contribution encompasses indirect contribution. As Birchall argues, ‘(w)hile there must be a point at which a contribution is so minor that it does not engender responsibility, the literature does not state that assistance to a cumulative impact cannot engender responsibility’.[453] Accordingly, banks, investors, or insurers (indirectly) involved in a high GHG-emitting activity (either alone or as part of a consortium) may fall under the category of contribution.[454] OHCHR guidance states that ‘many of the impacts associated with a bank’s financial products and services may fall into the ‘direct linkage’ category’ (see also below, IV.C.3).[455] In any case, distinguishing between contribution and direct linkage requires case-by-case assessment to determine whether a causal link exists, such that the likelihood of adverse climate impacts increases.[456] For a bank, key factors include the transaction’s relative size, investment type, degree of influence over clients or investees, foreseeability of impacts (typically high for climate change), awareness of climate impacts in specific projects and investments, and measures taken to prevent or mitigate them..[457] These criteria beg the question whether the bank has conducted adequate CCDD. Referring to the principle of progression as it applies to states’ NDCs under the Paris Agreement (above, II.A.1), Macchi and Bernaz argue that ‘there is a strong presumption of contribution for all those activities that hinder the progressive achievement of the reduction targets required to realize the Paris Agreement’.[458] Similarly, OECD guidance states that investors can contribute to adverse climate change impacts through their own activities ‘when [GHG] emissions or impacts on carbon sinks associated with these activities are inconsistent with internationally agreed global temperature goals based on best available science, including as assessed by the [IPCC]’ and are directly linked to these impacts if they invest in assets or companies with such activities.[459] Examples of such ‘inconsistent activities’ include those in end-use sectors generating significant GHG emissions (eg fossil fuel-based industry, transportation, buildings), production of waste and pollutants affecting climate change, and activities tied to land use, forestry, and agriculture.[460] In sum, providing finance (or insurance) to a project that generates substantial GHG emissions or reduces carbon sinks over its expected life cycle may constitute a contribution to climate change risks and impacts, depending on the circumstances.[461]

Address

In General

Once a company has identified and assessed its climate change risks and impacts, it must address them through appropriate prevention and mitigation actions. Prevention concerns the efforts to ensure that an impact does not occur, whereas mitigation aims to reduce the extent of an impact.[462] Businesses have a responsibility to address both adverse climate impacts and climate risks throughout their value chain.[463] Several factors determine the type of action expected of a company involved in adverse impacts (below, IV.B.4.2). Focusing on prevention and mitigation, the primary measure to address a company’s climate impacts is reducing its GHG emissions or enhancing carbon sinks (see IV.4.3 below), including through the use of leverage (below IV.4.4). In addition, various accompanying measures may be warranted (below, IV.4.5). Where a company has not been able to foresee, prevent, or mitigate its impacts, remediation is required (below, IV.B.4.2; IV.B.7).

Types of Action

The type of action expected of a company depends on a number of factors, including the company’s level of involvement in the adverse impacts, the nature and severity of the adverse impacts, the degree of leverage the company has to address the adverse impacts, and the size of the company.[464] As a matter of principle, potential impacts should be addressed through prevention or mitigation, while actual impacts necessitate remediation (below, IV.B.7).[465]

A key factor in determining the adequate type of action to address an adverse impact is the degree of involvement in that impact (above, IV.B.3.2.3):

Where an enterprise causes (or may cause) an adverse impact, it should take the necessary steps to cease or prevent that impact.[466]

Where an enterprise contributes (or may contribute) to an adverse impact, it should take the necessary steps to cease or prevent its contribution (direct contribution) and use its leverage to mitigate any remaining impact to the greatest extent possible (indirect contribution; above, IV.B.3.2.3).[467] Leverage exists where the enterprise has the ability to effect change in the wrongful practices of the company causing the harm (below, IV.B.4.4).[468] If an impact nevertheless occurs, the company should actively engage in remediation (below, IV.B.7), either on its own or in cooperation with others (state and non-state actors).[469]

Where a company is directly linked to an adverse impact through a business relationship, determining the appropriate response depends on several factors. These include the degree of influence over the company with which it has a business relationship, the severity of the impact, whether the relationship is critical, and the potential adverse consequences of terminating the relationship.[470] A direct link does not trigger a responsibility for a company to provide remediation, although it may choose to take a role in doing so.[471] Nor does it imply a shift in responsibility; the entity causing or contributing to the impact remains responsible for addressing its own impact.[472] However, the directly linked company has a responsibility to use its leverage, alone or with others, to influence the entity that causes or contributes to the impact to prevent, mitigate or remediate the impact.[473]

Companies should prioritise the order in which they take action based on the severity of an impact (judged by its scale, scope and irremediable character) and its likelihood.[474]

[picture]

Fig. 13: Addressing Adverse Impacts (using the example of a bank)[475]

The Environment Chapter of the OECD GL specifically addresses how companies should address environmental impacts (above, IV.B.3.2.1). Focused on prevention, the Environment Chapter rests on the premise that enterprises should act as early as possible and in a proactive manner to avoid adverse environmental impacts (above, III.A.2.5; IV.A.3.3.2). Where there is a risk of serious or irreversible damage to the environment, enterprises should not use a lack of full scientific certainty or pathways as a reason for postponing cost-effective measures to prevent or minimise such damage (above, IV.A.3.3.2).[476] These three types of action (avoid, prevent, minimise) are largely consistent with the cease/prevent/mitigate trichotomy used in the UNGP and the OECD GL’s chapters on General Policies (Chapter II) and Human Rights (Chapter IV), although the term ‘minimise’ appears to be more strict than ‘mitigate’.[477] Environmental due diligence also includes providing for – or cooperating in – remediation where appropriate (below, IV.B.7).[478]

As discussed, it is not feasible for a single company to prevent or mitigate all climate impacts due to their scale and ubiquitous nature. However, reflecting the principle of shared or partial responsibility as recognised in the OECD GL (above, IV.B.3.2.3), CCDD implies that companies take action to address their respective share of cumulative climate impacts.[479] In line with CCDD’s focus on prevention, an essential part of this responsibility is to reduce the company’s GHG emissions, including both direct and indirect emissions, or reduction of carbon sinks, respectively (below, IV.B.4.3). Taking a risk-based approach entails that companies prioritise areas of greatest risk, as determined through CCIA (above, IV.B.3). This serves to ensure that companies focus on the areas where the potential for GHG reduction (or carbon sink enhancement) is greatest. Where the enterprise does not have full control over a source of emissions (or reduction of carbon sinks), it must use its leverage to reduce GHG emissions (below, IV.B.4.4).

Reduce Emissions

The OECD GL state that enterprises should ensure that their GHG emissions and impact on carbon sinks are consistent with internationally agreed temperature goals based on best-available science, including as assessed by the IPCC.[480] According to the IPCC, achieving the peak temperature goal of the Paris Agreement requires ‘rapid and deep and in most cases immediate GHG emission reductions in all sectors’ (above, I.A.3). While not imposing direct obligations on private actors (above, II.A.2), the Paris Agreement invites the private sector and financial institutions to ‘scale up their efforts and support actions to reduce emissions and/or to build resilience and decrease vulnerability to the adverse effects of climate change’.[481] In line with the focus of CCDD on prevention and mitigation, an essential part of addressing an enterprise’s adverse climate change impacts is to reduce its GHG emissions (and reductions of carbon sinks), including both direct and indirect GHG emissions.[482] Crucially, reducing GHG emissions should be prioritised over measures such as offsetting and compensation.[483]

The OECD GL and accompanying guidance recognise that enterprises have a responsibility to reduce GHG emissions and thereby reduce the adverse climate-related impacts of their activities on people and the planet.[484] The responsibility to reduce GHG emissions covers the full range of GHG emissions and, therefore, not only the emissions occurring in the enterprise’s own operations (direct emissions), but also those occurring throughout its upstream and downstream value chain (indirect emissions).[485] In this regard, the OECD GL provide that enterprises should seek to improve their environmental performance both at the level of the enterprise and, where appropriate, at the level of entities with which they have a business relationship, including by (i) adopting best-available technologies, (ii) developing and providing products and services that have no undue environmental impact, including by minimising GHG emissions as far as possible, and (iii) promoting greater awareness among customers of the environmental impacts of products and services offered by the enterprise, including by providing accurate information on the respective GHG emissions.[486] Furthermore, the OECD GL reaffirm the precautionary principle by stating that companies should not use a lack of full scientific evidence as a reason for postponing cost-effective measures to prevent or reduce GHG emissions.[487] Moreover, the OECD GL highlight resource efficiency and circular economy approaches as additional means to reduce and prevent GHG emissions.[488] In sum, preventing adverse climate change impacts is clearly – and explicitly – linked to GHG emission reductions (and the prevention of reducing carbon sinks) in the OECD GL. This resonates with statements concerning corporate responsibility for addressing climate change-related adverse human rights impacts under the UNGP (above, IV.A.3.1.2).[489] For instance, in the Safe Climate Report of 2019 (above, IV.A.3.1.2), the first three of the five ‘main responsibilities of businesses specifically related to climate change’ concern enterprises’ GHG emissions reductions.[490] More specifically, the Information Note issued by the UN Working Group on Business and Human Rights (above, IV.A.3.1.2) states that enterprises should phase out both their use of fossil fuels and their production of GHG emissions, avoid contributing to deforestation, and not use carbon offsets.[491] The TCFDR, in turn, make indirect references to GHG reductions, particularly in the context of target setting and reporting in general.[492]

The type of action expected from an enterprise depends mainly on its level of involvement in adverse climate impacts and degree of leverage (above, IV.B.4.2). As argued (above, IV.B.3.2.3), the GHG Protocol’s distinction between direct and indirect emissions provides a useful way of thinking about the specifics of corporations’ responsibility to reduce GHG emissions.[493] Notably, the GHG Protocol Scope 3 Standard recognises that ‘while a company has control over its direct emissions, it has influence over its indirect emissions’.[494] Indeed, where the company has (full) control over a source of GHG emissions (typically for direct emissions), it can reduce GHG emissions directly. Where it does not have full control over a source of GHG emissions (typically for indirect emissions), the company must use its leverage (above, IV.B.4.2; below, IV.B.4.4).[495]

The OECD GL recommend that enterprises set mitigation targets that include absolute and, ‘where relevant’, intensity-based GHG reduction targets (above, IV.B.2.2).[496] The OECD GL thus recognise the priority of absolute GHG emission reductions over efficiency gains. Further, the OECD GL state that enterprises should prioritise eliminating or reducing sources of emissions over offsetting, compensation, or neutralisation measures.[497] Carbon credits or offsets may only be considered as a last resort to address unabated emissions.[498] The prioritisation of reductions over compensation or offsetting is corroborated by other guidance such as the ISO Net Zero Guidelines.[499] If used as an ultima ratio, carbon credits and offsets should be of high environmental integrity and should not distract from the need to reduce emissions or contribute to the locking in of GHG intensive processes and infrastructure.[500] These clarifications are important given the manifold problems associated with the voluntary carbon markets,[501] such as the lack of actual GHG emissions reductions, risks of double counting, land grabbing and other human rights issues.[502] Taking a stricter stance, the Information Note issued by the UN Working Group on Business and Human Rights explicitly states that enterprises should reduce GHG emissions without offsetting.[503] The exclusion of carbon offsets resonates with the UNGP’s statement that a company’s failure to address negative impacts cannot be offset by parallel positive initiatives in other areas.[504]

Exercise Leverage

Where companies do not have full control over a source of emissions, as is typically the case with indirect emissions, they should use their leveraging power to achieve GHG emissions reductions in order to prevent or mitigate the adverse climate change impacts to which they have contributed, or to which they are directly linked through their operations, products or services (above, IV.B.4.2–4.3). Leverage exists where the enterprise has the capacity to effect change in the wrongful practices of the company that causes or contributes to a harm (above, IV.B.3). Where leverage exists, it must be exercised.[505] Where leverage is lacking, a company should look for ways to increase it.[506] The OECD GL point out that the use of leverage, together with the provision of technology on mutually acceptable terms, technical assistance and funding to suppliers and other business relationships for climate mitigation (and adaptation), will be critical to meeting targets and addressing impacts.[507]

There are many ways in which a company can exert leverage with a view to reducing its indirect emissions. Relevant measures include collaborative action such as training, capacity building, engagement and cooperation with other companies (eg through initiatives, below, IV.B.4.5) – but also more ‘coercive’ measures through contractual means (eg setting expectations on climate change mitigation in commercial contracts), or corporate governance measures (eg linking business incentives to performance on climate change targets).[508] The OECD GL recommend that enterprises encourage their business partners (including suppliers and subcontractors) to adhere to the OECD GL ‘where practicable’.[509] In practice, exercising leverage in the supply chain often involves the contractual inclusion of supplier codes of conduct or terms and conditions.[510] Contractual enforcement is essential (below, IV.C.1). Where a business partner does not adhere to contractual expectations concerning climate change mitigation, temporary suspension or disengagement from the business relationship may be adequate responses.[511] With respect to upstream Scope 3 emissions (such as from purchased fuel, goods and services, transportation and business travel), the company can implement measures such as GHG emissions criteria (targets or budgets) into policies concerning procurement or business travel.[512] With regard to downstream Scope 3 GHG emissions (such as from the use or processing of sold products, distribution, or investments), the company may exert leverage power for instance through designing and providing its products and services in a way that minimises GHG emissions as far as possible.[513] Major shifts may require more fundamental actions. For example, a fossil fuel producer can significantly reduce its Scope 3 emissions by shifting to renewable energy production.[514]

There are several limitations and practical challenges to exercising leverage.[515] In addition, there may be legal constraints, such as corporate governance rules that prevent minority shareholders, particularly foreign shareholders, from exercising influence over publicly listed companies.[516] Notably, difficulties in exercising leverage do not relieve the company of its responsibility to exercise any leverage it may have as part of its responsibility to carry out CCDD.[517] In fact, there are many different ways to overcome leverage constraints.[518] Accordingly, a company must explore the full spectrum of possible ways to use or increase leverage. Limitations and possible ways to overcome them are illustrated by two examples:

As a first example, it may be challenging for a bank to use leverage concerning its Scope 3 emissions to the extent that relevant decisions are taken by the bank’s customers (eg investment decisions).[519] To exercise leverage, the bank may, for instance, provide customers with information on its products’ and services’ adverse climate change impact (as well as the potential climate-related financial risks to the client), actively inquire about the customer’s preferences, or promote alternative services and products linked to lower GHG emissions, with the aim of ‘educating’ customers to improve their ability to better understand the environmental impact of their decisions.[520] Such ‘nudging’ approaches are increasingly being mandated by financial market regulations and self-regulatory instruments.[521]

As a second example, increasing leverage may create a dilemma for an investor if it means increasing investment in a company or project with high GHG emissions (above, II.B.3).[522] Investors are not responsible for the behaviour of an investee company, which remains individually responsible for addressing its share of adverse climate change impacts; however, investors are responsible for their own conduct, including efforts to exert leverage on investees.[523] Strategies to exercise or increase include shareholder engagement (involving strategies such as dialogue, proxy voting, filing shareholder resolutions; above, II.C.3) and, as an ultima ratio, litigation (above, III.C.4).[524] Using shareholder rights is a way to hold the boards of investee companies accountable for their responsibility to address climate change impacts.[525] In circumstances where an investor is unable to effectively address its direct link or contribution to adverse climate change impacts through the exercise of leverage, divestment is an adequate response (above, II.C.3).[526]

More generally, addressing GHG emissions tied to investments generally involves integrating the consideration of climate change impacts into investment decisions, including shifting away from financing fossil fuel projects and other investments that lock in significant GHG emissions.[527] Further, enterprises may consider participating in industry or multi-stakeholder initiatives dedicated to climate action, such as Climate Action 100+ or GFANZ (above, II.B.3).[528] While joining such initiatives may be a viable option, participating companies (including investors) remain individually responsible for ensuring that their due diligence is carried out in an effective manner.[529]

Accompanying Measures

In addition to reducing GHG emissions and using leverage, international guidance points to several accompanying measures that should form part of companies’ broader responsibility to address climate impacts. These measures include, in particular, (i) stakeholder engagement, (ii) avoiding greenwashing, (iii) refraining from inappropriate lobbying, and (iv) preventing the use of reprisals against organisations and individuals seeking to investigate or report climate change-related concerns.

Companies should engage effectively and meaningfully with relevant stakeholders affected by adverse climate impacts associated with the enterprise’s operations, products, or services.[530] Meaningful engagement with relevant stakeholders – employees, suppliers, customers, communities, etc – consists of interactive processes (such as meetings, hearings, or consultations) that provide an opportunity for the views of those impacted or potentially impacted to be taken into account by the enterprise.[531] In principle, enterprises should prioritise engagement with the most severely impacted or potentially impacted stakeholders.[532] However, given that climate change affects virtually everyone (above, IV.B.3.2), including future generations, engagement on a broad scale may not be feasible.[533] In such circumstances, the OECD GL and the UNGP recommend that enterprises consider reasonable alternatives such as consulting with credible, independent experts, stakeholder representatives, or ‘proxy organisations’ (eg NGOs or representative public bodies).[534]

International guidance recommends that enterprises should refrain from greenwashing (see above, I.A.4), promoting unsustainable consumption as well as from seeking undue corporate influence in the political and regulatory spheres (ie lobbying against policies that seek to enable the transition to net-zero).[535] Businesses should abstain from making representations or engaging in practices that may be deemed deceptive, misleading, fraudulent, unfair or otherwise undermine consumer choice.[536] The OECD GL recommend that companies provide accurate, verifiable and clear information that is sufficient to enable consumers to make informed choices in relation to the environmental attributes of products and services, including with respect to GHG emissions.[537] Any environmental claim made by an enterprise – for example, a claim that a product or the entire company is ‘climate neutral’ – should be based on adequate evidence and, where appropriate, proper tests and verification.[538]

With respect to influencing political processes, enterprises should ensure transparency and integrity in their lobbying activities, which involves ascertaining that lobbying activities are consistent with the company’s commitments and goals on climate change mitigation.[539] It is the board’s responsibility to ensure that the company’s lobbying activities are in alignment with its stated climate objectives and targets.[540]

Finally, enterprises should take active steps to prevent the use of reprisals (retaliatory or discriminatory actions designed to censor, intimidate, harm or silence critics) against groups and individuals who seek to investigate, express or report concerns related to climate change, including by maintaining appropriate whistleblower protections.[541] This involves treating ‘climate activists’ or ‘climate defenders’ as critical partners and ensuring that the enterprise’s actions do not directly or indirectly harm them.[542] Further, companies should refrain from strategic lawsuits against public participation (SLAPP lawsuits) and undue counter-shareholder litigation aimed at silencing ‘activist’ shareholders concerned about climate risk.[543]

Track and Measure Implementation

The fourth element of CCDD is tracking and measuring the implementation and results of the companies’ efforts to address their adverse climate change impacts.[544] This includes periodically reviewing the effectiveness of strategies and monitoring progress towards climate change mitigation.[545] Transition plans and GHG reduction targets (above, IV.B.2.2) should be regularly reviewed for adequacy and relevance based on the latest available scientific evidence and transition pathways, and updated accordingly.[546] Supporting measures include periodic internal or third-party reviews and audits, assessments of business relationships where appropriate, and continuous improvement of the company’s CCDD-related processes.[547] Performance should be tracked against defined metrics (above, IV.B.2.2), providing key indicators of the effectiveness of CCDD.[548] The results of tracking and measuring inform whether the enterprises’ CCDD strategy and processes need to be adjusted.[549] Companies’ progress (or lack of progress) against climate-related targets should be disclosed publicly (below, IV.B.6).[550]

Reflecting the duty of oversight (above, III.B.2.5), the board has primary responsibility for monitoring progress against the strategy and targets for addressing climate-related issues.[551] Aligning board and executive remuneration incentives with the achievement of quantifiable climate targets, and thus with the longer-term interests of the company, is considered good practice (above, III.C; IV.B.2.1).[552]

Communicate

Communication is an important element of CCDD, as it enables outsiders to evaluate a company’s level of ambition and efficiency in terms of addressing adverse climate impacts.[553] It requires full transparency on the company’s CCDD strategy, its implementation actions, and progress (or shortfalls) toward its goals. In many jurisdictions, reporting on climate issues is mandatory (above, II.C.2, III.C.2).[554] In addition to formal disclosures, meaningful stakeholder engagement (see IV.B.4.5 above) serves as another key form of communication within CCDD.[555]

In terms of creating transparency about climate risks to the company, the communication element of CCDD can draw on the TCFDR (above, III.C.2).[556] The OECD GL call for reporting on material sustainability-related information (above, II.C.2.2) as part of enterprises’ responsibility to carry out due diligence.[557] In this context, the importance of reporting on climate-related risks is particularly emphasised.[558] The OECD GL also recommend disclosures concerning climate impacts: Companies should provide the public, workers, and other relevant stakeholders with adequate, measurable, verifiable (where applicable) and timely information on environmental impacts – including climate impacts – associated with their operations, products and services based on best-available information, and progress against targets and objectives.[559] Due diligence communication includes information about the company’s policies on climate issues (including transition plans and their corresponding metrics and targets), measures taken to embed those policies into management systems, identified areas of significant risks, specific priority areas, as well as the actions taken to prevent or mitigate those risks, including any remedial actions – in other words, transparency in relation to all other elements of CCDD.[560]

Absolute GHG emissions should be reported in accordance with the GHG Protocol, the most widely recognised and used international standard for measuring and accounting GHG emissions (above, II.B.2).[561] Reliable metrics should be disclosed in a readily accessible form, enabling users to assess the enterprise’s progress against its targets.[562] In addition, enterprises should publicly report on their reliance on, and relevant characteristics of, any carbon offsets used to balance residual emissions as a last resort (above, IV.B.4.3); this reporting should be complementary to, but distinct from, reporting on emission reductions.[563]

Providing transparency on the board’s oversight of climate-related risk is essential. The TCFDR recommends that, as part of disclosing the board’s oversight of climate-related issues, the organisation describe how the board monitors and oversees progress against goals and targets for addressing those issues.[564]

Remedy

Remediation concerns a company’s response to the actual adverse impacts that it has not been able to foresee, prevent or mitigate.[565] Taking remedial action means seeking to restore the situation that would have existed had the adverse impact not occurred.[566] In addition to restoration, remediation has a preventive dimension in the sense that it also concerns the prevention of adverse climate impacts. The preventive dimension of remediation overlaps with the element of addressing adverse climate impacts by reducing GHG emissions or enhancing carbon sinks (above, IV.B.4). The collective, transboundary and diffuse nature of climate impacts renders remediation in the context of CCDD particularly complex.[567]

Whether a company should engage in remediation depends on its level of involvement in an adverse impact. Where a company contributes to an impact, it should take the necessary steps to cease or prevent its contribution, but also cooperate in remediation; where it is directly linked to an adverse impact, the company is not responsible for providing remediation, but it should, alone or in cooperation with others, use leverage to influence the entity causing the adverse impact to prevent, mitigate or remediate the impact (above, IV.B.4.2).[568]

The right to effective access to remedy is a core principle of international human rights law, constituting Pillar III of the UNGP; there, it is conceptualised as a joint responsibility of states and enterprises.[569] Although formally treated separately in the UNGP (in Pillar III, not in Pillar II), remediation is an integral part of risk-based due diligence.[570] This is corroborated by the fact that the OECD GL Environment Chapter includes remediation as an element of risk-based environmental due diligence.[571] The 2019 Safe Climate report reaffirms that business responsibility extends to remediation (IV.A.3.1.2).

Remedial measures that states must take by judicial, administrative, legislative or other appropriate means as part of their duty to protect against corporate abuse (Pillar I) include apologies, restitution, rehabilitation, financial or non-financial compensation and punitive (criminal or administrative) sanctions, as well as prevention of harm, for example through injunctions or guarantees of non-repetition.[572] For businesses, remediation includes maintaining legitimate processes to promote early identification of adverse impacts, including operational-level grievance mechanisms (see above, IV.B.4.5).[573] The type of remedy appropriate to the situation will depend on the nature and extent of the adverse impacts, and may include apologies, restitution or rehabilitation, financial or non-financial compensation, sanctions (eg dismissal of employees responsible for wrongdoing), and preventive measures to avoid future adverse impacts.[574] To determine the appropriate way to remediate an adverse impact, companies can also look to standards and precedents and consider a remedy consistent with that provided in similar cases.[575]

The issue of remediation gives rise to a number of fundamental questions, including those pertaining to the attribution of responsibility to each of the parties involved.[576] As a matter of principle, risk-based due diligence includes providing effective access to remedy in regards to climate change impacts.[577] Businesses and states should provide appropriate and effective remediation both for existing climate change impacts (actual impacts) and, arguably, also for the protection of the rights of future generations (as part of potential impacts).[578] Notably, the OECD GL recognise the concept of individual responsibility for cumulative impacts (above, IV.B.3.2.3), albeit without offering specific guidance on the content and scope of remedial actions for climate change impacts. Concerning investors, OECD guidance notes that remediation involves encouraging investee companies to provide for or cooperate in remediation, which may include various actions, including restoration and taking preventive actions ‘for example through adopting cleaner technologies or making changes to business models and activities’.[579] The 2023 Information Note of the UN Working Group on Business and Human Rights provides certain climate-specific recommendations in relation to remedy.[580] It points out that companies should take urgent remedial action, including ceasing any climate change-related human rights impacts that they cause or to which they contribute.[581] Further, the Information Note sets out that preventive remedies such as injunctions against state and business projects with human-rights related climate change risks should be developed and implemented.[582] Pointing to further elements of remediation, the Information Note posits that (i) business enterprises should participate in good faith in judicial or non-judicial proceedings concerning climate change-related impacts on human rights and the environment and (ii) industry and business associations should consider establishing sector-specific or industry-wide operational grievance mechanisms to address complaints about climate change-related human rights and environmental impacts.[583]

The topic of remedies as part of risk-based due diligence in relation to climate change impacts is rarely explored in the literature. Among the few authors addressing the topic, Seck argues that companies with high GHG emissions must not only take measures to reduce emissions, but also to remedy climate damage.[584] Birchall posits that the types of remedies advocated under Pillar III of the UNGP (in particular, operational-level grievance mechanisms) are ill-suited to dealing with large-scale impacts such as climate change, identifying three major structural problems.[585] First, the mechanisms require a specific group to target a specific firm or set of firms, creating high burdens for collective actions. Second, they are largely framed as voluntary and thus perceived as weak from an enforcement point of view. Third, they are costly and burdensome. For these reasons, Birchall proposes the alternative of establishing a trust fund for victims.[586] His proposition is based on the view that ‘determining a particular corporation’s contribution is difficult in the case of large-scale impacts’ and that ‘(i)t would be impossible to disaggregate the contributions of one of the carbon majors, a leading technology company, and a large bank to a climate change-related disaster’.[587] However, as demonstrated in Heede’s research, the disaggregation of contributions by disparate entities does not present an insurmountable challenge. Further, continuing developments in GHG accounting and reporting contribute to the allocation of responsibility to individual actors. Hence, dismissing the potential of individualised remedies outright would be a mistake. This resonates with a statement of an OHCHR document of 2016, which notes that ‘(i)n the context of climate change, particularly where businesses have contributed to severe impacts (such as large businesses involved in the generation of electricity and heat, transportation, industrial agriculture, and other high emitting sectors), each business should provide for remediation appropriate to its share in responsibility for the harm’.[588] As mentioned earlier (above, IV.B.3.2.3), the OECD GL explicitly recognise the concept of partial responsibility for cumulative impacts. Drawing on examples from climate change litigation, Bright and Buhmann identify a number of potential remedial actions, including participation in the cost of preventive measures to address climate change risks (such as anti-flooding works).[589] Notably, as stated above, reducing GHG emissions is a (key) form of (preventive) remediation. Put differently, addressing the companies’ adverse climate change impacts by reducing GHG emissions throughout the company’s value chain (above, IV.B.4.3) overlaps with the preventive dimension of remedy.

Remediation should not be equated with liability. As mentioned, litigation before both state and non-state dispute resolution bodies is a form of seeking remedy. The discussion of remedies within CCDD helps identify potential types of remedies (both preventive and restorative) pursued in climate litigation (see below, IV.C.4).

Enforcement

Means of Enforcement

For CCDD to be effective, enforcement must be available. The focus in this section is on arguably the strictest form of remedy (above, IV.B.7), enforcement through dispute resolution, both before judicial and non-judicial bodies. A primary avenue of non-judicial enforcement of CCDD is the NCP system as established by the OECD GL. By the end of 2025, more than two dozen climate change-related cases had been filed through this system (below, IV.C.2). In addition, several UN special procedures calling for corporate action on climate change had been initiated (below, IV.C.3). With respect to judicial enforcement of CCDD, there is a growing trend of private climate litigation cases which contributes to establishing the concept of CCDD as a legal obligation for companies (below, IV.C.4).

While not explored in depth in this study, contractual means are also an important means of enforcing CCDD. It has become common practice for large companies to incorporate CCDD-related obligations into their supplier contracts, typically by reference to their supplier code of conduct (above, IV.B.2.1). Contractual enforcement is an important way of exercising leverage on business partners, especially in the upstream value chain (above, IV.B.4.4).

Specific Instances before National Contact Points under the OECD GL

By the end of 2025, more than two dozen climate change-related cases had been filed under the OECD GL’s unique non-judicial grievance mechanism, the NCP system (above, IV.A.3.2.1). These cases, part of the growing body of private climate litigation (above, II.B.4.3), highlight the OECD GL’s key role in defining corporate climate responsibility through international standards. They deal with a range of climate change-related issues, including disclosure, greenwashing, GHG reduction targets and due diligence. Notably, many of the cases were filed prior to the OECD GL’s inclusion of climate change-specific recommendations in 2023 (above, IV.A.3.2.2). The evolving body of NCP cases contributes to clarifying how CCDD expectations are interpreted and applied in practice. Given the close conceptual alignment of the OECD GL with the UNGP in terms of risk-based due diligence, the NCPs can be seen as the de facto grievance mechanism of the UNGP.[590]

Any interested party may submit a so-called ‘specific instance’ – a form of complaint – to an NCP (or several NCPs), alleging non-observance of the OECD GL by one or several MNEs. There are several characteristics of NCP proceedings that make them distinct from court proceedings. Unlike court proceedings, which are typically adversarial, NCP procedures primarily aim to foster constructive dialogue between parties – seeking a mutually agreed resolution to the issues raised (consensual and non-adversarial).[591] Further, rather than an ex-post assessment, the main focus of NCP proceedings is forward-looking in the sense of seeking to change corporate behaviour where it is deemed not to be in line with the OECD GL.[592] Moreover, NCPs lack the authority to impose remedies such as injunctions or compensation orders. For the MNEs involved, participation in a specific instance is voluntary. However, non-participation may result in adverse consequences. This stems primarily from the (partial) publicity of specific instances – including NCPs’ ability to issue a public statement of an MNE’s non-adherence to the OECD GL (though this happens rarely).[593] In addition, in certain jurisdictions, an unfavourable assessment by an NCP can trigger ‘tangible’ consequences for the MNE involved, for example difficulties in securing foreign trade assistance or export credit.[594] Finally, NCPs do not have the authority to impose procedural costs on the parties, and the parties bear their own legal costs (if any).

NCPs frequently handle complaints concerning environmental issues. According to an OECD study, out of a total of 322 specific instances submitted to all NCPs between 2011 and 2021, 77 (24 per cent) made reference to the Environment Chapter, making it the fourth most cited chapter after Human Rights (61 per cent), General Policies (57 per cent), and Disclosure (25 per cent).[595] Submitting parties commonly allege non-compliance with multiple chapters of the OECD GL. Out of the 77 cases alleging non-observance of the Environment Chapter during the mentioned time period, almost half (42 per cent) concerned environmental impacts in countries that do not adhere to the OECD GL (non-adherents), demonstrating the extraterritorial reach of the NCP system.[596]

A total of 27 climate change-related complaints had been lodged by the end of 2025. In these cases, climate change either constituted the primary concern or one of several issues raised by the submitting parties (above, II.B.4; below, Table 6). The complaints, most of them lodged by NGOs, concern MNEs from a variety of sectors, including finance (11), energy (8), agriculture/food (4), manufacturing (2), transport (1), and other (1). In line with this study’s concept of CCDD focused on mitigation (above, IV.A.2.3), Table 6 does not include ‘just transition cases’, such as those alleging adverse impacts from renewable energy projects on local communities.[597]

Table 6: Climate change-related Specific Instances under the OECD GL (in chronological order, until end of 2025)

1
Germanwatch
Volkswagen
Germany
[598]Germany
2007
[599]II, III, V, VII
Manufacturing (automotive)
Allegation that Volkswagen breached the Guidelines by (i) failing to formulate adequate climate targets, (ii) failing to take the necessary steps to achieve its climate targets, (iii) failing to inform customers transparently about the climate impact of its vehicles and (iv) lobbying against climate policy frameworks.
[600]Not accepted (outside the scope of the Guidelines).

2
Greenpeace Germany
Vattenfall
Germany
Germany
2010
II, V, VII
Energy
Allegation that Vattenfall breached the Guidelines by initiating investor-state arbitration proceedings against Germany, seeking EUR 1.4 billion in compensation in relation to the government’s decision to impose stringent environmental standards on Vattenfall’s Hamburg-Moorburg coal-fired power plant (then under construction).
Not accepted (not substantiated / outside the scope of the Guidelines / already being dealt with by German courts).

3 | Norwegian Climate Network and Concerned Scientists Norway | Statoil (today: Equinor) | Norway | Canada | 2011 | VI | Energy | Allegation that Statoil breached the Environment Chapter by investing in Alberta oil sands, thereby contributing to Canada’s failure to meet its international obligations to reduce GHG emissions for the period 2008–2012. | Not accepted (outside the scope of the Guidelines / not substantiated / concerning the conduct of the state rather than that of the MNE).
4 | 4 NGOs | ING Bank | Netherlands | Nether-lands | 2017 | III, VI, VIII | Finance | Allegation that ING Bank breached the Environment Chapter by (i) failing to disclose its total carbon footprint (including indirect GHG emissions) and (ii) failing to set targets to align its indirect GHG emissions with the objectives of the Paris Agreement. | Concluded (with agreement, including ING’s consent to using certain methodologies for the setting of targets, to reduce its thermal coal exposure to close to zero by 2025, and to refrain from financing new coal-fired power plants).
5 | Development YES – Open-Pit Mines NO! Foundation | Group PZU | Poland | Poland | 2018 | II, III, VI, V, VIII | Finance | Allegation that Group PZU breached various chapters of the Guidelines by failing to include information on the impact of the activities of the companies it insures, including their environmental impact and climate-related matters within its 2017 non-financial statement. | Concluded (with agreement: PZU included a major part of the requested information in its 2018 report).

6
Market Forces
SMBC, MUFG and Mizuho
Japan
Vietnam
2019
II, III, IV, VI
Finance
Allegation that the three financial institutions’ financing of several coal-fired power plants in Vietnam breached the Guidelines by, among other things, (i) failing to use leverage to ensure that project sponsors engage with affected communities and (ii) failing to prepare (or require project sponsors to prepare) Environmental and Social Impact Assessments (ESIAs) of the projects.
Concluded (without agreement).

7 | Client Earth | BP | UK | UK | 2019 | VI, VIII | Energy | Allegation that BP’s advertising campaign (‘Keep Advancing’, ‘Everything Possible’) gave a false impression of the relative scale of renewable and low-carbon energy in the company’s business while misleading consumers about the severity of BP’s contribution to climate change. | Not accepted (due to BP’s withdrawal of the advertising campaign).
8 | Focus Association for Sustainable Development and others | Ascent Resources | Slovenia | Slovenia | 2019 | II, VI | Energy | Allegation that Ascent breached the Guidelines by failing to take appropriate steps to consider and address the potential environmental impacts of hydraulic fracking, including its contribution to the threat of runaway climate change (among other things). | Reportedly not accepted [limited information available].

9
Australian bushfire victims and Friends of the Earth Australia
ANZ Bank
Australia
Australia
2020
II, III, V, VI, VIII
Finance
Allegation that ANZ Bank breached the Guidelines by (i) failing to disclose its indirect GHG emissions resulting from its corporate lending activities, (ii) failing to carry out adequate due diligence on its climate-related risks, (iii) failing to prevent or mitigate its adverse environmental impacts (including through a lack of adequate environmental management), (iv) failing to provide sufficient information on its indirect GHG emissions to enable its customers to make informed decisions, and (v) failing to divest from fossil fuels.
Concluded (without agreement: ANZ Bank found to adhere to Guidelines/partially not accepted (in relation to fossil fuel divestment, outside the scope of the Guidelines)).[601]

10 | Global Witness | UK Export Finance (UKEF) | UK | UK | 2020 | III, VI | Finance | Allegation that UKEF breached the Guidelines by failing to support the objectives of the Paris Agreement by providing export credits to the fossil fuel industry. | Not accepted (outside the scope of the Guidelines / UKEF not an MNE).

11
Divest Invest Protect, Indigenous Peoples Law and Policy Program, and Women’s Earth and Climate Action Network (WECAN)
Credit Suisse (today: UBS)
USA
USA
2020
II, IV, VI
Finance
Allegation that Credit Suisse breached the Guidelines by (i) failing to leverage its business relationship as a financial services provider with the US energy company Energy Transfer Partners (ETP), (ii) by failing to conduct adequate due diligence to identify, prevent and mitigate actual and potential adverse impacts related to the ongoing activities of ETP’s US oil pipeline, including human rights abuses, environmental damage and social impacts on surrounding indigenous communities, and (iii) by continuing to finance fossil fuels.
Not accepted (no link between business relationship and adverse impacts).

12
Legalità per il clima on behalf of 38 others

Gruppo Veronesi
Italy[602]
Italy
2021
I, II, III, IV, VI, VIII, IX
Agriculture/ Food
Reportedly concerning Gruppo Veronesi’s reporting on the climate (and environmental) impacts of its activities in the livestock sector (methane emissions from intensive farming), adjustments to its risk assessment plans, and the reduction of methane and other GHGs and pollutants [limited information available].
Reportedly accepted [limited information available].

13 | The Lifescape Project et al. | Drax Group | UK | UK | 2021 | VI, VIII | Energy | Allegation that claims made by Drax about the environmental impact of the energy it produces by burning woody biomass at its UK power plant misled consumers about the company’s true climate and wider environmental impact. | Accepted.

14
Legalità per il clima on behalf of 10 others
ENI
Italy
n/a
2022
n/a
Energy
Reportedly, allegation that ENI’s industrial plan for the coming years is incompatible with the climate emergency, given that ENI has not publicly disclosed any information on its risk analyses and the methods used to carry out these analyses, thus rendering the efficiency and effectiveness of its climate strategy (which is supposed to lead to carbon neutrality by 2050) substantially unreliable (limited information available)
Reportedly pending [limited information available].

15 | Legalità per il clima on behalf of 45 others | Cremonini | Italy | n/a | 2022 | I, II, III, IV, VI, VIII | Agriculture/ Food | Reportedly allegation that Cremonini’s livestock-related activities in Italy contribute to the global climate emergency, particularly given the large amounts of methane produced (limited information available). | Reportedly pending [limited information available].

16
Indigenous leaders of AIDESEP and FECONAU et al.
Louis Dreyfus Company B.V.
Netherlands
Peru
2022
II, III, IV, VI, VIII
Agriculture/ Food
Allegations that Louis Dreyfous Company B.V. failed to conduct due diligence on one of its suppliers that allegedly operates on illegally appropriated land in the Peruvian Amazon, resulting in over 12,000 hectares of illegal deforestation without the required environ-mental certifications, causing adverse climate impacts, among other impacts.
Accepted.

17 | Survival International | Pasubio | Italy | Paraguay | 2022 | II, III, IV, VI, VIII | Manufacturing | Allegation that Pasubio breached the Guidelines by sourcing leather from cattle ranches on Ayoreo lands, thereby contributing to illegal deforestation. Although climate change is not at the heart of the case, the complaint explicitly addresses the link between deforestation and climate change. | Pending.

18
Client Earth
Cargill
US
Brazil
2023
II, IV, V
Agriculture/
Food
Allegation that Cargill’s environmental and human rights due diligence policies and procedures do not adequately address the company’s contribution to deforestation and conversion of other ecosystems, and related adverse human rights impacts through its extensive operations at all stages of the soy supply chain (except production) in Brazil.
Pending.

19 | Possible (The 10:10 Foundation) | British Airways and Virgin Atlantic | UK | UK | 2023 | VI, VII | Transport (aviation) | Allegation that the two airlines breached the Guidelines by making misleading claims about reducing emissions, efficiency, alternative fuels, and net zero. | Pending.
20 | Friends of the Earth US | Export-Import Bank of the Unted States (EXIM) | US | US | 2023 | III, VI | Finance | Allegation that EXIM breached the Guidelines by failing to align with the Paris Agreement’s mitigation goal and inadequately disclosing direct and indirect GHG emissions. | Pending.

21
Inclusive Development International et al.
Marsh
US
Uganda, Tanzania
2023
II, III, IV, V
Finance (insurance)
Allegation that Marsh, a US-based insurance broker, breached the Guidelines by failing to conduct adequate due diligence with respect to its reported role as a broker for the construction phase of the East African Crude Oil Pipeline (EACOP), which is alleged to cause serious adverse impacts, including climate change impacts.
Pending.

22
VU Climate Change & Sustainability Law Clinic, North Sea Fossil Free, Scientists for Future NL, Scientist Rebellion NL and Deutsche Umwelthilfe
ONE Dyas B.V.
Netherlands
Netherlands
2024
II, III, IV, VI, VIII
Energy
Allegation that ONE Dyas breached the Guidelines by (i) failing to identify adverse human rights and environmental impacts in the environmental impact assessment of the N05-A project in the North Sea, including a failure to identify Scope 3 emissions, (ii) failing to assess the project’s human rights impacts, and (iii) continually and consistently misrepresenting the climate-related impacts of the project in its public communications.
Accepted.

23
Greenpeace Luxembourg
Fonds de Compensation de la Sécurité sociale SICAV FIS
Luxembourg
Luxembourg
2024
II, III, IV, VI, VII
Finance
Allegation that the fund breached the Guidelines by (i) failing to have a risk-based human rights and environmental due diligence policy, (ii) failing to conduct due diligence in accordance with the Guidelines, including with respect to preventing and mitigating impacts related to its investments, (iii) not aligning with the goals of the Paris Agreement, (iv) not implementing measurable objectives, targets and strategies to address environmental impacts such as climate change, and (v) making misleading claims about the sustainability of its investments.
Pending.

24
The Philippine Movement for Climate Justice et al.
Standard Chartered Bank
UK
Philippines
2024
II, IV
Finance
Allegation that Standard Chartered Bank breached the Guidelines by (i) failing to conduct effective HREDD in connection with its financing of four coal-fired power plants in the Philippines and (ii) failing to cooperate in the remediation of adverse impacts (including climate impacts) that arose as a result of (i).
Pending

25 | Greenpeace Central and Eastern Europe and Fridays for Future Austria | OMV | Austria | UAE, Norway, Romania, Austria | 2024 | VI | Energy | Allegation that OMV breached the Guidelines by failing to establish and maintain an environmental management system, including carrying out risk-based due diligence for adverse environmental impacts, in relation to the expansion of its gas business and investment in gas exploration. | Pending
26 | Friends of the Earth US and the Articulation of Indigenous Peoples of Brazil (APIB) | BlackRock | US | Brazil, Canada, Chile, Indonesia, Liberia, Malaysia, Papua New Guinea, US | 2024 | n/a | Finance | Allegation that BlackRock is directly contributing to environmental and human rights harms (including climate change harms) by means of its investments in agribusiness corporations. | Pending

27
Adfree Cities and the New Weather Institute
WPP (and several companies to which WPP provides advertising services)
UK
UK
2025
II, III, IV, VI, VII
Other
Allegation that WPP’s advertising work for major polluters, including car manufacturers, plastic producers, airlines, and financiers of the fossil fuel industry, contributes to adverse human rights and environmental impacts by increasing demand for polluting products and undermining global efforts to reduce GHG emissions. Additionally, allegation that WPP has failed to disclose its environmental impact in line with its voluntary commitments and environmental claims, and has made inaccurate and misleading statements in its sustainability reporting, including statements claiming that WPP does not take on any client work designed to frustrate the objectives of the Paris Climate Agreement.
Pending

As shown in Table 6, climate change-related specific instances deal with various facets of CCDD, including internal policy setting, transition plans and targets, impact assessments and disclosure, as well as the issue of greenwashing. A substantial number of complaints included allegations of insufficient or misleading climate-related reporting practices and greenwashing (Table 6, cases 5, 7, 9, 12, 13, 19, 22, 23). In terms of industry sector, the most frequent category of cases (11) involves financial institutions. The fact that financial actors have gained significant prominence within the body of climate change-related NCP cases is likely attributable, at least in part, to the explicit reference in the Paris Agreement to the need to align public and private financial flows with the goals of climate mitigation and adaptation (above, II.A.1).[603] In several cases (Table 6, cases 6, 11, 12, 15, 16, 17, 18, 21–24), submitting parties alleged non-observance of the OECD GL’s Human Rights chapter in addition to the Environment (and other) Chapters, although without fully combining climate change with human rights arguments.[604] As indicated, due to the Environment Chapter’s self-standing status, the OECD GL do not require a ‘human rights nexus’ to be applicable to climate change issues (above, IV.A.3.2.2).

While the number of cases is remarkable, outcomes varied and not all cases were accepted for consideration by the respective NCP.[605] Notably, many cases were not concluded with a final statement, preventing a thorough analysis of the cases and the arguments raised therein. The first cases, filed with NCPs of Germany and Norway before the 2011 revision of the OECD GL and the adoption of the Paris Agreement in 2015 (Table 6, cases 1–3), were rejected for lack of applicability of the Guidelines. The period after the adoption of the Paris Agreement in December 2015 saw a sharp increase in climate change-related NCP complaints. This may be due to the growing recognition of the key role of non-state actors in global climate governance in the post-Paris era.[606]

Although focusing on dialogue rather than adjudication, the non-judicial NCP grievance mechanism contributes to shaping normative developments.[607] In the context of CCDD, the Dutch NCP has played a prominent role in this regard, as demonstrated by the following two cases:

Among the cases concluded by the end of 2025, the case 4 NGOs/ING Bank (Table 6, case 4) stands out as the most significant in terms of CCDD impact on financial institutions. Filed in 2017, the matter was governed by the 2011 version of the OECD GL, and thus before the introduction of climate change-specific recommendations through the 2023 revision of the Guidelines (above, IV.A.3.2). In its final statement of 2019, the Dutch NCP confirmed that environmental due diligence extends to climate impacts, including in relation to indirect GHG emissions that occur throughout the enterprise’s value chain.[608] In addition to the Environment Chapter, the Dutch NCP referred to the chapters on disclosure and consumer interest. It stated that the OECD GL demand that ING Bank, like any commercial bank, ‘put effort into defining, where appropriate, concrete targets to manage its impact towards alignment with relevant national policies and international environmental commitments’, pointing to the Paris Agreement as the most relevant international agreement (and thus benchmark) for setting targets.[609] While recognising that financed emissions are ‘difficult to measure and control’ and that banks ‘face considerable challenges in developing an appropriate method, including target setting’, the NCP stressed that the ‘absence of a methodology or international accepted standard will not dismiss companies, including financial institutions, to seek measurement and disclosure of environmental impact’, including both direct and indirect GHG emissions.[610] Hence, the Dutch NCP emphasised the precautionary principle, which underpins the Environment Chapter of the OECD GL (above, IV.A.3.2). Further, the NCP noted that MNEs are expected to periodically review the relevance of their objectives and targets, recommending that ING adopt intermediate targets.[611]

In 2024, in the matter of VU Climate Change & Sustainability Law Clinic et al. v ONE Dyas BV (Table 6, case 21) the Dutch NCP issued the world-first climate change-related initial assessment[612] under the revised OECD GL 2023.[613] The submitting parties argued that the N05-A project, located in the North Sea, should be terminated due to its adverse impacts on the environment and human rights.[614] The submitting parties argue that the environmental impact assessment (EIA) conducted by One Dyas, which formed the basis for the government’s approval, failed to include Scope 3 emissions. On this point, One Dyas advanced the argument that in order to avoid double counting, Scope 3 emissions do not need to be included for the purpose of an EIA.[615] While not commenting on the substance of the issues raised, the Dutch NCP’s initial statement determined that the case merits further consideration, offering its good offices to find a mutually acceptable outcome. Notably, the Dutch NCP stated that the examination of the matter ‘may help clarify the responsibilities of oil and gas extraction companies in the context of climate change within the framework of the updated 2023 Guidelines’ including with respect to ‘the responsibility to adopt, implement, monitor and report on mitigation targets, taking into account scope 1, 2 and, to the extent possible based on best available information, scope 3 (GHG) emissions’.[616]

Are specific instances an effective way of enforcing CCDD? The NCP system has its strengths and weaknesses. A potential strength is its non-adversarial nature. Not being bound by the strict rules of court proceedings, specific instances have the potential to help clarify the meaning of CCDD and identify its shortcomings. Especially the Dutch NCP has facilitated normative innovation in the context of CCDD.[617] However, several weaknesses cannot be ignored. A main critique is the lack of coherence in the ways adhering states set up their NCPs, in many cases leading to concerns about impartiality and lack of financial resources.[618] Benjamin and Seck identify ‘a tremendous lack of consistency across NCPs, which has the effect of discouraging parties from initiating specific cases in certain countries.[619] Another point of criticism is the lack of transparency.[620] Some NCPs operate with a high degree of secrecy regarding the specific instances filed. Ultimately, the efficacy of the NCP system is contingent upon the capacity of each NCP, which varies greatly.[621] Taking a critical stance, Birchall argues that the grievance mechanism provided by the NCP system largely precludes the possibility of bringing a case involving impacts caused by multiple actors and with disparate victims, as is typically the case with climate change.[622] Indeed, the NPC system was not designed to file a specific instance involving a large number of companies.[623] Birchall concludes that the NCP system is ill-suited to deal with large-scale impacts (see above, IV.B.7). And yet, the specific instances summarised in Table 6 demonstrate the NCP system’s capability of providing a government-facilitated platform for interested parties to engage with MNEs on climate change issues in a non-adversarial setting. In a few cases (Table 6, cases 4 and 5), the NCP process led to mutually acceptable outcomes. However, it must be acknowledged at this juncture that a mutually acceptable outcome facilitated by an NCP is not enforceable in the same way as a settlement in court.

Overall, it remains to be seen whether the inclusion of climate change-specific recommendations as part of the 2023 revision of the OECD GL (above, IV.A.3.2.2) will spur a further increase in the number of climate change-related cases and whether it potentially enhances the chances of ‘success’ for submitting parties. In any event, and crucially, the 2023 update reaffirmed the mandate of NCPs to accept climate change–related complaints and provided them with substantive guidance on how to handle such cases. Accordingly, the NCP system may become an important ‘test bed’ for defining the precise content of CCDD standards.[624]

UN Special Procedures

Several special procedures before international human rights bodies have dealt with climate change-related adverse human rights impacts (above, IV.A.3.1.2).[625] These special procedures do not provide for a non-judicial grievance mechanism like the OECD GL’s NCP system. Nevertheless, since they address similar issues, these cases are instructive in illustrating the potential scope and content of the CCDD. Procedures before international human rights bodies face significant constraints, especially regarding the exhaustion of domestic remedies, jurisdiction, and victim status.[626] In the context of CCDD, two cases are particularly noteworthy: Billy et al. v Australia and a complaint filed by ClientEarth against Saudi Aramco, the Kingdom of Saudi Arabia and several financing banks.

In 2022, in the matter of Billy et al. v Australia, the HRC issued the first authoritative finding by an international human rights body confirming the link between climate change and human rights violations.[627] It held that by failing to adequately protect indigenous Torres Strait Islanders against adverse impacts of climate change, Australia had violated their rights to enjoy their culture and to be free from arbitrary interferences with their private life, family and home under the International Covenant on Civil and Political Rights (ICCPR).[628] Representing an authoritative interpretation of the ICCPR, the HRC’s opinion may be relevant to the interpretation of climate change-related responsibility of corporate actors (Pillar II), because the ICCPR is recognised in the UNGP as being part of the minimum level of internationally recognised human rights, and thus as one of the ‘benchmarks against which other social actors assess the human rights impacts of business enterprises’.[629]

In September 2021, ClientEarth filed a complaint with the Working Group on the issue of human rights and transnational corporations and other business enterprises and the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment concerning Saudi Aramco, the Kingdom of Saudi Arabia, and several financing banks.[630] Referring to the trichotomy of involvements in adverse impacts (above, IV.B.3.2.3), the complaint alleges that Saudi Aramco, the world’s largest emitter of GHG emissions, contributes to significant climate change-related human rights impacts, including in Saudi Arabia, by substantially expanding (rather than winding down) its oil and gas production, while at the same time engaging in a widespread advertising campaign promoting claims of sustainability.[631] Thereby, the complaint argues, Saudi Aramco, which is controlled by Saudi Arabia, fails to prevent or mitigate the climate change-related human rights harms caused by its products.[632] The complaint further alleges that several financing banks are likely to be contributing to the adverse human rights impacts by facilitating Saudi Aramco’s activities through loans, direct investment and other support, arguing that the banks should cease their business relationships with oil and gas businesses which are not credibly aligned with the goals of the Paris Agreement.[633] In reaction to the complaint, the Working Group on the issue of human rights and transnational corporations and other business enterprises and several UN Special Rapporteurs issued a joint letter to Saudi Aramco.[634] The letter expresses ‘most serious concern regarding the adverse impacts on human rights caused by activities such as the exploitation of fossil fuels which contribute to climate change’.[635] It further states that the undersigned are ‘concerned about how Saudi Aramco’s actions may contribute to undermining the Paris Agreement and international cooperation in the face of the existential threat to human rights posed by climate change’, pointing out that ‘(s)tate-owned enterprises should have an increased responsibility to act fully in line with international standards and best practices to prevent and mitigate against the human rights impacts of climate change’, while also expressing concerns about greenwashing.[636] In addition, the letter asks Saudi Aramco to provide information on its climate change due diligence.[637] Separate letters were sent to the involved banks as well as to the home states of all involved companies. While Saudi Aramco appears not to have responded, several of the banks and states involved did.[638]

While focused on human rights, UN special procedures contribute to shaping the contours of CCDD, as exemplified by the two cases summarised above. These cases must be read in the broader context of litigation before state courts in which the UNGP and the OECD GL are invoked (below, IV.C.4).

Litigation before Courts

Civil Liability

Within the emerging body of private climate litigation (above, II.B.4.3, III.A.4.2), there is a cohort of cases that contributes to establishing CCDD as a legally enforceable obligation through civil liability.[639] These cases either (explicitly) build on the concept of risk-based due diligence as established through the OECD GL and the UNGP, such as the key case of Milieudefensie et al. v Shell (below, IV.C.4.2), seek to enforce national due diligence laws (below, IV.C.4.3.2), or otherwise contribute to specifying elements of CCDD. For the purposes of this study, the most relevant examples of such ‘due diligence cases’ have been identified in the Netherlands, Germany, New Zealand, France, and Switzerland. As this body of cases has only recently emerged, most remained pending a final decision at the end of 2025.

The UNGP recognise that ‘corporate directors, officers, and employers may be subject to individual liability for acts that amount to gross human rights abuses’.[640] The same could be said, mutatis mutandis, for the OECD GL with respect to environmental impacts. Indeed, in addition to regulation (above, IV.A.4), or in the absence thereof, civil litigation is a primary means of enforcing CCDD obligations.[641] The cases presented below (IV.C.4.2–4.3) illustrate a range of remedies conceivable under CCDD (see IV.B.7 above), particularly compensation, injunctions, and declaratory relief. Although these cases do not allege breaches of directors’ duties (concerning such cases, see above, III.C.4), the type of litigation discussed here highlights CCDD-related risks that corporate directors must take seriously.[642] This is exemplified by ClientEarth v Directors of Shell (see above, III.C.4.3), which – although dismissed by the English courts – illustrates the potential direct link between climate change litigation against a company and climate change-related duty of care claims against its directors.[643]

The cases presented below (IV.C.4.2–4.3) are all based on a variant of a duty of care owed by the company, which may take the form of a due diligence duty (eg, the French devoir de vigilance). Due diligence resonates with duties of care in tort law and equivalent duties in civil law jurisdictions such as the German Sorgfaltspflicht; however, due diligence is broader in terms of enforcement, as it is not limited to private actions but can also be subject to public enforcement (eg, fines for failing to conduct appropriate due diligence).[644] Further, the enforcement of due diligence duties does not necessarily require a breach of a substantive standard of conduct but may also arise in cases of deficient process – such as a failure to consider climate change issues in decision-making or to provide relevant disclosures – which resonates with breach of duty claims against directors (above, III.B.2.6).[645]

Netherlands: Milieudefensie et al. v Shell

The Decision of the District Court of The Hague

In 2021, the District Court of The Hague delivered a first-of-its-kind judgement in Milieudefensie et al. v Shell, shedding light on several key elements of CCDD. The case does not concern compensation but rather seeks injunctive relief, specifically an order requiring the company to reduce its GHG emissions. The ruling was groundbreaking, marking the first time a court anywhere in the world ordered a private actor to reduce its GHG emissions in line with a scientifically established emissions reduction pathway. In determining the standard of care owed by the company under Dutch civil law, the District Court relied on the concept of risk-based due diligence from the 2011 versions of the UNGPs and OECD Guidelines, applying it to the specific context of climate change. The ruling’s reliance on the UNGP and the OECD GL signifies a normative endorsement of both the existence and substance of a corporate responsibility to mitigate climate change.[646]

In May 2021, the District Court of The Hague handed down a judgement ordering Royal Dutch Shell (RDS), the (then) parent company of the Shell group (comprising more than 1,100 companies worldwide), to reduce the CO₂ emissions of the Shell group (both direct and indirect emissions) by at least net 45 per cent by 2030, relative to 2019 levels, the year in which the lawsuit was filed.[647] RDS was held liable on the basis of Article 6:162(2) of the Dutch Civil Code, a statute providing for liability in the event of a violation of a personal right, a breach of a statutory duty, or, in the variant relied on by the Court in this case, a breach of an unwritten standard of care to observe the due care exercised in society.[648] In establishing this open-ended standard of care, the District Court considered no fewer than 14 different factors of scientific, socio-economic, legal and factual nature: (i) the consequences of climate change for the country of the Netherlands and the Wadden region, (ii) the measures required to prevent dangerous climate change according to climate science, (iii) possible GHG reduction pathways, (iv) the ‘twin challenge’ of meeting the growing energy demand of the world’s population, (v) the responsibility of states and society, (vi) the right to life and the right to private and family life of Dutch residents and the inhabitants of the Wadden region (under Articles 2 and 8 ECHR), (vii) international RBC standards (in particular, the UNGP and the OECD GL), (viii) RDS’s controlling and policy-setting position within the group, (ix) the Shell group’s GHG emissions, (x) RDS’ influence on CO₂ emissions of the Shell group and its business partners, (xi) applicable obligations for the Shell Group under emissions trading schemes and permits, (xii) the burden of a reduction obligation on RDS and the Shell group, (xiii) the effectiveness of the reduction obligation, and (xiv) the proportionality of the reduction obligation.[649] Referring to the Urgenda precedent against the Dutch government (above, II.B.4.2), the District Court found that Articles 2 and 8 ECHR afford protection against the consequences of dangerous climate change.[650] It thus recognised the indirect horizontal effect of human rights in Dutch private law.[651]

The District Court’s recognition of a ‘corporate duty of care for climate mitigation’, as Mayer calls it,[652] was unprecedented. Drawing on international standards, in particular the UNGP and the OECD GL, the District Court developed its own construction of CCDD, notably in the absence of a domestic due diligence law.[653] The ruling attracted strong attention within academia.[654] It represents an initial, authoritative attempt to clarify CCDD obligations of a major fossil fuel company, drawing on the concept of risk-based due diligence, the Paris Agreement, and climate science.[655] Accordingly, irrespective of its ultimate outcome, which remained uncertain at the end of 2025, Milieudefensie stands out as a highly significant case that bridges the realms of international RBC standards, international climate law, and climate science.

The District Court’s Construction of CCDD

The District Court’s reasoning rested on the premise that corporate responsibility, as articulated in the UNGPs and OECD GL, constitutes a fundamental element in defining the standard of care owed by RDS. The ruling recognises the UNGP as ‘an authoritative and internationally endorsed “soft law” instrument’ that is consistent with the content of other widely accepted instruments, including the OECD GL, making the UNGP ‘suitable as a guideline in the interpretation of the unwritten standard of care’.[656] Underlining their normative character, the District Court’s decision highlights that the UNGP and the OECD GL embody the universal recognition that business enterprises must respect human rights, including those enshrined in the International Covenant on Civil and Political Rights (ICCPR) and the ECHR.[657] Consequently, the District Court found it irrelevant whether RDS had formally endorsed the UNGP.[658] In this context, the judgment quotes from the Environment Chapter of the OECD GL (in their 2011 version), emphasising the expectation that companies should take due account of the need to protect the environment by having regard to relevant international agreements, including by adhering to the precautionary principle (above, IV.A.3.2).[659] Accordingly, in its (implicit) formulation of CCDD, the Court integrated both the human rights–centred and environmental dimensions of risk-based due diligence. This integrated approach is reflected in the wide range of factors the Court considered when determining the standard of care owed by RDS (above, IV.C.4.2.1) – factors extending well beyond human rights considerations.

The ruling reaffirms that businesses are expected to actively ‘prevent, limit and, where necessary, address’ adverse impacts throughout (their) entire value chain.[660] Further, the District Court clarified that contribution to adverse impacts may occur both through a company’s own activities as well as through its business relationships (above, IV.B.3.2.3).[661] The ruling explicitly relies on the concept and terminology of risk-based due diligence as set out in the UNGP and OECD GL, albeit without using the term ‘due diligence’ itself. Crucially, the Court found that RDS bears an individual responsibility, requiring it to do more than merely monitor societal developments and comply with the laws and regulations in the countries where the Shell group operates.[662] The District Court did not require a direct causal link between RDS’s conduct and the harm in question. Rather, given the lower evidentiary burden for injunctive relief compared to compensation, RDS’s proximity to the risk was deemed sufficient to establish liability.[663] This resonates with the primarily preventive nature of CCDD (above, IV.A.2).

While recognising that there was, at the time of the judgment in 2021, ‘no well-defined and concrete specification for the method according to which the timing of various companies must be applied in working towards the goal of net zero emissions in 2050’, the District Court observed a ‘broad international consensus that each company must independently work towards achieving net zero emissions by 2050’.[664] In determining the scope of RDS’s responsibility, the District Court inferred from Principle 14 of the UNGP[665] that ‘much may be expected’ of RDS, because RDS (i) heads a group of over 1,100 companies operating in 160 countries around the world, (ii) has a policy-setting position in that group, (iii) is a major global player in the fossil fuel market, and (iv) produces significant CO₂ emissions which exceed those of many states and contribute to global warming with serious and irreversible consequences for the human rights of Dutch residents and the inhabitants of the Wadden region.[666]

The District Court held that RDS bears responsibility not only for emissions directly attributable to its own operations (Scope 1) but also for indirect emissions (Scopes 2 and 3), including those generated by end users of Shell’s products.[667] While acknowledging the lack of a single approach or standard for reaching net zero targets, the judgement finds that ‘it is internationally endorsed that companies bear responsibilities for Scope 3 emissions’.[668] According to the Court, the responsibility for Scope 3 emissions is ‘more keenly felt where these emissions form the majority of a company’s CO₂ emissions, as is the case for companies that produce and sell fossil fuels’ (see above, IV.B.3.2.3, Category B).[669] Consequently, the Court held that RDS bears responsibility for its Scope 3 emissions, which constituted approximately 85 per cent of its total emissions.[670] The judgment concludes that RDS is expected to identify and assess any potential and actual adverse human rights impacts of its Scope 1 through 3 emissions.[671] Accordingly, while not using this particular terminology, the Court expected RDS to perform a Climate Change Impact Assessment (CCIA), encompassing the full spectrum of direct and indirect emissions (above, IV.B.3.2). This approach is comparable with that of the Norwegian Supreme Court in People v Artic Oil, in which the Norwegian State was ordered to include extraterritorial GHG emissions (which is broadly equivalent to downstream Scope 3 emissions in corporate GHG accounting) in its EIAs (above, II.B.1.3).[672] It is particularly noteworthy that, akin to the conceptualisation of CCIA proposed in this study (see above, IV.B.3.2), the District Court did not require RDS to assess or identify specific potential and adverse impacts. Rather, the ruling finds that by measuring and reporting on its Scope 1 through 3 emissions in accordance with the GHG Protocol, RDS had sufficiently carried out a CCIA.[673] Assessing Shell’s reporting, the District Court concluded that the company regularly monitors and assesses the climate-related risks of its business activities and those of its business relations, for the short term (up to three years), the mid-term (between three to ten years) and the long term (more than ten years ahead).[674]

Adding a mens rea element, the District Court observed that ‘RDS has for a long time known of the dangerous consequences of CO₂ emissions and the risks of climate change to Dutch residents and the inhabitants of the Wadden region’ and that RDS knew, through its reporting activities, about the group-wide emissions.[675] The ruling finds that ‘(RDS) knows that the exploration, production, refinery, marketing, and the purchase and sale of oil and gas by the Shell group as well as the use of products of the Shell group generates significant CO₂ emissions worldwide, which undoubtedly contributes to climate change in the Netherlands and the Wadden region’.[676] While recognising that RDS does not ‘actually cause’ all of the Scope 1 through 3 emissions of the entire group, and that RDS is not the only actor responsible for tackling climate change, the ruling finds that RDS has an ‘individual partial responsibility to contribute to the fight against dangerous climate change according to its ability’.[677] The District Court thus acknowledged that the involvement of a major fossil fuel producer constitutes a level of contribution to adverse climate impacts (above, IV.B.3.2.3, Case B.1), at least with respect to its direct emissions (with respect to indirect emissions, see below, IV.C.4.2.3).[678]

Having established that RDS bears an individual, partial responsibility to contribute to climate change mitigation, the District Court then addressed the crucial question of how the company should address its adverse climate impacts (above, IV.B.4). Reflecting the trichotomy of involvements (above, IV.B.3.2.3), the ruling finds that RDS’ degree of responsibility is determined by two factors: first, the influence and control it can exercise over the Scope 1 to 3 emissions of the Shell group and second, what is necessary to prevent dangerous climate change.[679] In relation to Scope 3 emissions, the ruling holds that ‘(t)hrough the energy package offered by the Shell group, RDS controls and influences the Scope 3 emissions of the end-users of the products produced and sold by the Shell group’.[680] Further, while recognising that the IPCC does not prescribe a particular reduction pathway, the District Court found that the emissions reduction pathways requiring a reduction of 45 per cent until 2030 (as set out in SR1.5, see above, II.B.1.2) represent ‘the best possible chance to prevent the most serious consequences of dangerous climate change’.[681] It recognised that every emission of CO₂ and other GHG, regardless of where or how it occurs, contributes to the imminent environmental harm in the Netherlands and the Wadden region and exacerbates it.[682] Accordingly, acknowledging the transboundary nature of climate change, the Court found that ‘every contribution towards a reduction of CO₂ emissions may be of importance’, as it creates room in the global carbon budget.[683]

Overall, the District Court’s ruling affirms that due diligence can – and must – be applied to address the widespread and large-scale impacts of climate change. It also underscores the critical role of corporate reporting and communication.[684]

The District Court’s Reduction Order

Based on its finding that RDS bears responsibility to address its Scope 1 to 3 emissions, the District Court imposed the following reduction order:

‘The Court … orders RDS, both directly and via the companies and legal entities it commonly includes in its consolidated annual accounts and with which it jointly forms the Shell group, to limit or cause to be limited the aggregate annual volume of all CO₂ emissions into the atmosphere (Scope 1, 2 and 3) due to the business operations and sold energy-carrying products of the Shell group to such an extent that this volume will have reduced by at least net 45% at end 2030, relative to 2019 levels.’[685]

In relation to the group’s direct emissions (Scope 1), and seemingly also in relation including to Scope 2 emissions,[686] the District Court imposed an obligation of result; in relation to the emissions related to the business relationships of the group (Scope 3), the District Court imposed what it called a ‘significant best-effort obligation’.[687] Although the ruling does not elaborate further on this point, the distinction between obligation of result and ‘significant best-effort obligation’ appears to be informed by the cause/contribute/directly linked-trichotomy underlying risk-based due diligence (above, IV.B.3.2.3).[688] With regard to the significant best-effort obligation, by which the Court probably meant an obligation of means, the District Court held that ‘RDS may be expected to take the necessary steps to remove or prevent the serious risks ensuing from the CO₂ emissions generated by [the business relationships], and to use its influence to limit any lasting consequences as much as possible’.[689] In other words, the District Court affirmed RDS’ obligation to use its leverage to reduce its Scope 3 emissions, emphasising that RDS’ obligation to reduce emissions is not diminished by the responsibilities of its business partners and end users.[690] This is a significant finding, as it confirms that an entity directly linked to adverse impacts bears an independent responsibility to exercise leverage, in addition to the obligations of the entity that actually causes or contributes to the impact (above, IV.B.4.2). As Macchi and van Zeben observe, issuing an order with group-wide effect against the controlling parent company mirrors the approach adopted in two recent UK cases.[691]

Recognising that RDS is bound by contractual obligations to its business partners, the District Court held that RDS retains discretion in determining the measures it adopts to fulfil its emission reduction obligations.[692] The ruling holds that RDS ‘can and must’ meet its reduction obligation including by incorporating it into Shell’s group policy.[693] Remarkably, the District Court added that the best-effort obligation may mean that ‘RDS will forgo new investments in the extraction of fossil fuels and/or will limit its production of fossil resources’.[694] Given its order for a net reduction of 45 per cent, the District Court found that RDS may use CO₂ compensation measures to achieve its reduction obligation.[695] Furthermore, the judgment clarifies that the reduction order does not imply that RDS’s current emissions were unlawful, and it therefore rejected the plaintiffs’ request for declaratory relief on this point.[696] With respect to enforceability, the District Court found that the plaintiffs’ interest in the immediate implementation of the order outweighed RDS’s interest in maintaining the status quo pending a final decision, and therefore declared the order provisionally enforceable.[697]

The Decision of the Court of Appeals of The Hague

In August 2021, RDS filed an appeal against the District Court’s decision. Pending the appeal, RDS was renamed Shell Plc (Shell) and relocated its headquarters to London. On 12 November 2024, the Court of Appeals of The Hague upheld the appeal, overturning the District Court’s decision.[698] While reaffirming that major emitters are, in principle, legally responsible for contributing to climate change mitigation, the appellate court rejected the requirement that Shell reduce its CO₂ emissions by a specific percentage (such as 45 per cent or any other figure). Notably, the Court of Appeals referred to the OECD GL more prominently than the District Court.[699]

The Court of Appeals’ judgment reaffirms the indirect horizontal effect of human rights, with reference, inter alia, to the OECD GL.[700] Reflecting on several precedents in public climate litigation, in particular Urgenda and KlimaSeniorinnen (above, II.B.4.2), as well as various resolutions and reports of UN bodies, the Court of Appeals held that ‘there can be no doubt that protection from dangerous climate change is a human right’.[701] While accepting that primary responsibility for climate change mitigation rests with the state (of the Netherlands), the Court said it was an established fact that ‘fossil fuel consumption is largely responsible for creating the climate problem’ and that addressing climate change is ‘something that cannot wait’.[702] Remarkably, the Court of Appeals concluded:[703]

‘In summary, the court of appeal is of the opinion that companies like Shell, which contribute significantly to the climate problem and have it within their power to contribute to combating it, have an obligation to limit CO₂ emissions in order to counter dangerous climate change, even if this obligation is not explicitly laid down in (public law) regulations of the countries in which the company operates. Companies like Shell thus have their own responsibility in achieving the targets of the Paris Agreement.’

Accordingly, the Court affirmed, in unequivocal terms, that major GHG emitters have an obligation to limit CO₂ emissions. In its appeal, Shell had argued that decisions on CO₂ emissions reductions require a balancing of interests that can only be achieved by the legislator, leaving no room for adjudication by a civil court.[704] The Court of Appeals rejected this argument. Stating that legislative measures are not exhaustive in and of themselves, the Court held that the applicable regulatory framework does not preclude a duty of care on an individual company to reduce CO₂ emissions, based on the social standard of care (Article 6:162 Civil Code).[705] Hence, the Court found, companies have a ‘general’ obligation (social duty of care) to reduce their GHG emissions, an obligation that extends beyond the mere adherence to specific regulations.[706]

While acknowledging a general obligation to contribute to climate change mitigation in accordance with the objectives of the Paris Agreement, the Court of Appeals declined to specify a particular percentage by which Shell must reduce its GHG emissions, thereby vacating the District Court’s reduction order (above, IV.C.4.2.3). In its reasoning, the Court distinguished between direct and indirect emissions. Concerning Scope 1 and 2 emissions, the judges acknowledged that Shell has set (and largely achieved already) a reduction target for 2030 equivalent to that claimed by the plaintiffs.[707] Although the Court acknowledged that Shell had previously weakened its targets, it was not convinced by Milieudefensie’s argument that Shell was at risk of failing to meet them.[708] The decision examines in detail Shell’s obligations concerning its Scope 3 emissions. The Court accepted that, in general, Shell bears responsibility concerning its Scope 3 emissions, referring to the EU ETS, the CSRD, the CSDDD, the OECD GL, and the GHG Protocol.[709] Further, the Court of Appeals rejected Shell’s argument that it could not influence the emissions of its end-users: ‘it is … too easy to say that Shell has no influence on scope 3 emissions, even though Shell’s power in this regard may be somewhat limited’.[710] The decision holds that the fact that Shell has set Scope 3 targets contradicts its assertion that it has no influence over them.[711] Moreover, the Court found that ‘any reduction obligation regarding scope 3 emissions will not constitute a standard that creates liability of Shell for (lawful) acts of third parties’.[712] And yet, the Court concluded that it cannot determine a specific percentage by which Shell must reduce its emissions.[713] The judges acknowledged a broad consensus that, at the global level, net zero emissions by 2050 and net -45 per cent by 2030 as an interim target are required to limit average temperature increase to 1.5°C.[714] However, the Court also determined that the application of the global reduction pathway to a single company, whose emissions are distributed across multiple sectors, is not adequate.[715] According to the Court, the net 45 per cent reduction target was ‘not sufficiently case-specific’.[716] In the Court’s view, there was no ‘sufficient unequivocal conclusion’ concerning a possible sectoral reduction for the oil and gas sector.[717] Finally, the Court of Appeals was not convinced that an order on Shell to reduce its GHG emissions would be effective, given the likelihood of market substitution.[718]

Overall, while overturning the District Court’s unprecedented reduction order of 2021, the Court of Appeals reaffirmed that major emitters have a legal obligation to contribute to climate change mitigation. The decision marks a landmark global precedent, as it was the first time an appellate court recognised a legal obligation of this kind, even though it declined to issue an injunction requiring Shell to reduce its GHG emissions. In February 2025, Milieudefensie declared its intent to appeal to the Dutch Supreme Court.[719]

Key Cases in Other Jurisdictions

In parallel to the key matter of Milieudefensie in the Netherlands, similar cases have emerged in other jurisdictions, notably in Germany, France, New Zealand, and Switzerland. These cases contribute to establishing the contours of CCDD.[720]

Germany: Lliuya v RWE

Filed in 2015, Lliuya v. RWE was the first lawsuit in Germany to address a major GHG emitter’s liability for climate change-related damages.[721] The plaintiff, a Peruvian farmer, claimed that emissions caused by the Rheinisch-Westfälisches Elektrizitätswerk Aktiengesellschaft (RWE), one of Europe’s largest GHG emitters, have contributed to the melting of glaciers in the vicinity of his residence in the Peruvian Andes. Relying on Heede (above, I.A.2), the plaintiff alleged that 0.47 per cent of global industrial CO₂ and CH₄ emissions produced between 1751 and 2010 are attributable to RWE. Corresponding to RWE’s alleged historical contribution to climate change, the plaintiff sought compensation amounting to 0.47 per cent of the estimated cost of flood protection measures to mitigate the increased risk of glacial lake outburst flooding (EUR 21,000). In contrast to Milieudefensie, Lliuya sought compensation; however, both cases ultimately aim to establish the principle that a major GHG emitter bears individual, partial responsibility for adverse climate impacts.

In December 2016, the Court of First Instance (Landgericht Essen) dismissed the claim, finding that there was insufficient evidence to prove a causal link between the respondent’s GHG emissions and the threat to the plaintiff’s property rights; furthermore, the Court ruled that it was not reasonable to hold RWE liable for the alleged damage, given the multitude of other contributors to climate change.[722] In an interim decision issued in 2018, the Court of Appeal (Oberlandesgericht Hamm) held that the existence of multiple tortfeasors does not, in itself, preclude the possibility of individual partial liability for each.[723] In doing so, the Court appeared to accept the plaintiff’s legal argument on this point. This underscores an important consolidating legal principle: irrespective of how marginal an individual contribution may be in proportion to total global emissions, it nonetheless constitutes a legally cognisable contribution. This is consistent with the position adopted by the District Court of The Hague and the Court of Appeals of The Hague in Milieudefensie (above, IV.C.4.2).

In May 2025, the Higher Court of Hamm rendered its final decision.[724] The appellate proceedings experienced significant delays, primarily because the German judges were unable to travel to Peru to conduct an on-site inspection owing to COVID-19-related travel restrictions. In a remarkable decision, the Court dismissed the appeal on factual grounds but nonetheless affirmed that major emitters can, in principle, be held liable under German private law for climate-related harms. Although the court deemed the plaintiff’s legal reasoning fundamentally sound, the judges concluded that Lliuya’s property was not subject to a sufficiently concrete risk of flooding. As the Higher Court did not allow an appeal to the German Federal Court of Justice – and given that bringing the case before the Federal Constitutional Court was practically impossible[725] – the judgment is final.

France: Cases Brought under the Loi de Vigilance

France was an early mover in adopting dedicated due diligence legislation through its Loi de Vigilance, which is codified in the Code de Commerce (above, III.C.2). Several lawsuits seeking to enforce the Loi de Vigilance have been launched. Unlike Milieudefensie, Lliuya, and Asmania (see below, IV.C.4.3.4), which are grounded in general statutory civil liability provisions, the French cases rest on a specific national due diligence law.

While Loi de Vigilance is generally understood to impose an obligation of means – namely, the preparation and implementation of a plan de vigilance – rather than a substantive duty to reduce GHG emissions, it can be argued that effective GHG emission reduction is a necessary condition for fulfilling the devoir de vigilance.[726] Although none of these cases had reached a final judgment by the end of 2025, they illustrate the emerging potential of CCDD enforcement grounded in specific due diligence legislation.[727]

In Notre Affaire à Tous et al. v Total,[728] a case filed in 2020, various NGOs and more than a dozen French municipalities and cities (with the City of New York joining in 2022 as a co-plaintiff) seek an injunction ordering the energy company Total to publish a plan de vigilance detailing (i) the risks arising from GHG emissions resulting from the use of goods and services produced by the group (Scope 3), (ii) the risks of serious harm as defined in SR1.5, and (iii) the measures to align the group with a trajectory compatible with the temperature increase target of the Paris Agreement.[729] The lawsuit’s ultimate objective is to (indirectly) compel Total to reduce its oil and gas production, thereby ensuring alignment with the Paris Agreement’s peak temperature goal of 1.5°C.[730] The plaintiffs argue that the Paris Agreement constitutes one of the international reference norms that serve as guidance to determine which human rights and environmental risks companies must address under the Loi de Vigilance.[731] As Macchi observes, the case indicates ‘how the open-ended duty of vigilance … potentially allows for an integrated interpretation of the corporate duty of care informed by a variety of international human rights, environmental and climate standards’.[732] In June 2024, the Paris Court of Appeals overturned the pre-trial decision of the Paris Court of First Instance to dismiss the case on formal grounds, thereby allowing the case to proceed to trial.[733]

In Envol Vert et al. v Casino,[734] a lawsuit filed in 2021 by several NGOs against the large supermarket chain Casino, the plaintiffs assert that the activities of the respondent’s subsidiaries in Brazil and Colombia contribute to deforestation and the destruction of carbon sinks (forests) due to the cattle industry in the Amazon; the plaintiffs petitioned the Court to compel the company to publish a plan de vigilance in order to address these risks, and to compensate indigenous peoples for the harm already suffered.

In Comissão Pastoral da Terra and Notre Affaire à Tous et al. v BNP Paribas, a lawsuit filed in 2023, the plaintiffs allege that the bank’s plan de vigilance is insufficient to prevent human rights violations and excessive methane emissions associated with deforestation, land-grabbing, and forced labour on cattle farms in the Amazon.[735]

New Zealand: Smith v Fonterra

In August 2019, Mr. Smith filed a statement of claim in the High Court of New Zealand against seven companies engaged in industries that either emit GHGs directly or supply products that release GHGs when combusted (Smith v Fonterra).[736] The respondents are seven of New Zealand’s biggest GHG emitters, operating in the agriculture and energy sectors (including the dairy farming conglomerate Fonterra).[737] The plaintiff, an elder of Ngāpuhi and Ngāti Kahu, and a climate change spokesperson for a national forum of tribal leaders, argues that the respondents are materially contributing to climate change by producing GHG emissions, thereby causing damage to his land and sites of cultural significance.[738]

Smith raised three causes of action in tort: public nuisance, negligence, and a proposed tort for damage to the climate system (duty to cease contributing to climate change).[739] He seeks a declaration that the respondents, either individually or collectively, have either unlawfully breached a duty owed to him or have caused or contributed to a public nuisance, and that their activities have caused or will cause him loss. In addition to declaratory relief, Smith seeks injunctive relief, which would require the respondents to either reduce their GHG emissions by specified amounts within a specified period of time (net zero by 2050, with intermediate targets by 2025, 2030, and 2040), or to immediately cease emitting GHGs.[740] The plaintiff does not seek damages.

The Court of Appeals determined that common law tort claims were an unsuitable means of addressing the issue of climate change, striking out all three claims for lack of being reasonably arguable.[741] In February 2024, the Supreme Court ruled unanimously to reverse the Appeal Court’s decision, thereby granting Smith leave to proceed to trial with all three claims.[742]

The case of Smith v Fonterra may prove instrumental in establishing a precedent for the first ‘full’ climate tort claim in a common law jurisdiction.[743] Commenting on the case and drawing a comparison to the French Loi de Vigilance, Downs notes that ‘there may be important scope to develop novel torts based on notions of diligence and vigilance, which import standards of reasonableness, as do many other concepts that form the foundation of tort law’.[744] Moreover, Downs presents a compelling argument that such a novel tort should adopt a forward-looking approach, akin to that employed by the District Court in Milieudefensie (above, IV.C.4.2). This would entail ‘absolving plaintiffs of the need to establish a particular victim or direct causation’.[745]

Switzerland: Asmania et al. v Holcim

Building on the strategies deployed by the plaintiffs in Milieudefensie and Lliuya, a lawsuit was initiated in 2022 by four inhabitants of the Indonesian island of Pari against Swiss-based major building materials company Holcim (Asmania et al. v Holcim).[746] Relying on a study by Heede, according to which Holcim accounts for 0.42 per cent of global fossil fuel and cement emissions since 1950,[747] the plaintiffs seek compensation to fund a part of climate change adaptation measures on Pari (such as mangrove plantations) in an amount equivalent to the alleged contribution of Holcim (0.42 per cent), as well as a significant reduction of CO₂ emissions (43 per cent by 2030 and 69 per cent by 2040, compared to 2019 levels), including Scope 1 to 3 emissions. Accordingly, similar to Milieudefensie and Lliuya, the plaintiffs seek to establish individual partial responsibility for climate change-related adverse impacts. The case is distinctive in the sense that it presents a dual claim: one for injunctive relief and the other for compensation. The primary legal basis for the claim is constituted by two foundational norms of Swiss civil liability law: Article 28 of the Swiss Civil Code, a broadly framed norm concerning the protection of personality rights, and Article 41 of the Code of Obligations, a fundamental norm governing extracontractual liability.[748] Notably, and similar to Milieudefensie, the plaintiffs further base their case on climate science as well as on the OECD GL and the UNGP, while also referring to the Oslo Principles.[749]

As in Lliuya, the plaintiffs contend that a contribution to the violation is sufficient to establish an infringement of personality rights.[750] Consequently, where personality rights are violated by multiple wrongdoers, the aggrieved party possesses the legal capacity to bring individual actions against each offender. In summary, the plaintiffs argue that the respondent has contributed to adverse climate impacts experienced on the island of Pari through emitting vast amounts of GHG emissions and should therefore bear (partial) responsibility for redressing those effects.[751]

In a procedural decision issued in December 2025, the Cantonal Court of Zug (as the court of first instance) accepted the claim as justiciable and granted the plaintiffs standing, thus allowing the case to proceed to the merits.[752]

See Iglesias Márquez (n 222) 350.

Aristova and others (n 133).

OECD GL 2023, Commentary to Ch. VI, para. 66.

Nollkaemper (n 219) 185.

See eg Sjåfjell and Anker-Sørensen (n 145) 160–61. See generally, Carola Glinski, ‘The Ruggie Principles, Business Human Rights Self-regulation and Tort Law: Increasing Standards through Mutual impact and Learning’ (2017) 15 Nordic Journal of Human Rights 15.

Christine Kaufmann, ‘Whose Law Is It Anyway? – Taking Multistakeholderism Seriously’ in Giovanni Biaggini, Oliver Diggelmann, and Christine Kaufmann (eds), Polis und Kosmopolis – Festschrift für Daniel Thürer (Dike 2015) 375; Rajavuori, The Role of Non-State Actors (n ) 385 (stating that ‘new forms of accountability … link the international climate change regime with the operationalisation and enforcement of domestic climate liability, such as tort litigation and financial-reporting violations’); Morgera (n 79) 72.

Ong (n 234) 686–87.

Pargendler argues that there is an emerging body of ‘International Corporate Law’ defined as the ‘body of corporate governance rules and standards produced by international organizations, standard setters, and international agreements’ (Pargendler (n 346) 1772, 1818).

Pargendler (n 346) 1776.

Aristova and others (n 133) 523.

ibid; Expert Group on Climate Obligations of Enterprises, Principles on Climate Obligations of Enterprises (n 979) 86.

See eg OECD GL 2023, Commentary to Ch. VI, para. 66.

See eg Peter Muchlinski, ‘Global Bukowina Examined: Viewing the Multinational Enterprise as Transnational Law-making Community’ in Gunther Teubner (ed), Global Law Without A State (Aldershot, 1997) 83.

Williams, Fiduciary Duties (n 716) 1909.

UNGP, Commentary to Principle 3 (where it is stated further that ‘(l)aws and policies in this area should provide sufficient guidance to enable enterprises to respect human rights, with due regard to the role of existing governance structures such as corporate boards’).

UNGP, Guiding Principle 3(b), emphasis added. Further, the Commentary to Guiding Principle 8 specifies that States should engage in ‘supporting and equipping departments and agencies, at both the national and subnational levels, that shape business practices – including those responsible for corporate law and securities regulation, investment, export credit and insurance, trade and labour – to be informed of and act in a manner compatible with the Governments’ human rights obligations’ (emphasis added).

John Ruggie, ‘European Commission Initiative on Mandatory Human Rights Due Diligence and Directors’ Duties’ (2021) <https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/files/EUmHRDD.pdf>.

OECD GL 2023, Commentary on Ch. II, paras 7–9.

ibid, Ch. III, paras 2e–f (companies should provide information about the composition of the board and its members, including their qualification, the selection process and independence, as well as remuneration); Ch. XI, para. 2 (as a matter of oversight and broader risk management systems, corporate boards should adopt tax risk management strategies to ensure that the financial, regulatory and reputational risks associated with taxation are fully identified and evaluated).

G20/OECD, Principles of Corporate Governance 2023, V.D.2 (in fine).

ibid, V.C, VI.D.1.

Cynthia Williams and Ellie Mulholland, ‘Climate-Related Disclosures and TCFD Recommendations’ (Harvard Law School Forum on Corporate Governance and Financial Regulation, 2018) <https://corpgov.law.harvard.edu/2018/09/02/climate-related-disclosures-and-tcfd-recommendations/>. 

Robert G. Eccles and Michael P. Krzus, ‘Implementing the Task Force on Climate-related Financial Disclosures Recommendations: An Assessment of Corporate Readiness’ (2019) 71 Schmalenbach Bus Rev 292.

TCFD, Final Report (n 109) iv.

ibid 19.

Barker and Mulholland, Comparative Paper (n 128) 10.

Smit and others, Study on due diligence (n 228) 179.

OECD GL 2011, Ch. II, para. 10; the terminology remained unchanged in OECD GL 2023, Ch. II, para 11; Aristova and others (n 133) 506. The principle of due diligence was also incorporated into other international instruments concerning business responsibility, including the International Labour Organization’s (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy as well as the International Finance Corporation’s (IFC) Sustainability Performance Standards, which inform the Equator Principles on Project Finance Requirements (IFC, ‘Performance Standards on Environmental and Social Sustainability’ (2012) <https://www.ifc.org/content/dam/ifc/doc/2010/2012-ifc-performance-standards-en.pdf>).

OECD GL 2011, Commentary on Ch. II, para. 14 in fine (according to which due diligence does not apply to the Chapters on Science and Technology, Competition and Taxation); the 2023 version only excludes the Chapters on Competition and Taxation, see OECD GL 2023, Commentary on Ch. II, para. 18).

OECD GL 2023, Commentary on Ch. II, para. 16 (‘(d)ue diligence can be included within broader enterprise risk management systems, provided that it goes beyond simply identifying and managing material risks to the enterprise itself, to include the risks of adverse impacts related to matters covered by the (OECD GL)’).

ibid (‘(d)ue diligence can help enterprises avoid the risk of (adverse impacts related to matters covered by the OECD GL)’).

Kaufmann, Respecting Human Rights (n 132) 515.

Surya Deva, ‘Guiding Principles on Business and Human Rights: Implications for Companies’ (2012) 9 European Company Law 101, 106; Christine Kaufmann, ‘OECD MNE Guidelines quo vadis? Making responsible business conduct work for better lives’ in OECD Guidelines for Multinational Enterprises: a Glass Half Full. A Liber Amicorum for Dr. Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct 2013-2018 (OECD 2018) 30; Bonnitcha and McCorquodale (n 591) 900. See generally, Bright and Buhmann (n 133) 5–7; Morgera (n 79) 122. See also John Gerard Ruggie and John F. Sherman, ‘The Concept of “Due Diligence” in the UN Guiding Principles on Business and Human Rights: A Reply to Jonathan Bonnitcha and Robert McCorquodale’ (2017) 28 European Journal of International Law 921, 923.

Muchlinski, Implementing (n 595) 156–57; Sara L. Seck, ‘Corporate Law Tools and the Guiding Principles for Business and Human Rights’ in Manoj Kumar Sinha (ed), Business and Human Rights (Sage Publishers, 2013) 93.

See Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises’ comprised in HRC, Protect, respect and remedy: A framework for business and human rights, A/HRC/8/5 (7 April 2008), para. 56.

Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises (n 691). See the discussion in Seck, Corporate Law Tools (n 1094) 93–130.

Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie. Addendum: Human rights and corporate law: trends and observations from a crossnational study conducted by the Special Representative, A/HRC/17/31/Add.2 (23 May 2011) 2.

Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Summary of five multi-stakeholder consultations, A/HRC/8/5/Add.1 (23 April 2008) [Consultation Report], paras. 111, 112, 115. Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises (n 691), paras. 6, 13, 19.

Bright and Buhmann (n 133) 12.

Surya Deva ‘Treating human rights lightly: a critique of the consensus rhetoric and the language employed by the Guiding Principles’ in: Surya Deva and David Bilchitz (eds) Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? (CUP 2013) 78, 99 (with further references).

Ruggie and Sherman (n 1111) 924.

Kaufmann, Respecting Human Rights (n 132) 512; Muchlinski, Implementing (n 595) 156; Deva, Treating Human Rights Lightly (n 1100) 99.

Morgera (n 79) 117–18; Smit and others, Study on due diligence (n 228) 181.

See Smit and others, Study on due diligence (n 228) 180–84.

OECD GL 2023, Commentary on Ch. II, para. 16.

KPMG, 2022 EMA ESG Due Diligence Study (2022) <https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2022/11/ema-esg-due-diligence-report.pdf>.

OECD GL 2023, Commentary on Ch. II, para. 15; UNGP, Principles 15, 17; OHCHR, Interpretive Guide (n 594) 6 (referring to the definition of due diligence in Black’s Law Dictionary, which reads as follows: ‘(s)uch a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case’ (Black’s Law Dictionary, 6th ed. (St. Paul, Minnesota, West, 1990). See Robert McCorquodale and others, ‘Human Rights Due Diligence in Law and Practice: Good Practices and Challenges for Business Enterprises’ (2017) 2 Business and Human Rights Journal 195, 198 (arguing that ‘there is no international consensus on a definition’ due diligence under the UNGP’).

Bonnitcha and McCorquodale (n 591) 900, 908–909; see Nicolas Bueno and Claire Bright, ‘Implementing Human Rights Due Diligence through Corporate Civil Liability’ (2020) 69 International and Comparative Law Quarterly 789. The duality referred to by Bonnitcha and McCorquodale is reminiscent of the dual nature of the duty of care in corporate law, which embodies both a standard of care and a standard of review (above, III.B.2).

Bonnitcha and McCorquodale (n 591) 902–906.

ibid, 910–11 (with examples and further references).

Ruggie and Sherman (n 1111) 923.

OECD GL 2023, Preface, para. 5; UNGP, Commentary to Principle 12.

UNGP, Commentary to Principle 17 (‘(b)usiness enterprises conducting … due diligence should not assume that, by itself, this will automatically and fully absolve them from liability for causing or contributing to human rights abuses’).

See Smit and others, Study on due diligence (n 228) 156–58.

Chiara Macchi and Claire Bright, ‘Hardening Soft Law: The Implementation of Human Rights Due Diligence Requirements in Domestic Legislation’ in Martina Buscemi and others (eds), Legal Sources in Business and Human Rights: Evolving Dynamics in International and European Law (Brill 2020) 218, 220; see Surya Deva, ‘Climate Change, Human Rights and the UN Guiding Principles: Interlinkages and Red Flags’ in Lise Smit and Ivano Alogna (eds), Human Rights Due Diligence for Climate Change Impacts. Webinar Series Report (BIICL, 2021)) 48, 50 (arguing in favour of an obligation of result). On this point, Bright and Buhmann note that ‘(i)t is interesting to note that whilst human rights due diligence is described as an obligation of means in the UNGPs, risk-based due diligence expectations arising out of case-law in relation to climate-change go further by requiring, in certain circumstances, an obligation of result on the basis of specific targets in line with the best available scientific knowledge as embodied in the Paris Agreement’ (Bright and Buhmann (n 133) 9).

Lise Smit and others, ‘Business Views on Mandatory Human Rights Due Diligence Regulation: A Comparative Analysis of Two Recent Studies’ (2020) 5 Business and Human Rights Journal 261, 261–62; Muchlinski, Implementing (n 595) 156; Macchi and Bernaz (n 133) 15; Ruggie, Rees, and Davis (n 842) 186; OECD, OECD Due Diligence Guidance for Responsible Business Conduct (2018) 21.

Morgera (n 79) 128.

OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 21; OECD GL 2023, Commentary on Ch. II, para. 15.

OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 21.

UNGP, Principles 16 (policy commitment) 17–21 (human rights due diligence), 22 (Remediation); cf Bueno and Bright identify four steps of HRDD: (i) identify and assess actual and potential adverse impacts; (ii) take appropriate action to prevent those impacts; (iii) account for how they address those impacts; (iv) where they have caused or contributed to adverse impacts, provide for remediation (Bueno and Bright, Implementing (n 1108) 791).

OECD GL 2023, Commentary on Ch. VI, para. 71; OECD/Columbia School of International and Public Affairs, ‘Quantifying the Costs, Benefits and Risks of Due Diligence for Responsible Business Conduct’ (2016) <https://mneguidelines.oecd.org/Quantifying-the-Cost-Benefits-Risks-of-Due-Diligence-for-RBC.pdf>.

Kaufmann, Respecting Human Rights (n 132) 511.

See David Birchall, ‘Irremediable Impacts and Unaccountable Contributors: The Possibility of a Trust Fund for Victims to Remedy Large-scale Human Rights Impacts’ (2019) 25 Australian Journal of Human Rights 428.

See eg OECD, Stocktaking Report on the OECD Guidelines for Multinational Enterprises (2022) <https://mneguidelines.oecd.org/stocktaking-report-on-the-oecd-guidelines-for-multinational-enterprises.pdf> 55–56. Deva, ‘From “Business or Human Rights” to “Business and Human Rights”: What Next?’ (n 103) 21 (‘(w)hile the human rights connections to climate change are clear and compelling, more clarity is required as to the individual responsibility of each business and what accountability would look like for business enterprises not mitigating adverse impacts on climate’); Daniela Chimisso dos Santos and Sara L. Seck, Human Rights Due Diligence and Extractive Industries in Deva and Birchall (n 103) 160.

See Macchi and Bernaz (n 133) 5–6; Benjamin, Companies and Climate Change (n 83) 84; Hösli and Weber, Climate Change Reporting and Due Diligence (n 448)) 970–71.

UNWG on Business and Human Rights, ‘UNGPs 10+ A Roadmap for the Next Decade of Business and Human Rights’ (2021) <https://www.ohchr.org/sites/default/files/2021-12/ungps10plusroadmap.pdf>; OECD, Stocktaking Report (n 1124). See David R. Boyd, Keynote Speech, in Smit and Alogna (n 1115) 10 (observing, in 2022, that ‘(t)he current landscape in terms of due diligence requirements is inadequate to the magnitude of the climate challenge’).

OECD Working Party on Responsible Business Conduct, ‘Consultation Draft: Targeted Update of the OECD Guidelines for Multinational Enterprises and their Implementation Procedures’ (2023) <https://mneguidelines.oecd.org/consultation-draft-public-con​sul​ta​tion​tar​geted-update-of-the-oecd-guidelines-for-multinational-enterprises.pdf>.

OECD GL 2023, Ch. II, paras. 11–13; ibid, Commentary to Ch. VI, para. 35; Bright and Buhmann (n 133) 4; Aristova and others (n 133) 507.

Aristova and others (n 133) 507.

ibid.

Eg Smit and others, Study on due diligence (n 228) 181; Hösli and Weber, Climate Change Reporting and Due Diligence (n 448) 969–75.

IBA Climate Change Justice and Human Rights Task Force, ‘Achieving Justice and Human Rights in an Era of Climate Disruption’ (2014) <https://www.ibanet.org/Media​Handler?​id=​0f8cee12-​ee56-4452-bf43-cfcab196cc04>.

ibid, 148–49.

Roel Nieuwenkamp, ‘Two secrets concerning a value chain approach to corporate climate change risk-management’ (OECD Insights, 2015) <https://​friends​of​the​oecd​guide​lines.​wordpress.com/2015/11/30/two-secrets-concerning-a-value-chain-approach-to-corporate-climate-change-risk-management/>.

OECD, Responsible business conduct for institutional investors: Key considerations for due diligence under the OECD Guidelines for Multinational Enterprises (2017) 3.

Human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment. Report of the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment, A/74/161 (15 July 2019) para. 71 (stating that ‘(b)usinesses must adopt human rights policies, conduct human rights due diligence, remedy human rights violations for which they are directly responsible, and work to influence other actors to respect human rights where relationships of leverage exist. As a first step, corporations should comply with the Guiding Principles on Business and Human Rights as they pertain to human rights and climate change.’)

OECD, Global Climate Action and Responsible Business Conduct: What does it mean for business to act responsibly in the face of a climate emergency? (Background Note, 2019) <https://mneguidelines.oecd.org/OECD-instruments-on-responsible-business-conduct-supporting-implementation-and-accountability-of-business-net-zero-com​mit​ments.pdf>, 3.

European Parliament resolution of 10 March 2021 with recommendations to the Commission on corporate due diligence and corporate accountability 2020/2129(INL), para. 20.

OECD, The role of OECD instruments on responsible business conduct in progressing environmental objectives (OECD 2021) 9.

ibid, 9 (footnote omitted).

UN Working Group on the issue of human rights and transnational corporations and other business enterprises (UNWG on Business and Human Rights), ‘Information Note on Climate Change and the Guiding Principles on Business and Human Rights’ (2023) <https://www.ohchr.org/sites/default/files/documents/issues/business/working​group​busi​ness/Information-Note-Climate-Change-and-UNGPs.pdf>, para. 8(d).

ibid, paras 16, 17(c).

OECD, Managing Climate Risks and Impacts (n 273) 8.

See Iglesias Márquez (n 222) 354; Nieuwenkamp (n 1134).

OECD GL 2023, Commentary on Ch. VI, para. 66; See Macchi and Bernaz (n 133) 7.

Hösli and Weber, Climate Change Reporting and Due Diligence (n 448); Rajavuori, Savaresi, and van Asselt (n 133).

See OECD, Managing Climate Risks and Impacts (n 273) 12.

See Birchall, Irremediable Impacts (n 1123) 429. See generally Elizabeth Fisher, Eloise Scotford and Emily Barritt, ‘The Legally Disruptive Nature of Climate Change’ (2017) 80 Modern Law Review 173.

Although requiring a higher level of abstraction, attribution science is increasingly capable of demonstrating causal links between, for instance, climate change and single severe weather events (above, II.B.4.3).

OECD GL 2023, Ch. VI, para. 1. On the other hand, the OECD GL recognise that environmental due diligence ‘will often involve taking into account multiple environmental, social and developmental priorities’ (OECD GL 2023, Commentary on Ch. VI, para. 70).

OECD GL 2023, Commentary on Ch. VI, para. 67.

ibid, para. 69.

Macchi and Bernaz (n 133) 7 (stating that the UNGP are focused on the impacts on rights-holders, whereas CCDD is centred on businesses’ direct and indirect impacts on the climate (which, in turn, trigger a range of risks for human rights holders and the environment)).

Macchi, Climate Due Diligence (n 133) 108–109; Macchi and Bernaz (n 133) 16 (arguing that the ‘now widely accepted (HRDD) standard elaborated by the UNGPs, interpreted in light of relevant standards of international law and climate law, provides the strongest normative basis and the clearest definition to the principle of (CCDD)’); Bright and Buhmann (n 133); Smit and others, Study on due diligence (n 228) 184–89; Aristova and others (n 133) 511, 515–17. See also OECD, The role of OECD instruments on RBC (n 1139) 25–28.

This view resonates with that of Colombo, who argues that basing CCDD solely on the anthropocentric UNGP is problematic (Esmeralda Colombo, ‘Unpacking Corporate Due Diligence in Transnational Climate Litigation: A Planetary Perspective’ (2023) (ex ante Special Issue) 35, 41).

See Birchall, Irremediable Impacts (n 1123) 428. See Colombo, Unpacking Corporate Due Diligence (n 1155) 41 (identifying ‘the lack of a specific focus in the (UNPG) on human rights violations that are not only direct but also cumulative, such as those accruing from activities contributing to environmental damage and climate change’ as one of the reasons why the translation of the UNGP to climate change has been problematic).

The human right to a clean, healthy and sustainable environment, A/RES/76/300 (28 July 2022).

Macchi and Bernaz (n 133) 7; Bright and Buhmann (n 133) 7 (‘the lack of holistic approaches in corporate practices could be addressed through a comprehensive exercise of risk-based due diligence’).

Macchi, Climate Due Diligence (n 133) 109, 112.

Eg Bright and Buhmann (n 133) 10 (pointing out that the Paris Agreement uses the term ‘just transition’ in its Preamble); Sara L. Seck and Lisa Benjamin, ‘Evolving business responsibilities for climate-related harms under the United Nations Guiding Principles on Business and Human Rights and OECD MNE Guidelines’ in Elbert de Jong (ed), Corporate Accountability and Liability for Climate Change (Edward Elgar 2024) 54, 61–62. The OECD GL recognise the importance of a just transition and adaptation (OECD GL, Commentary on Ch. VI, paras 70, 79).

See Mayer, The International Law on Climate Change (n 72) 10 (‘mitigation and adaptation are both necessary … in the long run, however, adaptation efforts will become more challenging if mitigation efforts are not successful’ (emphasis added)). Describing the dilemma, see Isabella Kaminski, ‘“Disturbing” rise in just transition lawsuits threatens to derail energy transition, plus news …’ (The Wave, 7 August 2024) <https://www.the-wave.net/disturbing-rise-just-transition-lawsuits-threatens-derail-energy-transition/>.

Seemingly aware of this tension, Bright and Buhmann concede that ‘(m)eaningful stakeholder engagement and other elements of risk-based due diligence will not solve the dilemma on how to obtain a speedy but fair transition, but may help to provide an informed basis for decisions to be taken and to be followed up’ (Bright and Buhmann (n 133) 12).

See Macchi and Bernaz (n 133) 9.

Eg OECD GL 2023, Ch. VI, para. 5b; OECD GL 2023, Commentary on Ch. VI, para. 77 (mitigation targets). See generally, Nicolas de Sadeleer, ‘The Principles of Prevention and Precaution in International Law: Two Heads of the Same Coin?’ in Malgosia Fitzmaurice, David M. Ong and Panos Merkouris (eds), Research Handbook on International Environmental Law (Edward Elgar Publishing, 2010), 152 (pointing out that prevention concerns risks that are certain, that is, risks ‘for which causation between an event and damage is demonstrated by irrefutable scientific proof’, whereas precaution concerns ‘the absence of scientific certainty – or conversely the scientific uncertainty – as to the existence or the extent of a risk should no longer delay the adoption of preventative measures to protect the environment’).

Smit and others, Study on due diligence (n 228) 182. See generally ibid, 182–84.

Macchi, Climate Due Diligence (n 133) 109.

OECD GL (1991), Ch. VIII, para. 1.

Rajavuori, Savaresi, and van Asselt (n 133) 945.

For a comprehensive overview, see eg Morgera (n 79) 8–15, 69–139. Concerning the OECD GL, see Kaufmann, From Profit to People (n 588).

Morgera (n 79) 83–84. See also Benjamin, Companies and Climate Change (n 83) 82–87.

Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises (n 691).

See generally John Ruggie, Just Business: Multinational Corporations and Human Rights (Norton & Company 2013); Kaufmann, Taking Multistakeholderism Seriously (n 1066).

See Morgera (n 79) 99–101.

See ibid 91–99. The partnership approach aims to create collaborative partnerships between the UN and businesses. Launched in 2000, the (entirely voluntary) UN Global Compact (UNGC) is the most prominent example. Praised by some for its collaborative rather than confrontational approach, the UNGC is heavily criticised by others as being an ideal instrument for greenwashing, based on the fact that corporations are free to express their adherence to any of the ten principles by means of a letter of intent, and that there are no formal requirements other than posting an implementation report on the company’s website (see ibid, 93–95, with references). With regard to the environment (Principles 7–9), the UNGC calls on partner companies to develop a code of conduct and to implement environmental management, monitoring and verification programmes, but none of the principles specifically refers to GHG emissions reductions.

Morgera (n 79) 100.

Protect, respect and remedy: A framework for business and human rights, A/HRC/8/5 (7 April 2008).

Referring to shareholders as the owners of the corporation is misleading (above, I.C, III.B.2.4.2).

UNGP, Principle 14.

Kaufmann, From Profit to People (n 588) 8.

ibid, Taking Multistakeholderism Seriously (n 1066) 383. Kaufmann goes on to propose that ‘taking multistakeholderism seriously will eventually result in abandoning a state-centered rule-making process’ (ibid).

Morgera (n 79) 117.

Ruggie, Just Business (n 1172) 96.

See, eg, Seck and Benjamin (n 1160) 59–62.

Human rights and climate change, HRC/7/23 (28 March 2008).

Eg Human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment. Report of the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment, A/74/161 (15 July 2019); OHCHR, ‘Frequently Asked Questions on Human Rights and Climate Change. Fact Sheet No. 38’ (2021).

OHCHR, Submission of the Office of the OHCHR to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change, ‘Understanding Human Rights and Climate Change’ <https://www.ohchr.org/sites/default/files/Documents/Issues/ClimateChange/COP21.pdf> (emphasis added). See also OHCHR, Key Messages on Human Rights and Climate Change (2016) <https://www.ohchr.org/sites/default/files/KeyMessages_on_HR_CC.pdf>.

UNEP, Climate Change and Human Rights (2015), IX.

Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, A/HRC/29/28 (28 April 2015), para. 89 (‘there is a need to better delineate roles, responsibilities and appropriate accountability systems for both States and business enterprises with regard to specific issues, such as … climate justice’).

See Sara Seck, Reflections on Business, Human Rights, the Environment, and Climate Justice’ (4 December 2017) Dalhousie University Environmental Law News Blogs <https://perma.cc/8BGB-327K>. See eg UN Forum on Business and Human Rights, ‘What human rights responsibilities apply to businesses with respect to climate change?’ (2018) <https://2018unforumbhr.sched.com/event/GZ5c/what-human-rights-responsibilities-apply-to-businesses-with-respect-to-climate-change>; ibid, ‘Addressing climate change: the business and human rights connection’ (Conference Session, 27 November 2019) <https://2019unforumbhr.sched.com/event/U9Gp/addressing-climate-change-the-business-and-human-rights-connection>.

States are encouraged to publish National Action Plans (NAPs) as part of their responsibility to disseminate and implement the UNGP (UNWG on Business and Human Rights, Guidance on National Action Plans on Business and Human Rights (2016) <https://​www.​ohchr.​org/sites/default/files/Documents/Issues/Business/UNWG_NAPGuidance.pdf>). Specifically, the National Action Plans of Belgium, Chile, France, Italy, Luxemburg, Norway, and the UK made reference to climate change (see Iglesias Márquez (n 222) 349). See generally on NAPs, Kaufmann, National Contact Points (n 1216) 178–79.

Committee on the Elimination of Discrimination Against Women/Committee on Economic, Social and Cultural Rights/Committee on the Protection of the Rights of All Migrant Workers and Members of their Families/Committee on the Rights of the Child/ Committee on the Rights of Persons with Disabilities (Five UN human rights treaty bodies), Joint Statement on ‘Human Rights and Climate Change’ (2019) <https://www.ohchr.org/en/statements/2019/09/five-un-human-rights-treaty-bodies-issue-joint-statement-human-rights-and>.

ibid.

Human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment. Report of the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment, A/74/161 (15 July 2019), paras. 64(c), 65.

ibid, para. 72.

UNWG on Business and Human Rights, Information Note (n 1141) para. 3.

ibid, para. 5.

ibid, paras 7, 8.

ibid, para. 5.

ibid, para. 16.

ibid, paras 17(a), 17(b), 17(e), 19(c), 20.

Report of the Special Rapporteur on the promotion and protection of human rights in the context of climate change, Ian Fry, Exploring approaches to enhance climate change legislation, supporting climate change litigation and advancing the principle of intergenerational justice, A/78/255 (28 July 2023), 23.

ibid. See Aristova and others (n 133) 506.

This tension is clearly visible in the ‘Guide for Business’ draft of 2023. UN Development Programme (UNDP), ‘Human Rights Due Diligence and the Environment (HRDD+E) – A Guide for Business’ (Draft as of 10 November 2023) <https://www.undp.org/sites/g/files/zskgke326/files/2023-12/undp-unwg_hrdde_guide_draft.pdf>. See Fanny Thornton, ‘The Absurdity of Relying on Human Rights Law to Go After Emitters’ in Debating Climate Law (n 25) 159, 159–60 (arguing that there are four ‘absurdities’ of applying human rights law to climate change: (i) causal pathways are intricate and diffuse, (ii) those rights which are legally protected cannot actually address the causes and impacts of climate change comprehensively, (iii) the territorial focus of the human rights regime, and (iv) the lack of ‘bite’ of the human rights regime).

See Seck, A relational analysis (n 979) 269.

See Kaufmann, From Profit to People (n 588) 8.

OECD Declaration on International Investment and Multinational Enterprises, C(76)99/FINAL (21 June 1976). One of the reasons for the adoption of the OECD GL may have been the intention to pre-empt more stringent regulation under parallel UN negotiations at the time (Morgera (n 79) 120–21 (with references)).

Kaufmann, From Profit to People (n 588) 9; Morgera (n 79) 121.

OECD, <https://www.oecd.org/en/topics/responsible-business-conduct.​html​#​con​text>

While stating that a precise definition is not required for its purposes, the OECD GL describe MNEs as ‘usually compris(ing) companies or other entities established in more than one country and so linked that they may coordinate their operations in various ways’, adding that ‘(w)hile one or more of these entities may be able to exercise a significant influence over the activities of others, their degree of autonomy within the enterprise may vary widely from one multinational enterprise to another’ and that ‘(o)wnership may be private, State or mixed’ (OECD GL 2023, Ch. I, para. 4). See Peter Muchlinski, Multinational Enterprises and the Law (3rd edn, OUP 2021) 5–8.

Morgera (n 79) 127–28 (with references).

Kaufmann, From Profit to People (n 588) 10.

Second Revised Decision of the Council on the Guidelines for Multinational Enterprises, included in the revised edition 1984 of the Declaration on International Investment and Multinational Enterprises, C(84)90 (21 June 1984), 28, para. 1.

OECD, OECD Guidelines for Multinational Enterprises, C/M(91)12/FINAL (5 June 1991), Ch. VIII; Morgera (n 79) 124.

OECD, OECD Guidelines for Multinational Enterprises, C(2000)96/FINAL (27 June 2000) (OECD GL 2000); See Kaufmann, From Profit to People (n 588) (stating that 2000 revision was an important step for ‘the transformation of a mono-dimensional, profit-oriented, to a three-dimensional approach encompassing profit, planet and people’); Morgera (n 79) 122–24 (with references).

Kaufmann, From Profit to People (n 588) 11.

OECD, Guidelines for Multinational Enterprises, C(2011)59/FINAL (25 May 2011) (OECD GL 2011), Ch. IV (Human Rights); Christine Kaufmann, ‘National Contact Points and Access to Remedy under the UNGP – Why Two Can Make a Dream so Real’, in Nicola Bonucci and Catherine Kessedjian (eds), 40 Ans des lignes directrices de l'OCDE pour les entreprises multinationales / 40 Years of the OECD Guidelines for Multinational Enterprises (OECD 2018) 175, 176. This represented a significant expansion of the scope of the OECD GL to cover all human rights, not only labour rights, as in the previous version of the OECD GL (ibid, 177).

OECD GL 2011, Ch. II, Commentary, para. 14.

Kaufmann, National Contact Points (n 1216) 177.

OECD, OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (8 June 2023) <https://doi.org/10.1787/81f92357-en> (OECD GL 2023).

OECD GL 2023, Foreword, 3.

Kaufmann, From Profit to People (n 588) 14; OECD GL 2023, 3, 6.

Kaufmann, National Contact Points (n 1216) 176. OECD, Managing Climate Risks and Impacts (n 273) 10 (describing the OECD GL as ‘the most comprehensive government-backed instrument’ on RBC).

OECD GL 2023, Part II Ch. II. para. 2.

Aristova and others (n 133) 506.

OECD GL 2023, Preface, para. 5.

ibid.

See Aristova and others (n 133) 509; The International Council on Human Rights Policy, ‘Beyond Voluntarism: Human Rights and the Developing International Legal Obligations for Companies’ (2002) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1551200> 68.

Aristova and others (n 133) 508.

OECD GL 2023, Commentary on Ch. VI, paras. 76–77.

ibid, Commentary to Ch. VI, para. 75.

Eg Macchi and Bernaz (n 133) 5; Iglesias Márquez (n 222) 354.

The text of the OECD GL 2011 states that enterprises should seek to continually improve their environmental performance at the enterprise level and, ‘where appropriate’, of its supply chain, through the encouragement of various activities, including, notably, the ‘development and provision of products or services that … reduce (GHG) emissions’, promote higher levels of customer awareness concerning the environmental implications of using enterprises’ products and services including by ‘providing accurate information on their products (eg (GHG) emissions, biodiversity, resource efficiency, or other environmental issues)’, and by considering ways to improve environmental performance over the longer term, ‘for instance by developing strategies for emission reductions, efficient resource utilization, etc’ (OECD GL 2011, Ch. VI, para. 6 (b)–(d) (emphasis added)). Compare the slightly amended version in OECD GL 2023, Ch. IV, para. 5 (b): developing and providing products and services that ‘minimise(s) as far as possible’ instead of ‘reduce’ GHG emissions (emphasis added; below, IV.B.4.3).

See Kaufmann, OECD MNE Guidelines (n 1093) 33.

The Guidance on Responsible Agricultural Supply Chains (2016) recommends identifying measures to reduce and/or eliminate GHG emissions as a means of reducing environmental risks (OECD/FAO, OECD-FAO Guidance for Responsible Agricultural Supply Chains (OECD Publishing 2016) 66). The Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector (2017), which is directed towards mining, oil and gas enterprises, does not mention climate change or GHG emissions (OECD, OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector (OECD Publishing 2017). The Due Diligence Guidance for Institutional Investors of 2017 points out that ‘investors may flag in their policies that climate change risk is a priority for them, given the significant scale, scope and irremediable character of climate change impacts, as well as signals from regulators and their clients that this should be a priority issue’ (OECD, Responsible business conduct for institutional investors (n 1135) 25). The Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (2018) includes a section on GHG emissions, which encourages companies to measure and reduce GHG emissions (OECD, Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (OECD Publishing 2018) 171–75). The cross-sector OECD Due Diligence Guidance for Responsible Business Conduct (2018) does not refer to climate change and only mentions GHGs in passing in the context of stakeholder engagement (OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 50–51 (see the critique in Seck, Climate Change (n 103) 290). Although highlighting the key role of financial institutions in achieving the SDGs and the goals of the Paris Agreement, the Due Diligence for Responsible Corporate Lending and Securities Underwriting Guidance (2019) makes only passing reference to climate change by including a statement on how banks can communicate environmental and social risks to their clients (OECD, Due Diligence for Responsible Corporate Lending and Securities Underwriting (2019) 34, 45). See generally Seck and Benjamin (n 1160) 73–75.

Australian Bushfire Victims and Friends of the Earth Australia/ANZ Bank (Australian NCP), Final Statement (15 December 2021) para. 41 (see below, IV.C.2).

OECD GL 2023, Ch. VI, Chapeau.

ibid.

OECD GL 2023, Commentary on Ch. VI, para. 76.

Rio Declaration on Environment and Development, A/CONF.151/6/ Rev. (13 June 1992).

Transforming our world: the 2030 Agenda for Sustainable Development, A/RES/70/1 (21 October 2015).

OECD GL 2023, Commentary on Ch. VI, para. 66 in fine; see Morgera (n 79) 125.

OECD GL 2023, Commentary on Ch. VI, para. 76.

ibid, para. 75.

The use of the term ‘pathways’ by the OECD GL likely alludes to the fact that there is no single, universally applicable pathway for achieving net zero (above, II.B).

OECD GL 2023, Ch. VI, para. 3.

ibid, para. 1.

ibid, paras 2–7.

OECD GL 2023, Commentary on Ch. VI, para. 77. See also ibid, para. 79 (recommendation to adopt a science-based adaptation plan).

ibid, para. 77.

ibid, Commentary on Ch. V, para. 64 (reference to ‘just transition’; as mentioned, this study takes the view that this issue ought to be addressed separately through HRDD, not through CCDD, above, IV.A.2.3).

ibid, Ch. VIII para. 2; ibid, Commentary on Ch. VIII, paras 97–98 (provision of accurate, verifiable and clear information sufficient to enable consumers to make informed decisions on environmental attributes of goods and services); see OECD, The role of OECD instruments on RBC (n 1139) 30–32.

OECD GL 2023, Commentary on Ch. IX, para. 105 (‘(t)the development, licensing, sale, trade and use of technology has a profound impact on the matters covered by the Guidelines, including … climate change’); see OECD, The role of OECD instruments on RBC (n 1139) 32–33 (noting that ‘(i)n the context of climate change, the transition to a low carbon economy relies heavily on new technology and its transfer’).

OECD GL 2023, Ch. III, paras. 2–3, ibid, Commentary on Ch. III, para. 33. See also ibid, Commentary to Ch. VI, para. 77.

Aristova and others (n 133) 507.

ibid, 523 (stating that the OECD GL 2023 are ‘complementary to other legal and governance frameworks, working synergistically to advance responsible corporate behaviour and accountability on a global scale’).

See Iglesias Márquez (n 222) 348.

Weber and Staiger (n 565) 85.

ibid.

The acronym G20 stands for ‘Group of Twenty’, which describes itself as a ‘strategic multilateral platform connecting the world’s major developed and emerging economies’ (G20, <https://g20.org/about-the-g20/#about>).

G20, ‘G20 Finance Ministers and Central Bank Governors Meeting’ (Communiqué, 17 April 2015) <http://www.g20.utoronto.ca/2015/150417-finance.html>.

FSB, ‘FSB to establish Task Force on Climate-related Financial Disclosures’ (Press release, 4 December 2015) <https://www.fsb.org/2015/12/fsb-to-establish-task-force-on-cli​mate-related-financial-disclosures/>.

TCFD, Final Report (n 109) 13–23.

The consultation process is detailed in Appendix 2 of the Report (ibid, 46–50).

TCFD, Final Report (n 109) Appendix 1 (44–45).

ibid, 2–3 (stating that these three groups ‘assume the financial risk and reward of the decisions they make’ whilst recognising that ‘many other organizations, including credit rating agencies, equity analysts, stock exchanges, investment consultants, and proxy advisors also use climate-related financial disclosures’ and thus ‘in principle, depend on the same types of information as primary users’), 19.

ibid, 18.

ibid.

Vizcarra, The Reasonable Investor (n 479) 10107.

TCFD, <https://www.fsb-tcfd.org/publications/>.

TCFD, Final Report (n 109) ii.

ibid, ii.

ibid (emphasis added).

ibid, ii, 33–34.

ibid, iii.

ibid, v.

See eg Hösli and Weber, Climate Change Reporting and Due Diligence (n 448) 965–66; Armour, Enriques, and Wetzer (n 285) 1111–17.

TCFD, 2023 Status Report (2023) <https://assets.bbhub.io/company/sites/60/2023/09/2023-Status-Report.pdf>.

ibid, i.

TCFD, Final Report (n 109) iii, 2, 46.

ibid, iii–iv, 38. In determining which sectors are likely most exposed the TCFD applies three factors: GHG emissions, energy usage, and water usage (ibid, 16).

IOSCO, Mitigating Systemic Risk: A Role for Securities Regulators (2011) <https://​www.​iosco.​org/library/pubdocs/pdf/tOSCOPD347.pdf>.

See generally Virginia Harper Ho, ‘Modernizing ESG Disclosure’ (2022) U Ill L Rev 277, 296–300.

TCFD, Final Report (n 109) i, iii, 41–42.

ibid, iv.

ibid, 17.

See also ibid.

ibid, v.

ibid, iv.

ibid, 15–16; TCFD, Implementing (n 496).

TCFD, Final Report (n 109) 14; ibid, Implementing (n 496) 15.

See TCFD, Final Report (n 109) 34–35.

Eg Ruggie, Rees, and Davis (n 842) 189–95; Hösli and Weber, Climate Change Reporting and Due Diligence (n 448) 975–76.

Eg Jaako Salminen and Mikko Rajavuori, ‘Transnational Sustainability Laws and the Regulation of Global Value Chains: Comparison and a Framework for Analysis’ (2019) 26 Maastricht Journal of European and Comparative Law 602; Claire Bright and Nicolas Bueno, ’Mandatory Human Rights Due Diligence’ in Anthony Ewing (ed), Teaching Business and Human Rights (Edward Elgar 2023) 144 (distinguishing between mandatory human rights disclosure legislation and mandatory human rights due diligence legislation).

Eg Macchi, Climate Due Diligence (n 133) 117 (‘(w)hile HRDD remains an open-ended standard, its main elements should be clarified in law and possibly further explained in separate guidance documents’).

Articles 964j–964l Code of Obligations impose specific due diligence and reporting requirements with respect to child labour risks as well as conflict metals and minerals; the amendment was the result of a counter-proposal to a popular constitutional initiative known as the Swiss Responsible Business Initiative, which was approved by a majority of the Swiss electorate (50.7 per cent) but failed to achieve the required majority of Swiss cantons (states) (see Nicolas Bueno and Christine Kaufmann, ‘The Swiss Human Rights Due Diligence Legislation: Between Law and Politics’ (2021) 6 Business and Human Rights Journal 542).

Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten (Lieferkettensorgfaltspflichtgesetz) vom 16 Juli 2021 (BGBl. I 2021, 2959) [Supply Chain Due Diligence Act].

LOV-2021-06-18-99, Lov om virksomheters åpenhet og arbeid med grunnleggende menneskerettigheter og anstendige arbeidsforhold (åpenhetsloven). See Article 4: ‘The enterprises shall carry out due diligence in accordance with the OECD Guidelines for Multinational Enterprises’ (official translation). The Act imposes due diligence duties in relation to fundamental human rights and decent working conditions (Article 1) and therefore does not appear to include environmental issues. However, the reference in Article 4 to the OECD GL could be read as an implicit extension of the material scope to all matters covered by the OECD GL including environmental issues (cf Maria Chiara Malaguti, ‘From Soft to Hard Law and Interpretation: the Case of the OECD Guidelines for Multinational Enterprises and the Role of the National Contact Points’ (2023) 10 Oslo Law Review 1, 2).

See further, the overview in OECD, The role of OECD instruments on RBC (n 1139) 39–43.

Dutch Responsible and Sustainable International Business Conduct Bill 2022, Kamerstuk 35880 (unofficial English translation) <https://www.mvoplatform.nl/en/english-trans​la​tion-of-the-bill-for-responsible-and-sustainableinternational-business-con​duct/>; Sarah Downs, ‘Civil Liability for Climate Change? The Proposed Tort in Smith v Fonterra with Reference to France and the Netherlands’ (2024) 33 RECIEL 31, 40; Rajavuori, Savaresi, and van Asselt (n 133) 947.

Rajavuori, Savaresi, and van Asselt (n 133) 946 (pointing out that the French Loi de Vigilance covers around 200–250 entities, while close to 9,000 companies are in scope of the Norwegian Transparency Act).

ibid.

Social and Economic Council of the Netherlands, Agreements on international Responsible Business Conduct, <https://www.imvoconvenanten.nl/en/agreements>.

Martijn Scheltema, ‘The Dutch International Responsible Business Conduct Agreements’ (2019) 4 Erasmus Law Review 6, 10–11.

Eg Smit and others, Study on due diligence (n 228) 16.

For instance, Regulation (EU) 2017/821 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas, [2017] OJ L 130/1; Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (Regulation on deforestation-free products) [2023] OJ L 184/1.

CSDDD (Commission Proposal 2022).

Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859, [2023] OJ L; Ciacchi (n 555) 30–31 (noting that ‘path towards the adoption of the Directive has been a turbulent road, marked by difficulties, setbacks, and a healthy dose of sabotage … the project has been able to withstand these hurdles against all odds, albeit coming out the other side diminished and weathered’).

See Ciacchi (n 555) 35–44 (key changes in the CSDDD 2024 text included, in particular a narrowing of the personal scope of application (significantly higher thresholds concerning number of employees and turnover) and a narrowing of the material scope of application (in particular, regulated financial undertakings only subject to due diligence obligations for the upstream part of their chains of activities, not the downstream part)). Another key change was the deletion of the proposed provision on directors’ duties (above, III.C.3).

CSDDD 2024, recital 6.

See Proposal for a Directive of the European Parliament and of the Council amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements, 2025/0045 (COD), 10 December 2025.

Macchi and van Zeben (n 203) 413.

See Rajavuori, Savaresi, and van Asselt (n 133) 947; Magnier (n 927) 281–82 (arguing that under the Loi de Vigilance, large corporations are expected to assess climate-related financial risks and to report on the measures taken to address them, including through the adoption of a low-carbon strategy across their extended production chain); Paul Mougeolle, ‘Current Developments in Carbon & Climate Law Practitioner’s Perspective: A Brief Commentary on the French Total Climate Case’ (2020) 14 Carbon and Climate Law Review 128.

Anne-Christin Mittwoch and Fernanda Luisa Bremenkamp, ‘The German Supply Chain Act – A Sustainable Regulatory Framework for Internationally Active Market Players?’ (2022) 122 Beiträge zum Transnationalen Wirtschaftsrecht 5, 10.

Scheltema (n 1303) 12.

Yesim M. Atamer, Patrick Wittum, ‘Von Laissez-faire zu Regulierung: Grundlagen der EU Richtlinie über die Sorgfaltspflichten von Unternehmen im Hinblick auf Nachhaltigkeit (CSDDD)’ (2024) 3 EuZ <https://doi.org/10.36862/eiz-euz2024-09> I26 (with references).

CSDDD 2024, recital 14.

Article 3(1)(b) CSDDD 2024.

Notably, the adoption of a transition plan is required under the CSRD 2025.

Atamer and Wittum (n 1315) I26–28.

See eg Rajavuori, Savaresi, and van Asselt (n 133) 948; Jaako Salminen and Mikko Rajavuori, ‘Private International Law, Global Value Chains and the Externalities of Transnational Production: Towards Alignment?’ (2021) 12 Transnational Legal Theory 230.

Jaako Salminen and Mikko Rajavuori, Transnational Sustainability Laws (1293); Rajavuori, Savaresi, and van Asselt (n 133) 946.

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment [2020] OJ L 198/13.

See eg Diana Joita, Carmen Elena Dobrotã and Catalin Popescu, ‘“Do No Significant Harm” Principle and Current Challenges for the EU Taxonomy Towards Energy Transition’ in Carolina Machado and João Paulo Davim (eds), Corporate Governance for Climate Transition (Springer 2023) 187.

Rajavuori, Savaresi, and van Asselt (n 133) 949.

ibid.

Court of Appeals of The Hague, 302.332/01, 12 November 2024, Shell Plc and Stichting Milieu en Mens v Vereniging Milieudefensie et al (Milieudefensie, Court of Appeals), para 7.53 (where the Court holds that obligations arising from existing regulations (such as the CSRD and the CSDDD) do not preclude a duty of care based on the social standard of care on the part of individual companies to reduce their CO₂ emissions); see generally below, IV.C.4.2).

Macchi, Climate Due Diligence (n 133) 98 (referring to ‘risk mitigation’, concerned with the reduction of GHG emissions, and ‘integration’, meaning the embedding of climate-related objectives into policies and processes).

Bright and Buhmann (n 133).

OECD, Managing Climate Risks and Impacts (n 273) 17–45.

ibid 19.

Macchi and Bernaz (n 133) 14 (stating that ‘(w)hile the UNGP do not explicitly address climate due diligence, the fundamental elements of this process for banks can be inferred, with necessary differences, from the (HRDD) concept’).

See OECD GL 2023, Commentary on Ch. VI, para. 76.

Cf OECD, Managing Climate Risks and Impacts (n 273) Annex A.

OECD GL 2023, Commentary on Ch. VI, para. 76–79.

See also OECD, Managing Climate Risks and Impacts (n 273) 19 (proposing, building on the 2018 OECD Due Diligence Guidance for Responsible Business Conduct, six ‘main steps or ‘supporting measures’ of CCDD for institutional investors).

OECD GL 2023, Ch. VI, para. 1.

OECD GL 2023, Commentary on Ch. II, para. 16 in fine; UNGP, Principle 17C.

UNGP, Principle 17(b); OECD GL 2023, Commentary on Ch. II, para. 19, Commentary on Ch. VI, para. 67; see Milieudefensie (District Court) para. 4.4.16.

OECD GL 2023, Commentary on Ch. II, para. 19; UNGP, Principle 14, Commentary to Principle 14.

OECD GL 2023, Commentary on Ch. II, para. 19; ibid, Commentary on Ch. VI, para. 67.

See OECD GL 2023,

G20/OECD Principles of Corporate Governance 2023, VI.C; OECD GL 2023, Ch. II, para. 11; ibid, Commentary on Ch. II, para. 15; UNWG on Business and Human Rights, Information Note (n 1141) para. 17(c); see also UNGP, Commentary to Principle 18.

See OECD GL 2023, Commentary on Ch. II, para. 16.

Kaufmann, Respecting Human Rights (n 132) 520.

OECD GL 2023, Commentary on Ch. VI, para. 77.

See OECD GL 2023, Ch. IV, para. 4; UNGP, Principles 15(a), 16.

UNWG on Business and Human Rights, Information Note (n 1141) para. 33.

OECD GL 2023, Commentary on Ch. II, para. 13; ibid, Ch. VI, para. 3, 6; ibid, Commentary on Ch. VI, paras 77, 84; OECD, Principles on Corporate Governance 2023, 44–50; ibid, OECD, Managing Climate Risks and Impacts (n 273) 20–23, 31–36 (with further references); ibid, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 22–24; TCFD, Final Report (n 109) 19; UNWG on Business and Human Rights, Information Note (n 1141) paras 16–22.

ibid.

Eg Race to Net Zero, ‘Starting Line and Leadership Practices 3.0 – Minimum criteria required for participation in the Race to Zero campaign’ (2022) <https://​climate​champions.​unfccc.​int/wp-content/uploads/2022/06/Race-to-Zero-Criteria-3.0-4.pdf>; UN/HLEG on the Net Zero Emissions Commitments of Non-State Entities, Integrity Matters (n 277); ISO, ‘IWA 42:2022: Net zero guidelines’ (2022) <https://www.iso.org/obp/ui/en/​#iso:std:iso:iwa:42:ed-1:v1:en>; Transition Plan Task Force (TPT), TPT Disclosure Framework (2023) <https://www.ifrs.org/content/dam/ifrs/knowledge-hub/resources/tpt/disclosure-framework-oct-2023.pdf>; SBTi, ‘SBTi Corporate Net Zero Standard’ (v1.2, 2024) <https://sciencebasedtargets.org/resources/files/Net-Zero-Stan​dard.pdf>. These (and similar) initiatives and frameworks will not be discussed further in this study, as they are undergoing rapid evolution, and also because they do not enjoy the same level of endorsement (and thus, authority) as the TCFDR, the OECD GL, and the UNGP.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 67.

Cf Article 22(1) CSDDD 2024, which framed the purpose of transition plans as aiming to ensure, through best efforts, that the business model and strategy of the company are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement and the objective of achieving climate neutrality. In CSDDD 2025, Article 22 was deleted entirely.

G20/OECD Principles of Corporate Governance 2023, VI.A.4.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 40–42. See also OECD, ‘OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans, Green Finance and Investment’ (2022) <https://doi.org/10.1787/7c68a1ee-en>.

See Article 22(3) CSDDD 2024, which required that the transition plan is updated every 12 months, including a description of the progress made against the targets. In CSDDD 2025, Article 22 was deleted entirely.

OECD GL 2023, Ch. IV, para. 1b.

Race to Net Zero (n 1350) 2.

See also Article 1(1)(c) CSDDD 2024.

See CSRD 2025, para 26 (‘The provisions…on the transition plan for climate change have been deemed to be disproportionate, particularly due to the administrative burden on companies and supervisory authorities, and could lead to legal uncertainty’).

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 42.

ibid. See also Article 22(2)(d) CSDDD 2024. Article 22 was deleted entirely in CSDDD 2025.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 42.

ibid (noting that terms such as ‘aim’, ‘goal’ or ‘objective’ refer to the same concept as the term target). See Armour, Enriques, and Wetzer (n 285) 1140–41 (criticising the use of the term ‘targets’ in the TCFDR as ambiguous, because it may leave an uncertainty whether ‘target’ is merely an aspiration or rather a firm commitment, opening the door for greenwashing).

Eg Bright and Buhmann (n 133) 7–12.

OECD GL 2023, Ch. VI, para. 1b.

OECD GL 2011, Commentary to Ch. VI, paras. 76–77; see Dutch NCP, 4 NGOs/ING, Final Statement, 19 April 2019, 5 (‘the NCP observes that the OECD [GL] demand that ING, and other commercial banks, put effort into defining, where appropriate, concrete targets to manage its impact towards alignment with relevant national policies and international environmental commitments. Regarding climate change, the Paris Agreement is currently the most relevant international agreement between states, a landmark for climate change, signed by the State of the Netherlands’).

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 31–35.

OECD GL 2023, Commentary to Ch. VI, para. 77; see also ibid, Ch. VI, para. 1b. Cf Article 22(1)(a) CSDDD 2024.

OECD GL 2023, Commentary to Ch. VI, para. 77. See Article 22(1)(a) CSDDD 2024.

Volker H. Hoffmann and Timo Busch, ‘Corporate Carbon Performance Indicators Carbon Intensity, Dependency, Exposure, and Risk’ (2008) 12 Journal of Industrial Ecology 505, 509; TCFD, Implementing (n 496) 21, 52–54.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 19, referring to the SBTi’s criterion that a Scope 3 target is required if the company’s Scope 3 emissions are 40 per cent or more of its total GHG emissions (SBTi, SBTi Criteria and Recommendations (TWG-INF-002, Version 4.2 of April 2021) <https://sciencebasedtargets.org/resources/files/SBTi-criteria-legacy.pdf> 10). The same threshold is mentioned in subsequent versions of the SBTi Criteria and Recommendations (ibid, Version 5.1 of April 2023; ibid, ‘SBTi Corporate Near-Term Criteria’ Version 5.2 of March 2024).

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 42.

OECD GL 2023, Commentary to Ch. VI, para. 77.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 11.

ibid, 33. The internal carbon price is the price an organisation puts on its GHG emissions to facilitate analysis of the potential and actual impacts of climate change (ibid, 25).

ibid (n 242) 16, 33. See OECD, Managing Climate Risks and Impacts (n 273) 38–39 (with respect to useful metrics for investors).

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242).

See OECD, Managing Climate Risks and Impacts (n 273) 39.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242).

Armour, Enriques, and Wetzer (n 285) 1140–41.

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 42.

See OECD, Managing Climate Risks and Impacts (n 273) 28.

ibid, 25; TCFD, Technical Supplement. The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities (2017) <https://www.tcfdhub.org/resource/tcfd-recommendations-technical-supplement-the-use-of-scenario-analysis-in-disclosure-of-climate-related-risks-and-opportunities/>. See also OECD, Managing Climate Risks and Impacts (n 273) 29–30.

Thom Wetzer, Rupert Stuart-Smith, Arjuna Dibley, ‘Climate Risk Assessments Must Engage with the Law’ (2024) 383 Science 152.

TCFD, Final Report (n 109) 27.

ibid, 25.

ibid, 9.

TCFD, Final Report (n 109) 25.

See generally Joseph Alcamo, ‘Introduction: The Case for Scenarios of the Environment’ in Joseph Alcamo (ed), Environmental Futures: The Practice of Environmental Scenario Analysis (Elsevier 2008) 3–8. The TCFD states that the use of scenario analysis was first used by Royal Dutch Shell, which is said to have applied scenarios analysis as a method to evaluate its strategic options since the early 1970s (TCFD, Technical Supplement: Scenario Analysis (n 1383) 3, with further reference). See further on the history of scenario planning, Madison Condon, ‘Corporate Scenarios: Drawing Lessons from History’ (2025) 48 Seattle University Law Review 277, 282–92.

Armour, Enriques, and Wetzer (n 285) 1135.

TCFD, Technical Supplement: Scenario Analysis (n 1383) 3–4.

TCFD, Final Report (n 109) 25; Condon, Corporate Scenarios (n 1389) 292.

NGFS, Guide to climate scenario analysis for central banks and supervisors (2020) <https://​www.​ngfs.net/system/files/import/ngfs/medias/documents/ngfs_​guide_​scenario_​analysis_​final.pdf>; Condon, Corporate Scenarios (n 1389) 293–94.

ibid, 25–26.

Chad Michael Briggs, ‘Climate Security, Risk Assessment and Military Planning’ (2012) 88 International Affairs 1049, 1058; Condon, Corporate Scenarios (n 1389) 292–95.

ibid, 26.

ibid, 29.

TCFD, Technical Supplement: Scenario Analysis (n 1383) 7.

TCFD, Final Report (n 109) 29.

TCFD, Technical Supplement: Scenario Analysis (n 1383) 7. See the conception of business model change as a transition risk by Sjåfjell (Sjåfjell, Financial Risks of Unsustainability (n 552)).

Condon, Corporate Scenarios (n 1389) 295–98.

TCFD, Final Report (n 109) 30.

Condon, Corporate Scenarios (n 1389) 292–95.

TCFD, Final Report (n 109) 30, 35.

ibid, 35; TCFD, Technical Supplement: Scenario Analysis (n 1383) 12–29.

TCFD, Final Report (n 109) 38

ibid, 28; TCFD, Technical Supplement: Scenario Analysis (n 1383) 19–20.

IPCC, 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories (Vol. 1) <https://www.ipcc-nggip.iges.or.jp/public/2019rf/pdf/1_Volume1/19R_​V1_​Ch01_​Introduction.pdf> 1.6 (‘(n)ational inventories include (GHG) emissions and removals taking place within national territory and offshore areas over which the country has jurisdiction’).

TCFD, Technical Supplement: Scenario Analysis (n 1383) 19.

Johnston, Climate-Related Financial Disclosures (n 582) 13.

ibid 21; Armour, Enriques, and Wetzer (n 285) 1136.

TCFD, Final Report (n 109) 28–29.

TCFD, Technical Supplement: Scenario Analysis (n 1383) 9.

Armour, Enriques, and Wetzer (n 285) 1137.

See TCFD, Final Report (n 109) 30.

Wetzer, Stuart-Smith, Dibley (n 1384).

Johnston argues that ‘(p)ressure for standardisation of scenarios will have to come from investors or from regulatory intervention’ (ibid, 21); see Condon, Corporate Scenarios (n 1389) 292–93.

Armour, Enriques, and Wetzer (n 285) 1136.

See International Sustainability Standards Board (ISSB), ‘ISSB confirms requirement to use climate-related scenario analysis’ (2022) <https://www.ifrs.org/news-and-events/news/2022/11/issb-confirms-requirement-use-climate-related-scenario-analysis/>.

Condon, Corporate Scenarios (n 1389) 304 (arguing that scenario analyses ‘can be powerful tools for navigating uncertainty – and driving the future’, adding that ‘(f)or this reason, their use should not be relegated to the private sector going forward … (i)t is far past time for more public and democratically constructed visions of climate futures’).

OECD GL 2023, Commentary on Ch. II, para. 15; UNGP, Principles 17 and 18.

See Macchi and Bernaz (n 133) 9.

Kaufmann, Respecting Human Rights (n 132) 521.

ibid; OECD GL 2023, Commentary on Ch. VI, para. 67 (‘In the context of the [OECD GL], “environmental management” should be interpreted in its broadest sense, embodying activities aimed at understanding environmental impacts and risks …’ (emphasis added)); UNGP, Commentary on Principle 18 (stating that the purpose of human rights impact assessments is ‘to understand the specific impacts on specific people, given a specific context of operations’).

OECD GL 2023, Commentary on Ch. II, para. 15. See UNGP, Principle 18.

OECD GL 2023, Ch. VI, para. 1(a). Given that the definition of the term ‘adverse environmental impact’ (ibid) already relates to ‘significant changes’ (above, III.A.2.5), it is unclear what the OECD GL mean by ‘significant adverse environmental impact’.

ibid, Commentary on Ch. VI, para. 67.

Mayer, The Emergence of Climate Assessment (n 392) 285; ITLOS, Advisory Opinion, para. 365; ICJ, Advisory Opinion, paras. 295–98).

ICJ, Advisory Opinion, para. 298.

Mayer, The Emergence of Climate Assessment (n 392) 286; see Article 7(9)(c) Paris Agreement.

UK Government, ‘The Future of Coal Generation in Great Britain. Impact Assessment No: 3350(2) – BEIS’ (2020) <https://assets.publishing.service.gov.uk/media/5fd​74d7​c8fa​8f54​d564​af0a9/early-coal-close-impact-assessment-.pdf.pdf>.

See OECD, Managing Climate Risks and Impacts (n 273) 23–31 (framing CCIA for institutional investors as encompassing identifying and assessing climate risks, impacts and opportunities at the asset, asset class, sector, and portfolio level); UNGP, Commentary on Principle 18 (prior to approving a new activity or entering into a new business relationship, prior to major decisions, and periodically throughout the life of an activity or relationship). See also the PCOE (above, III.C.3), which propose various obligations that can be seen as reflecting elements of CCIA, including that CCIA shall include an assessment of a proposed project’s carbon footprint, and that investors shall ascertain and consider the GHG emissions of any project they consider financing (see the critique by Seck, A relational analysis (n 979) 274; Chimisso dos Santos and Seck (n 1124) 172).

UNWG on Business and Human Rights, Information Note (n 1141) para. 17(c).

OECD GL 2023, Ch. VI, Chapeau.

Note that an OECD guidance document published in 2023 gives some guidance with respect to how institutional investors should identify and assess actual and potential adverse climate impacts (OECD, Managing Climate Risks and Impacts (n 273) 23–31). With respect to the UNGP, see Macchi and Bernaz (n 133) 8–9.

See Macchi and Bernaz (n 133) 14 (mentioning the production of biofuels as another example). Bright and Buhmann consider ‘fair’ or ‘just’ transition risks as essential matters for CCIA (see Bright and Buhmann (n 133) 10–12).

Taking a different approach, Macchi differentiates between HRIAs and Environmental and Social Impact Assessment (ESIAs) (Macchi, Climate Due Diligence (n 133) 113.

Macchi and Bernaz (n 133) 14; see OECD, Managing Climate Risks and Impacts (n 273) 28.

OECD, Managing Climate Risks and Impacts (n 273) 25, with reference, while also stating that a reasonable level of due diligence from an adaptation and resilience perspective ‘can be useful’ (ibid, 27). See further, World Benchmarking Alliance, ‘Just Transition Assessment 2021’ (2021) <https://assets.worldbenchmarkingalliance.org/app/uploads/2021/11/2021_JustTransitionAssessment.pdf>.

With respect to human rights, see Bright and Buhmann (n 133) 10–11 (discussing due diligence in the context of the dilemma between a speedy but fair transition, referring to NCP cases in Sweden and Norway concerning the negative impacts of proposed wind farms on traditional reindeer husbandry).

Macchi and Bernaz (n 133) 8 (with further references).

Bright and Buhmann (n 133) 11.

Eg KlimaSeniorinnen.

By mentioning GHG emissions as an example of environmental impacts, the OECD GL seem to follow the same logic (OECD GL 2023, Ch. VI, para. 5c).

KlimaSeniorinnen, paras 414–22 (where the Court holds that in contrast to ‘common’ environmental impacts, where ‘those exposed to a particular harm can be localised and identified with a reasonable degree of certainty, and the existence of causal link between an identifiable source of harm and the actual harmful effects on groups of individuals is generally determinable’, climate change harms are diffuse in the sense that ‘(w)hole populations are, or will be, affected, albeit in varying ways, to varying degrees and with varying severity and imminence of consequences’); see Hösli and Rehmann (n 387) 273.

Under the CSRD 2023, the description of the company’s process to identify and assess climate-related impacts (ie CCIA) shall include a description of its process in relation to its GHG emissions (ESRS E1-1, para. 20a), which implies that determining the company’s climate impacts is contingent upon the measurement of its GHG emissions.

See OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 25.

ibid; Kaufmann, Respecting Human Rights (n 132) 520.

OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 26; OECD, Managing Climate Risks and Impacts (n 273) 23.

OECD GL 2023, Commentary on Ch. II, para. 19; UNGP, Principle 14, Commentary on Principle 14; UNWG on Business and Human Rights, Information Note (n 1141) para. 5.

OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 50; Birchall, Irremediable Impacts (n 1123) 430–31 (in relation to adverse human right impacts).

See OECD GL 2023, Commentary on Ch. II, para. 19, 20, Commentary on Ch. VI, para. 67; UNGP, Commentary on Principle 17; Macchi and Bernaz (n 133) 9.

OECD, Managing Climate Risks and Impacts (n 273) 27.

ibid, 28.

See OECD, Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (2018) 172; OECD, Managing Climate Risks and Impacts (n 273) 23.

OECD, Managing Climate Risks and Impacts (n 273) 25 (mentioning that investors can use ESG rating and indexes to assess environmental performance of assets or portfolios in relation to climate change, and that third-party assessments ‘can be used to inform investors’ due diligence processes but should not be used as a proxy or in place of these processes’).

See ibid 27.

OECD, Handbook on Environmental Due Diligence in Mineral Supply Chains (OECD Publishing 2023) <https://www.oecd.org/en/publications/2023/09/handbook-on-en​vi​ron​men​tal-due-diligence-in-mineral-supply-chains_ed05507f.html> 36.

OECD GL 2023, Commentary on Ch. II, para. 20.

OECD GL 2023, Ch. VI, para. 1a; OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 25.

See OECD GL 2023, Commentary on Ch. VI, para. 67.

OECD, Managing Climate Risks and Impacts (n 273) 30.

See Equator Principles (above n 1088), Annex A, 19; OECD, Managing Climate Risks and Impacts (n 273) 23–31.

OECD, Responsible business conduct for institutional investors (n 1135) 32; OECD, Managing Climate Risks and Impacts (n 273) 30.

OECD, Managing Climate Risks and Impacts (n 273) 27.

UNGP, Principle 13 (according to Ruggie, Principle 13 is the central Guiding Principle of Pillar II (John Ruggie, Comments on Thun Group of Banks Discussion Paper on the Implications of UN Guiding Principles 13 & 17 in a Corporate and Investment Banking Context (Harvard Kennedy School, 2017) <https://media.business-humanrights.org/media/documents/files/documents/Thun_Final.pdf>); OECD GL 2023, Ch. II, paras 12–13; ibid, Commentary on Ch. VI, para. 68.

Bueno and Bright (n 1120) 792.

Aristova and others (n 133) 521.

Ruggie, Comments on Thun Group (n 1466).

OECD GL 2023, Ch. VI, Chapeau.

ibid, Commentary on Ch. IV, para. 47.

ibid, para. 68.

See OHCHR, Interpretive Guide (n 594) 15–17.

ibid, 16–17; ibid, Response to Request from BankTrack for Advice Regarding the Application of the UNGP in the Context of the Banking Sector (2017) 5 <https://www.ohchr.org/Documents/Issues/Business/InterpretationGuidingPrinciples.pdf>.

See Macchi and Bernaz (n 133) 10. But see UNWG on Business and Human Rights, Information Note (n 1141) para. 17(f) (where it is stated that companies should ‘(t)ake urgent remedial action, including ceasing any climate change-related human rights impacts that they cause or contribute to’ (emphasis added)).

OHCHR, Interpretive Guide (n 594) 15–16; OHCHR, Response to Request from BankTrack (n 1474) 5 (stating that a client can represent an outside entity); see also Macchi, Climate Due Diligence (n 133) 111 (adding that contributing does not amount to a ‘but for’ standard).

OHCHR, Response to Request from BankTrack (n 1474) 5. Cf Greenpeace Southeast Asia et al. v Chevron et al. (Republic of the Philippines, Commission of Human Rights) (Petition, 2016) <https://www.greenpeace.org/static/planet4philippinesstateless/2016/07/213f​91ba-​amended-petition-may-2016.pdf> 27 (arguing that an enterprise contributes to an impact ‘if it is one among other sources that have caused such harm or if it provides products or services to a third party that then causes harm’).

OECD GL 2023, Commentary on Ch. II, para. 16 (‘(f)or the purposes of this recommendation, ‘contributing to’ an adverse impact should be interpreted as a substantial contribution, meaning an activity that causes, facilitates or incentivises another entity to cause an adverse impact and does not include minor or trivial contributions’ (emphasis added). In contrast, neither the UNGP nor the Environment Chapter of the OECD GL explicitly require a contribution to be ‘substantial’, but they likely imply it, see, with respect to the UNGP, OHCHR, Response to Request from BankTrack (n 1474) 5–6 (‘(i)t should be noted that the UNGPs do not include (the) requirement that a contribution meet a certain level [i.e., substantial] to be counted as such. However, in practice, for there to be a contribution at all requires sufficient effect on the client’s actions so as to make the abuse happen or make it more likely to happen…(a)ctions that a bank takes that have only a trivial or minor effect on the client’s actions and decisions would thus be excluded’ (emphasis added)).

Kaufmann, Respecting Human Rights (n 132) 513.

ibid.

ibid.

ibid 513, 522.

OECD GL 2023, Commentary on Ch. II, para. 17; UNGP, Commentary on Principle 13. In contrast, the relationship with individual consumers (natural persons) is not generally considered a business relationship under the OECD GL (OECD GL 2023, Commentary on Ch. II, para. 17).

Eg Kaufmann, Respecting Human Rights (n 132) 513, 522; Bueno and Bright (n 1120) 792, 794 (with further reference); Ruggie, Comments on Thun Group (n 1466); Tara van Ho, ‘Defining the Relationships: “Cause, Contribute, and Directly Linked to” in the UN Guiding Principles on Business and Human Rights’ (2021) 43 Human Rights Quarterly 625, 628–30.

Ruggie, Comments on Thun Group (n 1466); Macchi, Climate Due Diligence (n 133) 111; Birchall, Irremediable Impacts (n 1123) 435. Both Macchi and Birchall suggest that the severity of the impact is also a factor in determining the level of involvement (ibid). However, while relevant to prioritisation (above, IV.B.3.2.2), the severity of an impact cannot reasonably be a factor in assessing a company’s degree involvement.

OHCHR, Response to Request from BankTrack (n 1474) 6–7.

OECD GL 2023, Commentary on Ch. VI, 66, 69.

See ibid, para. 69.

ibid; KlimaSeniorinnen, paras 414–22 (cited above, n 1445).

Eg Jacqueline Peel, ‘Issues in Climate Change Litigation’ (2011) 1 Carbon & Climate Law Review 15, 18–19; Macchi and Bernaz point out that it is ‘not always straightforward for a corporation … to identify the link between its own contribution to climate change and a specific climate change-related adverse impact’ Macchi and Bernaz (n 133) 8, emphasis added); KlimaSeniorinnen, paras 414–22 (cited above, n 1445).

See Macchi and Bernaz (n 133) 10.

Birchall refers to ‘contributory impacts’, distinguishing two forms: cumulative, where multiple enterprises each contribute a relatively minor amount to the creation of a substantial impact, and assistive, where an enterprise (the contributor) provides products and services or other assistance to another business, the actions of which cause an impact, where the contributor knowingly enables and fails to mitigate it (Birchall, Irremediable Impacts (n 1123) 429).

UNGP, Commentary to Principle 18 (emphasis added).

See Macchi and Bernaz (n 133) 8–9; Bright and Buhmann (n 133) 11.

Macchi and Bernaz (n 133) 8–9; see Macchi, Climate Due Diligence (n 133) 111.

OECD GL 2023, Commentary on Ch. VI, para. 67.

Black carbon (above, I.C) may cause localised impacts (Sergey M. Sakerin and others, ‘Spatial Distribution of Black Carbon Concentrations in the Atmosphere of the North Atlantic and the European Sector of the Arctic Ocean’ (2021) 12 Atmosphere 949). Further, there is evidence to suggest that the altitude at which GHGs are emitted matters, see the research on radiative forcing of aircraft-induced condensation trails (eg Johannes Quaas and others, ‘Climate impact of aircraft-induced cirrus assessed from satellite observations before and during COVID-19’ (2021) 16 Environ. Res. Lett. 064051).

See Macchi and Bernaz (n 133) 10–11 (with respect to carbon majors).

ibid 10 (arguing that, ‘(w)hile it is not possible to fix a level of emissions that determines with certainty the existence of contribution responsibility’, carbon majors’ involvement amounts to contribution).

See OECD GL 2023, Commentary on Ch. II, para. 17.

See Joseph Wilde-Ramsing, ‘Insights on Corporate Due Diligence for Climate Change from Existing Normative Corporate Accountability Frameworks’ (in Smit and Alogna (n 1115) 72) (‘any company emitting a significant amount of greenhouse gas can be considered to be contributing to the impacts associated with climate change’).

See Christine Parker and Lucinda Sheedy-Reinhard, ‘Are Banks Responsible for Animal Welfare and Climate Disruption? A Critical Review of Australian Banks’ Due Diligence Policies for Agribusiness Lending’ (2022) 11 Transnational Environmental Law 603, 606 (explaining how ‘responsible banking’ requires an enhanced due diligence approach for corporate lending and underwriting aimed at preventing and mitigating the negative impact of ESG risks).

Greenpeace Southeast Asia et al. v Chevron et al., 19–20, 23 (‘it is not possible to attribute a specific harm, or threat thereof, to the carbon produced by a single Carbon Major’, inferring that ‘(e)ach company should be held accountable for making some of that contribution’). In 2022, the Commission on Human Rights of the Philippines published a report on its investigation into the impact of climate change on the human rights of the Filipino people and the role of carbon majors in this context (Commission on Human Rights of the Philippines (CHRP), National Inquiry on Climate Change – Report (2022) <https://www.ciel.org/wp-content/uploads/2023/02/CHRP-NICC-Report-2022.pdf>). While not taking a clear stance on the level of involvement of carbon majors, the CHRP formulated a wealth of recommendations for governments (ibid, 115–29), carbon majors (ibid, 130–32), financial institutions and investors (ibid, 132–35), the UN and other international bodies (ibid, 135–37), national human rights institutions (ibid, 137–40), courts (140–43), NGOs, CSOs and the legal profession (ibid, 143–45), and global citizens (ibid, 145–46).

Macchi and Bernaz (n 133) 11.

ibid.

With respect to climate change, see ibid, 11–14; Birchall, Irremediable Impacts (n 1123) 434–35; OECD, Managing Climate Risks and Impacts (n 273) 14–16. See generally, OHCHR, Response to Request from BankTrack (n 1474); Ruggie, Comments on Thun Group (n 1466); Kaufmann, Respecting Human Rights (n 132); OECD, Due Diligence for Responsible Corporate Lending and Securities Underwriting (n 1234) 44–45.

Kaufmann, Respecting Human Rights (n 132) 514.

OHCHR, Response to Request from BankTrack (n 1474) 6.

ibid; ibid, The issue of the applicability of the Guiding Principles on Business and Human Rights to minority shareholdings (2013) <https://web.dev.ohchr.un-icc.cloud/sites/default/files/Documents/Issues/Business/LetterSOMO.pdf>.

OHCHR, Response to Request from BankTrack (n 1474) 6.

Birchall, Irremediable Impacts (n 1123) 434–35.

Ruggie, Comments on Thun Group (n 1466) 3 (‘the Thun paper reinterprets core elements of the Guiding Principles in such a way that banks, by definition, do not ‘contribute to’ harm except through their own activities. This is arbitrary and inconsistent with the UNGPs’).

Birchall, Irremediable Impacts (n 1123) 434–35.

See Macchi and Bernaz (n 133) 13.

OHCHR, Response to Request from BankTrack (n 1474) 6 (for instance, where ‘a bank has provided finance to a client and the client, in the context of using this finance, acts in such a way that it causes (or is at risk of causing) an adverse impact’. See also Kaufmann, Respecting Human Rights (n 132) 513–14 (‘(c)learly, negative human rights impacts which occur within a business relationship by clients’ or business partners’ activities cannot be attributed to the bank’, adding that ‘(h)owever, a bank is required to include its business partners’ and clients’ activities in its own due diligence procedure and to draw the necessary conclusions’).

ibid.

ibid 5, 13 (taking the view that the severity of the impact is also a relevant factor – which this study considers it is not (see above (n 1485)).

ibid 12 (emphasis added; Macchi and Bernaz add the requirement that such activities are ‘not justified by demonstrable reasons of necessity in the light of all available resources and alternative options and with due regard to all relevant human rights and sustainable development considerations’; however, such additional ‘policy’ criterion would permit an excessive degree of interpretation, thereby hampering the efficacy of CCDD).

OECD, Managing Climate Risks and Impacts (n 273) 14, 62 (emphasis added; as a second variant, the guidance states that direct linkage may arise where investments ‘undermine climate adaptation for, or resilience of, communities, workers and ecosystems’).

ibid, 15 (with further reference).

Macchi and Bernaz (n 133) 11; ibid, 16 (stating that ‘(a)lthough banks will in most cases only have indirect involvement in these impacts through their financial transactions, there might be cases in which, for instance, their financing to a high-emitting project is so crucial or their influence over the client is so relevant that a causal link might be established between their financial transaction and the adverse impacts (‘contribution’ type of involvement)’).

OHCHR, Interpretive Guide (n 594) 7.

Eg OECD, Global Climate Action (n 1137) 1; ibid, The role of OECD instruments on RBC (n 1139) 9.

OECD GL 2023, Ch. II, paras. A.12–13; ibid, Commentary to Ch. II, para. 19; UNGP, Principles 13, 14, 19; OHCHR, Interpretive Guide (n 594) 16.

OECD GL 2023, Commentary on Ch. IV, para. 46; UNGP, Commentary on Principle 19.

OECD GL 2023, Commentary on Ch. II, para. 21; UNGP, Commentary on Principle 19. It is not entirely clear what the UNGP and the OECD GL mean by ‘may cause’.

OECD GL 2023, Commentary on Ch. II, para. 22; UNGP, Commentary on Principle 19. It is not entirely clear what the UNGP and the OECD GL mean by ‘may contribute’.

OECD GL 2023, Commentary on Ch. II, para. 22; UNGP, Commentary on Principle 19.

UNGP, Principle 22.

OECD GL 2023, Commentary on Ch. II, para. 23; UNGP, Commentary on Principle 19.

OECD GL 2023, Commentary on Ch. II, para. 23; UNGP, Commentary on Principle 22; OHCHR, Interpretive Guide (n 594) 18.

OECD GL 2023, Commentary on Ch. II, para. 23.

ibid.

ibid, Commentary on Ch. VI, para. 19; ibid, Commentary on Ch. VI, para. 67; UNGP, Principle 24; ibid, Commentary on Principle 14.

OECD, Due Diligence for Responsible Corporate Lending and Securities Underwriting (n 1234) 42.

OECD GL 2023, Ch. VI, para. 3; see also ibid, para. 5(b) (‘developing and providing products and services that … are produced in a way that … minimises as far as possible … [GHG] emissions’).

It is unclear whether there is a deliberate terminological distinction between minimising and mitigating. Cf ibid, Commentary on Ch. VI, para. 70 (referring to prevention and mitigation, not minimisation).

ibid, Ch. VI, para. 1(e).

ibid, Commentary on Ch. VI, paras 67, 76; UNWG on Business and Human Rights, Information Note (n 1141) paras 16–22.

OECD GL 2023, Commentary to Ch. VI, para. 76. The 2011 edition of the OECD GL was used rather weak language in this context, see discussion in Macchi and Bernaz (n 133) 5. See also the Principles on Climate Obligations for Enterprises’ GHG emission reduction obligations (n 979), as criticised by Seck (albeit in relation to the first version of the PCOE) as overly complex and at times borderline incomprehensible due to the linkage of corporate GHG reduction obligations with States’ GHG reduction obligations (Seck, A relational analysis (n 979) 272–74).

Decision 1/CP.21, Adoption of the Paris Agreement, FCCC/CP/2015/10, Add.1 (29 January 2016) para. 135 (emphasis added).

Eg Macchi, Climate Due Diligence (n 133) 118; Nieuwenkamp (n 1134).

OECD GL 2023, Commentary on Ch. VI, para. 76.

OECD GL 2023, Commentary on Ch. VI, paras 76–77; OECD, Global Climate Action (n 1137) 1 (‘(o)n the part of the private sector, [the urgent need for collective action from governments and the private sector] means ambitious mitigation action to reduce [GHG] emissions and thereby the adverse climate related impacts of their operations, on people and the planet’); see also ibid, The role of OECD instruments on RBC (n 1139) 9.

See OECD GL 2023, Commentary to Ch. VI, para. 77; OECD, Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, 2018, 172 (with respect to reducing GHG emissions in the supply chain through exercising leverage); Jaap Spier, ‘The Climate Principles for Enterprises as a Global Framework to Come to Grips with Climate Change’ in Smit and Alogna (n 1115) 24 (arguing that there is a ‘strongly emerging view that enterprises bear responsibility for their scope two, and scope three emissions’).

OECD GL 2023, Ch. VI, para. 5.

OECD, Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, 2018, 172. See generally with respect to adverse environmental impacts, OECD GL 2023, Ch. VI, para. 3.

OECD GL 2023, Commentary on Ch. VI, paras. 66, 73 (describing circular economy as ‘model in which products and materials are designed so that they can be reused, repaired, remanufactured, recycled or recovered and therefore maintained in the economy for as long as possible, along with the resources they are made of’).

See also the joint summary of amicus curiae briefs submitted in the Carbon Majors Inquiry (above, IV.B.3.2.3), which submitted that addressing climate change impacts entails a responsibility to reduce GHG emissions in line with best available climate science (Joint Summary of the Amicus Curiae In Re: National Inquiry on the Impact of Climate Change on the Human Rights of the Filipino People (CHR-NI-2016-0001) (2018) <https://climate.law.columbia.edu/sites/default/files/content/docs/Joint-Summary-Amicus_0.pdf> 59; see ibid, 64 (‘Principle 13 [of the UNGP] should be interpreted to require that the respondent companies use appropriate means equivalent to the scale of the risks to human rights from climate change in order to reduce their emissions in order to meet their responsibility to respect human rights’ (emphasis added)).

See also the statement of former UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein in the wake of the adoption of the Paris Agreement: ‘(b)usinesses must behave responsibly and respect human rights, including by taking measures to cut their [GHG] emissions’ (OHCHR, ‘Zeid urges climate change ambition as Paris deal enters into force’ (2016) <https://www.ohchr.org/en/2016/11/zeid-urges-climate-change-ambition-paris-deal-enters-force>).

UNWG on Business and Human Rights, Information Note (n 1141) para. 19(b).

TCFD, Final Report (n 109) 23 (recommending disclosure on ‘avoided GHG emissions through the entire product life cycle’). See also TCFD, Implementing (n 496) 63 (referring to efforts to reduce GHG emissions in the agriculture and food products sector).

Notably, inferring the level of responsibility from the type of GHG emission (direct or indirect) is a key plank of the Court of First Instance’s reasoning in Milieudefensie et al. v Royal Dutch Shell (below, IV.C.4.2).

GHG Protocol, Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) 27 (emphasis added).

See OECD GL 2023, Commentary to Ch. VI, para. 78; OECD, Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (2018) 172. The differentiation of responsibility according to the type of emission (direct or indirect) is a prominent element of the Court of First Instance’s reasoning in Milieudefensie et al. v Royal Dutch Shell (below, IV.C.4.2).

OECD GL 2023, Commentary to Ch. VI, para. 77 (without explaining what ‘where relevant’ means here).

ibid. The OECD GL do not define the terms offsetting, compensation, and neutralisation. The terms offsetting and compensation are commonly understood as equivalent, referring to the purchase and retirement of carbon credits available on the voluntary carbon market.

ibid.

ISO, Net Zero Guidelines (n 1350). See further, eg, UN/HLEG on the Net Zero Emissions Commitments of Non-State Entities, Integrity Matters (n 277).

OECD GL 2023, Commentary to Ch. VI, para. 77.

The voluntary carbon market is distinct from the ‘mandatory’ carbon market through state-based carbon emission trading schemes.

Patrick Greenfield, ‘Revealed: more than 90% of rainforest carbon offsets by biggest certifier are worthless, analysis shows’ (The Guardian online, 18 January 2023) <https://www.theguardian.com/environment/2023/jan/18/revealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe>; Benedict Probst and others, ‘Systematic assessment of the achieved emission reductions of carbon crediting projects’ (2024) 15 Nature Communications <https://doi.org/10.1038/s41467-024-53645-z> (finding that less than 16 per cent of the total volume of existing carbon credits constitute real emissions reductions).

UNWG on Business and Human Rights, Information Note (n 1141) para. 19(b), 22.

UNGP, Commentary on Principle 11. See Macchi and Bernaz (n 133) 15 (‘a bank or investor failing to exercise leverage on (or divest from) high-emitting companies in its portfolio cannot compensate for this failure by increasing its ‘green’ investments or financing climate adaptation projects. Similarly, emitting companies cannot discharge their responsibilities under the UNGPs by buying carbon offsets … also because the corporate responsibility to respect under the UNGPs cannot be outsourced’).

UNGP, Commentary on Principle 19.

OECD GL 2023, Commentary on Ch. II, para. 23; UNGP, Commentary on Principle 19.

OECD GL 2023, Commentary on Ch. VI, para. 78. With respect to adaptation, the OECD GL state that enterprises should refrain from activities that undermine climate adaptation for, and resilience of, communities, workers, and ecosystems (ibid, para. 79).

OECD GL 2023, Commentary on Ch. II, para. 23–26; UNGP, Commentary on Principle 19; OECD, Managing Climate Risks and Impacts (n 273) 33; UNWG on Business and Human Rights, Information Note (n 1141) para. 22; ibid, para. 19 (‘(b)usiness enterprises should … (l)ink incentives for directors and executives with positive performance in combating climate change).

OECD GL 2023, Ch. II, para. A.14.

See generally Salminen and Rajavuori, Transnational Sustainability Laws (n 1293).

UNGP, Commentary to Principle 19; OECD GL 2023, Commentary on Ch. II, para. 25; OECD, Managing Climate Risks and Impacts (n 273) 33; Macchi, Climate Due Diligence (n 133) 119.

With respect to procurement, see UNWG on Business and Human Rights, Information Note (n 1141) para. 19(c).

OECD GL, Ch. VI, para. 5b; See PCOE (2nd edn), Principle 10.1: ‘An enterprise must not make available products, including packaging, that cause excessive GHG emissions, or render services that cause excessive GHG emissions, without taking countervailing measures … to offset the excessive GHG emissions’).

As recognised by the Court of First Instance in Milieudefensie et al v Shell, para. 4.2.25 (‘[Royal Dutch Shell] does not contest that it can exert that control and influence [over the Scope 3 emissions of the Shell group, which are released by the end-users] through its energy package, and the composition thereof, produced and sold by the Shell group’). See also Bright and Buhmann (n 133) 12. A common example in the literature of an energy company that underwent a transition from relying entirely on fossil fuels to renewable energy sources is Danish company Ørsted (eg Tulin Dzhengiz, Leona A. Henry, and Khaleel Malik, ‘The Role of Partnership Portfolios for Sustainability in Addressing the Stability-Change Paradox: Dong/Orsted’s Transition From Fossil Fuels to Renewables’ (2024) 63 Business & Society 1518).

OECD GL 2023, Commentary on Ch. II, para. 23.

OECD, Managing Climate Risks and Impacts (n 273) 36.

ibid.

See eg OECD, Due Diligence for Responsible Corporate Lending and Securities Underwriting (n 1234) 50–51.

Kaufmann, Respecting Human Rights (n 132) 515, 521.

See OECD GL 2023, Ch. VI, para. 5c; ibid, Ch. VIII, para. 5; ibid, Commentary on Ch. VIII, paras 97, 101. See OECD, Due Diligence for Responsible Corporate Lending and Securities Underwriting (n 1234) 34 (‘[I]n cases of securities underwriting, if a company in a carbon intensive industry does not consider climate change to be a risk because there is no foreseeable short-term impact on the company, the bank can play a role in explaining to the client the significant environmental and social risks that climate change poses and how it may also have a material impact on the client’).

See, for instance, SFDR, recital (10).

ibid, 515.

OECD GL 2023, Commentary on Ch. II, para. 23; OECD, Managing Climate Risks and Impacts (n 273) 14.

OECD, Managing Climate Risks and Impacts (n 273) 31–36 (setting out, among other things, that investors should engage in setting, filing or supporting resolutions consistent with their climate policies and aligned with climate change mitigation, including on topics such as credible GHG emission reduction targets and phasing out fossil fuels); Macchi and Bernaz (n 133) 15; Bright and Buhmann (n 133) 12.

OECD, Managing Climate Risks and Impacts (n 273) 32.

Macchi and Bernaz (n 133). See, for instance, the decision of the Norwegian Government Pension Fund Global (Norges Bank Investment Management, NBIM), one of the world’s largest investment funds, in 2020 to exclude four companies ‘after an assessment that acts or omissions that on an aggregate company level lead to unacceptable [GHG] emissions’ (NBIM, Exclusion Decisions and decisions to revoke exclusions, 2020 <https://​www.​nbim.​no/en/the-fund/news-list/2020/exclusion-decisions-and-decisions-to-revoke-exclusion/>).

UNWG on Business and Human Rights, Information Note (n 1141) para. 20.

OECD GL 2023, Commentary on Ch. II, para. 27; OECD, Responsible business conduct for institutional investors (n 1135) 32; ibid, Managing Climate Risks and Impacts (n 273) 32; see UNGP, Principle 30; UNWG on Business and Human Rights, Information Note (n 1141) para. 22; Macchi and Bernaz (n 133) 15.

OECD GL 2023, Commentary on Ch. II, para. 12.

See ibid, Ch. VI, para 2; UNWG on Business and Human Rights, Information Note (n 1141) para. 17(e) (adding that this includes ensuring free, prior and informed consent (FPIC) by indigenous peoples on their actual and potential climate change-related impacts on human rights and the environment; in line with this study’s focus of CCDD on climate change mitigation, FPIC is seen as a very important process, but one that is separate from CCDD). On FPIC, see generally Fanny Pulver, The Implementation of Free, Prior and Informed Consent and Indigenous People’s Rights under the OECD Guidelines for Multinational Enterprises (EIZ Publishing 2022); Bright and Buhmann (n 133) 11.

OECD GL 2023, Ch. II, para. A.15; ibid, Commentary on Ch. II, para. 28; UNGP, Principle 18; Bright and Buhmann (n 133) 11 (stating that businesses ‘must ensure a meaningful engagement with affected stakeholders across the whole risk-based due diligence process’).

OECD, Managing Climate Risks and Impacts (n 273) 28; Bright and Buhmann (n 133) 11.

Macchi and Bernaz (n 133) 14; Bright and Buhmann (n 133) 11.

UNGP, Commentary on Principle 18; OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 50–51; OECD GL 2023, Commentary on Ch. II, para. 28.

UNWG on Business and Human Rights, Information Note (n 1141) para. 18.

OECD GL 2023, Ch. VIII, para. 4.

ibid, Ch. VI, para. 5c; ibid, Ch. VIII, para. 2.

ibid, Commentary on Ch. VIII, para. 97.

See OECD GL 2023, Ch. II, paras A.5, A.16; ibid, Commentary on Ch. II, para. 6.

See G20/OECD Principles of Corporate Governance 2023, VI.C.1.

OECD GL 2023, Commentary on Ch. II, paras 13–14; UNWG on Business and Human Rights, Information Note (n 1141) para. 31; G20/OECD Principles of Corporate Governance 2023, VI.D.5.

UNWG on Business and Human Rights, Information Note (n 1141) paras 19(e), 31.

Timothy Smith, ‘ExxonMobil’s Lawsuit Against its Shareholders: A Cautionary Tale’ (Harvard Law School Forum on Corporate Governance, 2024) <https://​corp​gov.​law.​harvard.edu/2024/06/12/exxonmobils-lawsuit-against-its-shareholders-a-cautionary-tale/>.

See OECD GL 2023, Commentary on Ch. II, para. 15; TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 30–3; OECD, Managing Climate Risks and Impacts (n 273) 36–40; UNGP, Principle 20; Macchi, Climate Due Diligence (n 133) 98, 114.

See OECD GL (2023), Ch. IV, para. 1c. To mention an example from due diligence legislation, Article 15 CSDDD 2024 spells out companies’ obligation to conduct periodic assessments of their own operations and measures, those of their subsidiaries and, where related to the company’s chain of activities (defined in Article 3(1)(g) CSDDD 2024), those of their business partners, to assess implementation of due diligence based on qualitative and quantitative indicators at least every twelve months or without undue delay after a ‘significant change’ occurs. In CSDDD 2025, Article 15 was amended as follows: ‘Such assessments shall be based, where appropriate, on qualitative and quantitative indicators and be carried out without undue delay after a significant change occurs, but at least every 5 years and whenever there are reasonable grounds to believe that the measures are no longer adequate or effective or that new risks of the occurrence of those adverse impacts may arise’.

OECD GL 2023, Commentary on Ch. VI, para. 77.

See OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 32.

OECD, Managing Climate Risks and Impacts (n 273) 38.

See ibid, 39. Cf Article 15 CSDDD (n 1605).

TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 30.

See G20/OECD Principles of Corporate Governance 2023, VI.C; ibid, V.D.3.

See ibid, paras V.D.5, VI.C.

See OECD GL 2023, Ch. III, para. 3; see UNGP, Principle 21.

See eg Article 19a(2)(f)(i) Accounting Directive as amended by the CSRD 2023. Under the CSDDD 2024, companies were required to publish an annual statement on their website concerning their due diligence (Article 16 CSDDD 2024).

See OECD GL 2023, Commentary on Ch. VI, para. 72; UNGP, Commentary on Principle 21.

See OECD, Managing Climate Risks and Impacts (n 273) 41–43.

OECD GL 2023, Ch. III, paras. 2–3. See also G20/OECD Principles of Corporate Governance 2023, VI.A.

OECD GL 2023, Commentary on Ch. III, para. 33. See also ibid, Commentary on Ch. VI, para. 77.

ibid, Ch. VI, para. 1(d).

See ibid, Ch. III, para. 3(c),(e); ibid, Commentary on Ch. VI, para. 77; OECD, OECD Due Diligence for Responsible Business Conduct (2018) 33; ibid, Managing Climate Risks and Impacts (n 273) 41; TCFD, Final Report (n 109) 14; UNWG on Business and Human Rights, Information Note (n 1141) para. 17(b).

TCFD, Final Report (n 109) 14; TCFD, Guidance on Metrics, Targets, and Transition Plans (n 242) 19.

G20/OECD Principles of Corporate Governance 2023, VI.A.4.

OECD GL 2023, Commentary on Ch. VI, para. 77 in fine.

TCFD, Final Report (n 109) 19.

OECD GL 2023, Commentary on Ch. II, para. 16; ibid, Ch. VI, para. 1(e); UNGP, Principle 22.

OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 34. Cf the definition in the CSDDD 2024, according to which remediation is the ‘restoration of the affected person or persons, communities or environment to a situation equivalent or as close as possible to the situation they would have been in had an actual adverse impact not occurred, in proportion to the company’s implication in the adverse impact, including by financial or non-financial compensation provided by the company to a person or persons affected by the actual adverse impact and, where applicable, reimbursement of the costs incurred by public authorities for any necessary remedial measures’ (Article 3(1)(t) CSDDD).

See Bright and Buhmann (n 133) 13 (‘(i)n relation to remediation for climate-related impacts, several challenges and specificities arise notably with respect to issues of standing, identification and attribution of the share of responsibility for each individual contributor and causation’).

OECD GL 2023, Commentary on Ch. II, para. 23.

UNGP, Principles 25–31; see Bright and Buhmann (n 133) 12–13.

With respect to the UNGP, see Bright and Buhmann (n 133) 12.

OECD GL 2023, Ch. VI, para. 1(e) (providing for, or co-operating in, remediation as necessary to address adverse environmental impacts the enterprise has caused or contributed to); ibid, Commentary on Ch. II, para. 15.

OECD GL 2023, Commentary on Ch. II, para. 19; UNGP, Commentary to Principle 25.

OECD GL 2023, Commentary on Ch. II, para. 15; OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 35; UNGP, Principles 15(c), 28–31; ibid, Commentary on Principle 29.

OECD, OECD Due Diligence Guidance for Responsible Business Conduct (n 1116) 34.

ibid, 34, 88.

Bright and Buhmann (n 133) 13.

With respect to UNGP, see UNWG on Business and Human Rights, Information Note (n 1141) para. 23.

See ibid, para. 24(b). It is noteworthy that the language used in the Information Note explicitly extends to adverse environmental impacts, possibly reflecting the growing recognition of a right to a healthy environment (above, IV.A.3.1.2).

OECD, Managing Climate Risks and Impacts (n 273) 44.

UNWG on Business and Human Rights, Information Note (n 1141) Ch. V; see also Safe Climate Report (n 1193) para. 71.

UNWG on Business and Human Rights, Information Note (n 1141) para. 17(f).

ibid, para. 28.

ibid, para. 29.

Seck, A relational analysis (n 979) 268; see also Iglesias Márquez (n 222) 352–53.

Birchall, Irremediable Impacts (n 1123) 436.

ibid.

ibid, 438.

OHCHR, ‘Human Rights, Climate Change and Business. Key Messages’ (2016) <https://​www.​ohchr.​org/sites/default/files/Documents/Issues/ClimateChange/materials/KMBusiness.pdf> 5 (emphasis added).

Bright and Buhmann (n 133) 13.

Pulver (n 1590) 139. In fact, several of the climate change-related NCP cases also cite the OECD GL’s Human Rights chapter, which is largely congruent with the respective parts of the UNGP (below, Table 6).

See OECD GL 2023, Part II/Procedures. See generally Kaufmann, National Contact Points (n 1216).

See Malaguti (n 1297) 12–13.

See OECD GL 2023, Part II/Procedures. In particular, NCPs are entitled to publish the fact that a specific instance has been lodged, which includes the naming of the parties (unless submitting parties wish to remain anonymous if there is a serious threat of retaliatory measures). Further, NCPs are entitled to publish statements, in particular an initial assessment and a final assessment. The proceedings themselves (submissions, meetings) are confidential. The practice of NCPs concerning publicity and transparency varies greatly.

Christine Kaufmann, Glass Half Full (n 1093) 31; Ramona Elisabeta Cîrlig, ‘Business and Human Rights: From Soft Law to Hard Law?’ (2016) 6 Juridical Tribune 228, 233, 243.

See OECD, The role of OECD instruments on RBC (n 1139) 14–15, 45–53. The majority of cases citing provisions of the Environment Chapter pertain to the environmental impacts of large-scale projects or operations, with the mining and quarrying sector accounting for 39 per cent of cases, the manufacturing sector for 16 per cent, the energy sector for 13 per cent, the finance and insurance sector for 12 per cent, the agriculture, forestry and fisheries sector for 8 per cent, and the construction sector for 8 per cent (OECD, The role of OECD instruments on RBC (n 1139) 14–15).

ibid, 14.

See, for example, Society for Threatened Peoples/BKW Group (Swiss NCP, 2020) concerning BKW’s investment in a large onshore wind power plant in Norway in an area of crucial importance to the local indigenous Sámi community. Cf Aristova and others, who include just transition cases, naming the example of FOCSIV et al./FCA Italy (Italian NCP, 2022), in addition to (i) cases concerning GHG reduction and (ii) greenwashing cases (Aristova and others (n 133) 512, 518); Seck and Benjamin (n 1160) 77.

Given the transboundary nature of climate change impacts, the country of harm (information derived from the OECD Watch complaints database) is of limited significance. In most cases, it simply indicates the headquarter(s) of the MNE(s) involved or the location of a project under scrutiny.

The numbering of the chapters in the 2000 version differs from that in the 2011 and 2023 versions of the OECD GL. Ch. II: General Policies, Ch. III: Disclosure, Ch. IV: Employment and Industrial Relations (2000)/Human Rights (2011/2023), Ch. V: Environment (2000)/Employment and Industrial Relations (2011/2023), Ch. VI: Combating Bribery (2000)/Environment (2011/2023), Ch. VII: Consumer Interests, Ch. VIII: Science and Technology (2000)/Consumer Interests (2011/2023), Ch. IX: Competition (2000)/Science and Technology (2011/2023).

The table distinguishes between four different types of case status (there is no consistent terminology; see generally OECD GL 2023, Part II). ‘Pending’ means that the case has been submitted, but the competent NCP has not yet issued an initial assessment whether the submission merits further consideration. ‘Accepted’ means that the competent NCP has decided that the case merits further consideration. ‘Not accepted’ means that the competent NCP has decided that it is not competent to deal with the specific instance. ‘Concluded’ means that the NCP has closed the specific instance, either with or without agreement between the parties.

Further, the NCP identified ‘limited specificity in the (OECD GL’s) wording about climate change and what companies should do’ (above, IV.A.3.2.2).

Due to the Italian NCP’s highly restrictive approach to transparency, information on specific instances handled by this NCP is very limited.

ibid, 515.

ibid, 515–17.

Seck and Benjamin (n 1160) 76.

Aristova and others (n 133) 513–14.

Seck and Benjamin (n 1160) 64.

4 NGOs/ING (Dutch NCP), Final Statement, 19 April 2019, 3.

ibid, 5.

ibid.

ibid.

In an initial assessment, an NCP determines whether the case merits further examination. If the answer is affirmative, the NCP offers the parties its good offices with the objective of achieving a mutually acceptable outcome through mediation or conciliation (see OECD GL 2023, Part II/Procedures).

VU Climate Change & Sustainability Law Clinic et al./ONE Dyas B.V (Dutch NCP), Initial Assessment, 11 October 2024.

ibid, 3.

ibid, 4.

ibid, 6.

Aristova and others (n 133) 510.

ibid (with references).

Seck and Benjamin (n 1160) 77 (mentioning Canada as an example).

Aristova and others (n 133) 510.

Seck and Benjamin (n 1160) 63–64.

Birchall, Irremediable Impacts (n 1123) 436.

ibid.

Aristova and others (n 133) 524.

See Riccardo Luporini, ‘Climate Change Litigation before International Human Rights Bodies: Insights from Daniel Billy et al. v. Australia (Torres Strait Islanders Case)’ (2023) 3 The Italian Review of International and Comparative Law 238.

Riccardo Luporini and Annalisa Savaresi, ‘International Human Rights Bodies and Climate Litigation: Don’t Look Up?” (2023) 32 RECIEL 267.

See Luporini (n 1685).

Billy et al. v Australia, Annex II: Individual opinion by Committee Member Gentian Zyberi (concurring), para. 5 (22 September 2022). International Covenant on Civil and Political Rights, A/RES/2200A (XXI) (16 December 1966). In particular, Article 6 (right to life), 17 (right to privacy and family life), 27 (right of ethnic minorities to their culture).

UNGP, Commentary on Principle 12. This argument was made by Jenny Sandvig at the inaugural Climate Law Seminar Series event ‘Climate Change Impacts as Human Rights Violations’ held at the University of Oslo on 22 November 2022. The ICCPR is also referenced in the OECD GL 2023, Commentary on Ch. V, para. 58.

See Client Earth, Complaint to the Working Group Working Group on the issue of human rights and transnational corporations and other business enterprises and the Special Rapporteur on the Issue of Human Rights Obligations relating to the Enjoyment of a safe, clean, healthy and sustainable environment and JP Morgan, Citi, HSCB, SMBC, Crédit Agricole, Morgan Stanley, BNP Paribas, Goldman Sachs, Mizuho, Société Générale and EIG Global Energy Partners (2021) <https://www.clientearth.org/media/l44by31b/clientearth-complaint-concerning-saudi-arabian-oil-company.pdf>.

ibid, paras 1, 9.

ibid, para. 11.

ibid, paras 13–14, 205, 211.

Working Group on the issue of human rights and transnational corporations and other business enterprises and several UN Special Rapporteurs to Saudi Aramco (Letter dated 26 June 2023, AL OTH 53/2023).

ibid, 6.

ibid.

ibid, 6–8 (specifically, the letter enquires about Saudi Aramco’s EIA, due diligence process, identification of Scope 1 to 3 emissions, steps taken to avoid misinformation on climate change, and remediation).

Namely, Mitsui, Mizuho, HSBC, the US, the UK, Société Générale, Japan, France, Crédit Agricole, and BNP Paribas (see OHCHR, <https://spcommreports.ohchr.org/TmSearch/RelCom?code=SAU3/2023>).

See eg Savaresi and Setzer (n 375) 14; Rajavuori, Savaresi, and van Asselt (n 133) 947–51.

UNGP, Commentary on Principle 23.

Rajavuori, Savaresi, and van Asselt (n 133).

See generally CCLI, ‘Climate Change Litigation – What Does It Mean for Board Directors?’ (2022) <https://commonwealthclimatelaw.org/wp-content/uploads/2022/06/CGI-CCLI-Quarterly-Update-1-Climate-Change-Litigation.pdf>. See further, Cynthia A. Williams and Ellie Mulholland, ‘What the Shell Judgment Means for US Directors’ (Harvard Law School Forum on Corporate Governance, 2021) <https://corpgov.law.harvard.edu/2021/07/22/what-the-shell-judgment-means-for-us-directors/> (arguing that ‘boards will need to think expansively about potential tortious liability risks relating to climate change, and ensure they have systems in place to avoid being sued and potentially found liable by a court’ which ‘may include considering whether and how to adopt and implement Paris-aligned business strategies that are consistent with emissions trajectories that limit global average warming to 1.5°C’).

Concerning the relevance of tort law litigation on directors’ duties under German law, see Peter Rott ‘Directors’ Duties and Corporate Social Responsibility under German Law – Is Tort Law Litigation Changing the Picture?’ (2017) 1 Nordic Journal of Commercial Law 11.

Rühmkorf and Walker (n 869).

ibid, 16.

Laura Burgers, ‘An Apology Leading to Dystopia: Or, Why Fuelling Climate Change Is Tortious’ (2022) 11 Transnational Environmental Law 419, 430.

Milieudefensie (District Court).

ibid, para. 4.4.1. See Burgers (n 1706) 422–23.

Milieudefensie, para. 4.4.2–4.4.55. See Andreas Hösli, ‘Milieudefensie et al. v. Shell: A Tipping Point in Climate Change Litigation against Corporations?’ (2021) 11 Climate Law 195, 198–208; Macchi and van Zeben (n 203) 411–12.

Milieudefensie (District Court), para. 4.4.10.

Burgers (n 1706) 430 (with further reference). See also Macchi and van Zeben (n 203) 412.

Mayer, Duty of Care (n 752) 410.

See Rajavuori, Savaresi, and van Asselt (n 133) 948.

Among others, Hösli, Milieudefensie (n 1709); Colombo, Unpacking Corporate Due Diligence (n 1155); Mayer, Duty of Care (n 752); Burgers (n 1706); Macchi and van Zeben (n 203).

Macchi and van Zeben (n 203) 414.

Milieudefensie (District Court), para. 4.4.11; see UNGP, Commentary to Principle 11. See Bright and Buhmann (n 133) 9.

Milieudefensie (District Court), para. 4.4.14; Macchi and Bernaz (n 133) 13.

Milieudefensie (District Court), paras 2.5.22, 4.4.11. In any event, the Court recognised that RDS had on its website declared its support for the UNGPs.

Milieudefensie (District Court), para. 4.4.14 (referring to OECD GL (2011), Ch. VI, Chapeau, para. 4).

ibid, para. 4.4.15.

ibid, 4.4.17.

ibid, paras 4.4.13, 4.4.44–48, 4.4.52.

Downs (n 1299) 39, 41.

Milieudefensie (District Court), para. 4.4.37.

Principle 14 provides that business responsibility applies to all enterprises regardless of their size, sector, operational context, ownership and structure and that nevertheless, the scale and complexity of the means through which enterprises meet that responsibility may vary according to these factors and with the severity of the enterprise’s adverse impacts.

Milieudefensie (District Court), para. 4.4.16. According to Heede, RDS accounts for 2.25 per cent of global industrial CO₂-eq emissions produced from 1965 to 2020, ranking as the world’s seventh largest emitter (Heede, The Evolution of Corporate Accountability (n 44) 250).

Milieudefensie (District Court), para. 4.4.18.

ibid (in fine). The District Court based its view on a document it referred to as ‘Oxford Report’ (see discussion in Hösli, Milieudefensie (n 1709) 201)) See also Macchi and van Zeben (n 203) 413.

Milieudefensie (District Court), para. 4.4.19.

ibid, para. 2.5.5.

ibid, para. 4.4.20.

See Mougeolle (n 1312) 130.

Milieudefensie (District Court), paras 2.5.4, 4.4.20.

ibid, para. 4.4.20.

ibid.

ibid (emphasis added).

ibid, para. 4.4.37 (emphasis added), see also para. 4.4.49 (concerning the effectiveness of a reduction obligation on RDS).

See also ibid, para. 4.4.20.

ibid, paras 4.4.18 (in fine), 4.4.21; Colombo, Unpacking Corporate Due Diligence (n 1155) 43.

Milieudefensie (District Court), para. 4.4.25.

ibid, para. 4.4.29; see Hösli, Milieudefensie (n 1709) 206. Mayer criticises the District Court for not explicitly justifying its choice of pathway over other plausible pathways and its assumption that RDS’ CO₂ emissions must be reduced at the same rate as at the aggregate global level (Mayer, Duty of Care (n 752) 414).

Milieudefensie (District Court), para. 4.4.37.

ibid, paras 4.3.5, 4.4.37, 4.4.54.

Rajavuori, Savaresi, and van Asselt (n 133) 948.

Milieudefensie (District Court), para. 5.3.

Concerning Scope 2 emissions, the Court order is not entirely clear: the obligation of result ‘concerns RDS’ Scope 1 emissions and the part of RDS’ Scope 2 emissions which can be ascribed to the Shell companies’ (Milieudefensie (District Court), para. 4.4.23).

ibid, paras 4.1.4, 4.4.39. Cf Colombo, Unpacking Corporate Due Diligence (n 1155) 44; Macchi and van Zeben (n 203) 413.

Macchi and van Zeben (n 203) 413.

Milieudefensie (District Court), para. 4.4.39.

ibid, para. 4.4.24.

Lungowe et al. v Vedanta Resources PLC and Konkola Copper Mines PLC [2016] EWHC 975 (TCC); Okpabi et al. v Royal Dutch Shell PLC and Shell Petroleum Development Company of Nigeria Ltd (SPDC) [2021] UKSC 3; Macchi and van Zeben (n 203) 414.

Milieudefensie (District Court), para. 4.4.55.

ibid, paras 4.4.39, 4.4.52, 4.5.2.

ibid, para. 4.4.39.

ibid, para. 4.4.30. In contrast, the OECD GL 2023 accept compensation only as a last resort (above, IV.B.4.3).

ibid, para. 4.5.8.

ibid, para. 4.5.7.

Court of Appeals of The Hague, 200.302.332/01, 12 November 2024, Shell Plc and Stichting Milieu en Mens v Vereniging Milieudefensie et al (unofficial translation: <https://​uit​spra​ken.rechtspraak.nl/details?id=ECLI:NL:GHDHA:2024:2100> (Milieudefensie (Court of Appeals)).

ibid, in particular, paras. 7.21–22.

ibid, paras 7.18–27.

ibid, para. 7.17.

ibid, para. 7.26.

ibid, para. 7.27 (emphasis added).

ibid, para. 7.52.

ibid, para. 7.53.

ibid, para. 7.57.

ibid, para. 7.65.

ibid.

ibid, para. 7.99.

ibid.

ibid.

ibid.

ibid, para. 7.96.

ibid, para. 7.73.

ibid, para. 7.111.

ibid, para. 7.75

ibid, para. 7.91.

ibid, para. 7.106.

Milieudefensie, ‘Why we’re taking our Shell Climate Case to the Supreme Court’ (11 February 2025) <https://en.milieudefensie.nl/news/why-we2019re-taking-our-shell-climate-case-to-the-supreme-court>.

See Rajavuori, Savaresi, and van Asselt (n 133) 946 (noting that ‘(t)hese early cases seemingly indicate that there is a growing willingness to creatively use diverse hard and soft law instruments to challenge companies through climate change litigation, also on the basis of due diligence obligations’).

Will Frank, Christoph Bals, and Julia Grimm, ‘The Case of Huaraz: First Climate Lawsuit on Loss and Damage Against an Energy Company Before German Courts’ in Reinhard Mechler and others (eds), Loss and Damage from Climate Change (Springer 2019) 475.

LG Essen, Decision of 15 December 2016 – 2 O 285 (NVwZ 2017, 234). See Philipp Semmelmayer, ‘Climate Change and the German Law of Torts’ (2021) 22 German Law Journal 1569, 1575.

OLG Hamm, Decision of 1 February 2018, I-5U 15/17, 4. See discussion by Semmelmayer (n 1782) 1576 (with references).

OLG Hamm, Decision of 28 May 2025, I-5U 15/17.

See Paul Grimm and Jan-Erik Schirmer, ‘Success Without Victory: Lliuya v. RWE Decided’ VerfBlog (1 June 2025) <https://verfassungsblog.de/lliuya-rwe-climate-judgment/>.

See Rajavuori, Savaresi, and van Asselt (n 133) 948; Mougeolle (n 1312) 132; Marta Torre-Schaub, ‘Climate Change Litigation in France: New Perspectives and Trends’ in Alogna, Bakker and Gauci (n 366) 124, 138; Macchi, Climate Due Diligence (n 133) 96.

Rajavuori, Savaresi, and van Asselt (n 133) 947.

Tribunal judiciaire de Nanterre, Summons dated 28 January 2020 (Notre Affaire à Tous et al. v Total).

See Torre-Schaub (n 1786) 124.

Mougeolle (n 1312) 128.

ibid, 129.

Macchi, Climate Due Diligence (n 133) 97.

Cour d’Appel de Paris, Decision of 18 June 2024, No RG 23/14348.

Tribunal judiciaire de Saint-Etienne, Summons dated 3 February 2021 (Envol Vert et al. v Casino).

Tribunal judiciaire de Paris, Summons dated 23 February 2023 (Comissão Pastoral da Terra and Notre Affaire à Tous and Others v BNP Paribas).

Supreme Court of New Zealand (Media Release, 7 February 2024) <https://​www.​courts​of​nz.govt.nz/assets/cases/2024/MR-2024-NZSC-5.pdf>.

Sam Bookman, ‘Smith v Fonterra and the Climatisation of Tort Law’ (2024) 284 Modern Law Review 192.

Downs (n 1299) 33.

ibid.

Supreme Court of New Zealand (n 1796); ibid.

Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552. See discussion by Downs (n 1299) 34–35.

Smith v Fonterra Co-operative Group Ltd [2024] NZSC 5.

Bookman (n 1797).

Downs (n 1299) 39.

ibid 42 (arguing that ‘a common law rule incorporating the concept of due diligence should impose a duty on private businesses to adopt and enforce corporate policies that reduce their emissions in line with New Zealand’s NDC’, recognising time that courts should be entitled to disregard the governments’ reduction budget if poorly designed or ill-founded; furthermore, Downs puts forth the hypothesis that the standard of care may become increasingly rigorous over time as climate change progresses, and may eventually call for a common law requirement to reconsider business models).

Asmania et al. v Holcim, Kantonsgericht Zug (Statement of Claims filed on 30 January 2023). See Laura Duarte Reyes and Nina Burri, ‘Transnational corporate liability in the era of loss and damages: the case of Asmania Et Al. V Holcim’ in Stefano Zirulia, Lidia Sandrini and Cesare Pitea (eds), What Future for Environmental and Climate Litigation? Exploring the Added Value of a Multidisciplinary Approach from International, Private and Criminal Law Perspectives (Milano University Press 2024) 97, 107–23.

Richard Heede, ‘Carbon History of Holcim Ltd: Carbon dioxide emissions 1950–2021’ (Climate Accountability Institute 2022), <https://climateaccountability.org/wp-content/uploads/2024/08/CAI-Holcim-Rpt-Jul22R.pdf> 24.

Swiss Civil Code of 10 December 1907, SR 210. The first paragraph of Article 28 reads as follows (unofficial English translation): ‘Any person whose personality rights are unlawfully infringed may petition the court for protection against all those causing the infringement’. The requests for injunctive relief are based on Article 28a. See Reyes and Burri (n 1806) 113–15.

Asmania et al. v Holcim, Statement of Claim dated 30 January 2023.

Reyes and Burri (n 1806) 117–18.

See ibid, 118. With respect to the concept of concurrent causation (according to which the presence of multiple concurrent causes does not negate liability for the individual bearing responsibility for one of the causes), the plaintiffs refer to Neubauer v Germany, Milieudefensie and the intermediate decision of the Higher Regional Court of Hamm in Lliuya, as well as case law of the Swiss Federal Supreme Court (ibid, 119–20).

Cantonal Court of Zug, A1 2023 9, Decision of 17 December 2025.

5

Conclusion

General Remarks

Over the course of the research period leading to this thesis, atmospheric CO₂ concentrations increased from approximately 411 parts per million (ppm) to around 430 ppm (below, Fig. 14). The global economic slowdown caused by COVID-19 in 2020 amounted to only a brief interruption in the persistent upward trend of atmospheric GHG concentrations. Each year, a new global temperature record is set. In 2024, earlier than expected, the global average temperature was recorded at around 1.5°C above pre-industrial levels, already

[picture]

Fig 14: Rise of CO₂ concentration in the atmosphere from 2019 to June 2025 (NASA)[2]

reaching the peak temperature range of the Paris Agreement.[1] According to the IPCC, staying on a 1.5 °C pathway requires global GHG emissions to be reduced by approximately 50 per cent by 2030. And yet, global GHG emissions continue to rise with no signs of decreasing. It appears that achieving the 1.5°C goal will require a significant and unforeseen event, perhaps even a miracle.

What role does corporate law play in this grand picture? A pessimistic view is that the law is per se an instrument to conserve the status quo. In the present scenario, the status quo means business as usual with rising GHG emissions. An optimistic view, by contrast, views the law as a powerful instrument capable of driving behavioural change. Yet one might ask whether it is truly powerful enough to deliver the kind of transformation that would amount to the above-mentioned miracle. While such questions invite speculation and philosophical reflection, the task of the legal scholar is to engage in a critical examination of the law, its underlying principles, structures, and operational mechanisms. In this spirit, the author has sought to draw a realistic picture, illuminating the tertium comparationis from multiple analytical angles.

The thesis has examined the following research question: From a comparative and international perspective, does the duty of care in company law require company directors to address climate change risks and impacts? Seeking to overcome siloed thinking, this research project has explored a new area situated at the intersection of international climate change law, corporate law, and responsible business conduct. The main findings are summarised in the following section.

Answering the Research Question

Sub-RQ 1

What is the normative regime governing the legal responsibilities of companies in relation to climate change and how is it operationalised? Which role does corporate law play in this context?

International climate law has by and large failed to drive sufficient state action to meet global temperature goals, prompting greater attention to the responsibilities of non-state actors, in particular corporations. In lieu of clear international rules, various private governance systems have arisen, aiming to align corporate behaviour with the Paris Agreement. Although commonly – and inadequately – described as ‘voluntary’, these mechanisms are increasingly shaping the understanding that corporations bear substantive climate responsibilities beyond mere compliance with technical regulatory requirements. The concept of ‘net zero’ has become the unifying benchmark for both states and non-state actors, but methodological gaps and inconsistencies, including in relation to Scope 3 emissions, threaten the credibility and comparability of corporate climate targets.

At the national level, domestic laws operationalise international climate commitments through a mix of market-based and regulatory tools, yet with limited success in terms of delivering substantial cuts in GHG emissions. International standards, such as the UNGP and OECD GL, help fill the resulting regulatory void by setting benchmarks for acceptable corporate conduct. Additionally, climate litigation, particularly involving private actors, is emerging as a key avenue for defining corporate liability for both direct and indirect emissions. Within the domain of corporate law, disclosure mechanisms, shareholder rights, and directors’ duties are central to shaping climate governance.

Sub-RQ 2

How can the risks and impacts of climate change, as identified by climate science, be conceptualised in the context of corporate law?

Climate science has identified numerous climate change risks and climate change impacts. In the international law on climate change, the terms risk and impacts are grounded in climate science. By contrast, within the field of corporate law, the concept of ‘risk’ has traditionally focused on risks to the company itself, reflecting an outside-in perspective informed by enterprise risk management. Accordingly, there is an apparent incoherence between how risks and impacts are conceptualised in climate science and international climate law, and how risk is understood in corporate law.

In 2017, the TCFD popularized the classification of climate-related risk into physical and transition risks. Grounded in a traditional outside-in perspective, this framework remains limited as it overlooks the inside-out dimension, that is, the climate change risks and impacts triggered by a company’s own activities. Despite this constraint, the TCFD framework represents an important step toward a more comprehensive understanding of climate-related risks within the business context. To advance this understanding further, the outside-in perspective should be complemented by an inside-out dimension, which can be integrated through reference to the OECD GL and the UNGP.

Sub-RQ 3

From a functional comparative corporate law perspective, what is the concept and content of the duty of care owed by directors?

In modern corporate law systems, directors hold a central role in the governance structure, performing strategic, supervisory, and advisory functions. A fundamental norm guiding their conduct is the duty of care. Although its origins differ across legal systems, a broadly comparable concept of the duty of care has developed in many jurisdictions. This duty operates as a bifurcated standard, encompassing a (substantive) standard of care and a (formal) standard of review.

Comparative corporate law research broadly agrees that the standard of care under the duty of care is articulated in a similar manner across legal systems. Typically, it is defined by reference to the conduct expected of a hypothetical reasonable person or manager in comparable circumstances. Despite the similarity in formulation, the application of the duty of care varies significantly across – and even within – jurisdictions. Two main factors explain this variation. First, the duty of care is generally framed as an open-ended standard, which does not prescribe how directors must perform their functions. Secondly, because of this open-ended nature, the interpretation and application of the duty of care are shaped by norms beyond corporate law proper, including legal and quasi-legal norms (such as expressed by international standards), as well as potentially social norms such as shareholder primacy.

Comparative corporate law research indicates that, across jurisdictions, directors’ duties are owed to the company as a legal entity rather than to shareholders or other stakeholders. Nonetheless, despite the absence of legal support in corporate law, the social norm of shareholder primacy continues to exert strong influence over the interpretation of the duty of care. This influence often limits consideration of interests beyond shareholder wealth, including those related to climate change mitigation. The shareholder primacy narrative is deeply embedded in corporate governance codes. Although recent revisions to these codes have introduced language that pronounces sustainability, particularly in relation to climate change, this emphasis typically remains embedded within a shareholder-centric perspective.

Shareholder primacy theory is typically contrasted with stakeholder theory. The latter holds that directors should, or must, take into account the interests of all relevant stakeholders. However, the dichotomy between shareholder primacy and stakeholderism is ill-conceived and offers limited value in defining the company’s interests in the context of climate change. Under the shareholder primacy model, climate change considerations are acknowledged only insofar as they align with shareholder interests. The stakeholder model, on the other hand, is problematic because it requires the identification of specific stakeholder interests – and a difficult task given the pervasive and far-reaching risks and impacts of climate change, which affect virtually everyone and everything, including the voiceless interests of future generations, non-human species, and the environment itself. Accordingly, instead of equating the company’s interest with that of shareholders or any particular stakeholder group, this study suggests that the company’s interest should be defined through the lens of risk-based due diligence as articulated in the UNGP and the OECD GL (see sub-RQ 5).

Across jurisdictions, the duty of oversight (or duty to monitor) constitutes a central aspect of the duty of care. In response to recurring corporate scandals over recent decades, the oversight function of directors has attracted significant attention in legal scholarship and litigation, often at the expense of examining the board’s advisory and strategic functions. A key component of fulfilling the duty of oversight is the establishment and maintenance of an effective internal control system (ICS). Contemporary ICS frameworks increasingly integrate sustainability considerations, including those related to climate change.

Across legal systems, the standard of review is typically interpreted as primarily concerning the process of directorial decision-making rather than the substance or quality of directors’ judgments. The scope for judicial scrutiny of the content of such decisions is therefore narrowly constrained. Several legal doctrines reinforce this limitation, most notably the business judgment rule. Comparative research indicates that the duty of care is often poorly enforced, even in jurisdictions generally considered supportive of shareholder rights. One contributing factor to this under-enforcement is the duty’s open-ended nature, which engenders legal uncertainty and may discourage shareholders from pursuing litigation. Nonetheless, in cases involving a flagrant disregard for due process, insolvency, or criminal conduct, the enforcement of directors’ duties becomes particularly critical.

Sub-RQ 4

From a functional comparative corporate law perspective, what does the duty of care owed by directors entail specifically with respect to addressing climate change risks and impacts?

Considering emerging international guidance, comparative research and country-specific corporate law literature, the study has identified two dimensions of the duty of care in the context of climate change: a duty to disclose climate risks and impacts, and a duty to address climate risks and impacts.

The duty to disclose requires directors to ensure that the company provides transparent information about both climate-related risks to the company and the company’s impacts on climate change. Given the widely recognised financial materiality of climate risks, it is well established that directors must disclose such risks as part of fulfilling their duty of care. The underlying rationale is to protect the company and its investors from exposure to unmanaged risks, thereby contributing to broader financial stability. Where reporting standards or legislation impose requirements for double materiality, mandating disclosure of both climate risks and climate impacts, directors must also ensure the adequacy and completeness of these disclosures. Key measures for discharging the duty to disclose include conducting robust materiality assessments and, with respect to climate risks, comprehensive climate risk assessments.

The duty to address reflects the principle that directors must, as part of discharging their duty of care, take concrete measures to manage the climate-related risks and impacts associated with the company’s operations. In relation to climate risks, this obligation stems from the broader duty of oversight. The G20/OECD Principles of Corporate Governance, for example, explicitly recognise the duty to address climate risks. Although the duty to address climate impacts remains nascent, its contours are beginning to emerge in international policy guidance and through litigation. Existing scholarship seldom examines what addressing climate impacts entails in practical terms. This study proposes that the concept capable of giving substantive meaning to this duty is climate change due diligence, as discussed in Sub-RQ 5.

An emerging body of corporate law-based litigation alleges that directors have breached their duty of care (or an equivalent duty) by failing to adequately disclose or address climate-related risks. Such cases have so far primarily arisen in common law jurisdictions, notably Australia, the UK, and the US. In other jurisdictions, plaintiffs tend to pursue claims against companies under tort law (or its equivalent) rather than bringing corporate law actions directly against the companies’ directors, as discussed in Sub-RQ 5.

Sub-RQ 5

From an international perspective, expressed by three established standards (the UN Guiding Principles on Business and Human Rights, the OECD Guidelines on Multinational Enterprises on Responsible Business Conduct, and the TCFD Recommendations), what is the scope and content of climate change due diligence with respect to addressing climate change risks and impacts?

The duty of care is a principle enshrined in domestic corporate laws. However, given its open-ended formulation and the transboundary nature of climate change, interpreting the duty of care in relation to a company’s climate-related risks and impacts requires consideration of relevant international standards and private climate governance initiatives, most notably the OECD GL, the UNGP, and the TCFDR. While most national legal frameworks remain silent or unspecific on how directors should address climate change, international guidance on this matter is gradually emerging. The UNGP and OECD GL operationalise corporate responsibility through the concept of risk-based due diligence. This concept draws from two main sources: the transactional notion of due diligence in corporate law and foundational principles of international environmental law. While the UNGP focus primarily on the protection of human rights, the OECD GL encompass a broader range of areas, including environmental and climate-related issues.

International guidance does not yet articulate a comprehensive concept of CCDD. This study argues that, although conceptually informed by the UNGP and the OECD GL, CCDD should primarily focus on climate change mitigation for two key reasons. First, the OECD GL’s Environment Chapter, underpinned by the principles of precaution and prevention, provides an independent concept of environmental due diligence. Importantly, it also acknowledges the notion of partial responsibility for cumulative environmental impacts. Secondly, given the pervasive nature of climate change impacts and the multitude of actors contributing to global emissions, a preventive approach offers the most effective way to address adverse climate outcomes. Attempting to attribute specific corporate activities to specific climate impacts is neither practical nor efficient for achieving the objectives of CCDD. Instead, the assessment should centre on a company’s contribution to climate change, primarily measured through its relative and absolute levels of GHG emissions and its role in reducing or degrading carbon sinks. Drawing on international guidance, three levels of involvement in adverse environmental impacts can be distinguished: causation, contribution, and direct linkage. While applying these categories requires careful consideration of context, the degree of involvement directly informs the scale and nature of the actions expected from a company (and, by extension, from its directors) in addressing adverse climate impacts.

Drawing on OECD due diligence guidance, CCDD comprises six core elements. Rather than constituting a simple tick-the-box process, these elements are interlinked, forming an integrated framework that provides businesses with a systematic and comprehensive approach to addressing climate-related risks and impacts. Importantly, CCDD must encompass not only the risks and impacts arising from a company’s own operations but also those associated with its upstream and downstream value chain.

The incorporation of climate change considerations into a company’s internal policies and management systems forms the foundational element of CCDD. This element ensures that the corporate governance framework enables directors to integrate climate-related issues into their strategic, supervisory, and advisory functions. Transition plans constitute the strategic core of CCDD. When properly designed and implemented, such plans establish measurable benchmarks against which a company’s progress in contributing to climate change mitigation can be evaluated, both internally and externally. To identify and assess a company’s exposure to climate-related risks (outside-in perspective), CCDD builds on the TCFD’s recommendation to conduct scenario analysis. Conversely, CCIA are employed to identify and evaluate the company’s climate impacts (inside-out perspective). Collectively, the assessment of climate risks and impacts serves as a fact-finding exercise that lays the groundwork for subsequent action to address these risks and impacts. CCDD incorporates the established cause–contribute–directly linked trichotomy to distinguish the varying degrees of corporate involvement in adverse impacts. However, given the widespread and cumulative nature of both the causes and consequences of climate change, establishing a direct causal link between a specific corporate activity (or omission) and a particular climate impact is typically challenging, and not even necessary. Crucially, the OECD GL’s Environment Chapter recognises that companies bear responsibility for their share in cumulative environmental impacts. Accordingly, rather than seeking to prove specific causal links, a company’s degree of involvement in adverse climate impacts should primarily be determined by its level of GHG emissions and the reduction of carbon sinks.

After identifying and assessing its climate-related risks and impacts, a company must take appropriate action to address them through prevention and mitigation measures. The type and extent of action required depend on several factors, including the company’s level of involvement in adverse impacts (as determined through the CCIA), the nature and severity of those impacts, the degree of leverage the company can exert to influence outcomes, and the company’s overall size and capacity. Consistent with CCDD’s preventive orientation, a central responsibility is the reduction of GHG emissions, encompassing both direct and indirect emissions. In particular, addressing Scope 3 emissions, which often fall outside a company’s direct control, requires the strategic use of leverage over business partners and other value-chain actors. CCDD implementation also entails continuous monitoring and measurement of progress using credible and transparent metrics. Companies should communicate their performance, including achievements and shortcomings, through clear public reporting. Finally, the question of remediation raises complex issues, especially concerning the attribution of responsibility among multiple actors contributing to cumulative climate impacts. Remediation encompasses both preventive and restorative dimensions. This study suggests that the preventive dimension is primarily reflected in the company’s responsibility to address adverse climate impacts proactively.

The enforcement of CCDD occurs primarily through both judicial and non-judicial dispute resolution mechanisms. The norm-shaping influence of non-judicial processes should not be underestimated. In particular, the non-judicial grievance mechanism under the OECD GL, the NCP system, contributes to consolidating and operationalising the emerging concept of corporate climate responsibility. Additionally, the growing body of private climate litigation brought before domestic courts under tort law (or equivalent civil law doctrines) and under specific due diligence legislation, such as France’s Loi de Vigilance, is helping to delineate the contours of CCDD. A leading example of this development is the case of Milieudefensie et al. v. Shell, which underscores the increasing judicial engagement with corporate climate accountability.

Alex J. Cannon, ‘Twelve months at 1.5 °C signals earlier than expected breach of Paris Agreement threshold’ (2025) Nature Climate Change <https://www.nature.com/articles/s41558-025-02247-8>

NASA, Carbon Dioxide <https://climate.nasa.gov/vital-signs/carbon-dioxide/​?​intent=​121>. The annual fluctuations in CO₂ levels are the result of seasonal cycles in photosynthesis on a global scale.

1

Table of Cases

Advisory Opinions

Climate Emergency and Human Rights (Advisory Opinion AO-32/25) IACtHR (2025)

Obligations Of States In Respect Of Climate Change (Advisory Opinion) ICJ (2025)

Request for an Advisory Opinion submitted by the Commission of Small Island States on Climate Change and International Law (Advisory Opinion) ITLOS (2024)

European Court of Human Rights

Carême v France ECHR 088 (2024)

Duarte Agostinho and Others v Portugal and 32 Others ECHR 089 (2024)

Greenpeace Nordic and Others v Norway ECHR Application no. 34068/21 (2025)

Verein Klimaseniorinnen and Others v Switzerland ECHR 087 (2024)

National Courts

Australia

Abrahams and another v Commonwealth Bank of Australia (2017) VID 879/2017 (Federal Court of Australia)

(2021) NSD 864/2021 (Federal Court of Australia)

Australasian Centre for Corporate Responsibility v Santos (2021) NSD 858/2021 (Federal Court of Australia)

Cassimatis v ASIC [2020] FCAFC 52 (Federal Court of Australia)

McVeigh v Retail Employees Superannuation Trust (2018) NSD 1333/2018 (Federal Court of Australia)

Canada

Peoples Department Stores Inc (Trustee of) v Wise [2004] 3 SCR 461 (SCC)

France

Cour d’Appel de Paris, Decision of 18 June 2024, RG No 23/14348

Cour de Cassation, 30 March 2010, 08-17841 (Crédit Martiquinais), Revue des Sociétés 2010, 304, note P. Le Cannu

Tribunal judiciaire de Nanterre, Summons dated 28 January 2020 (Notre Affaire à Tous et al. v Total)

Tribunal judiciaire de Paris, Summons dated 23 February 2023 (Comissão Pastoral da Terra and Notre Affaire à Tous and Others v BNP Paribas)

Tribunal judiciaire de Saint-Etienne, Summons dated 3 February 2021 (Envol Vert et al. v Casino)

Germany

German Constitutional Court (Bundesverfassungsgericht), Order of the First Senate of 24 March 2021 – 1 BvR 2656/18 (Neubauer)

LG Essen, Decision of 15 December 2016 – 2 O 285 (NVwZ 2017, 234)

LG München I, Decision of 10 December 2013 (5 HKO 1387/10 – Neubürger), ZIP 2014, 570

LG Kassel, case no. unknown (Metz et al. v Wintershall Dea AG)

OLG Braunschweig, Decision of 8 May 2023 – 2W 25/23, MDR 2023, 1195

Decision of 24 June 2024 – 2 U 8/23 (Kaiser et al. v Volkswagen)

OLG Hamm, Decision of 1 February 2018, I-5U 15/17 (Lliuya v RWE)

Decision of 28 May 2025, I-5U 15/17

OLG München, Decision of 12 October 2023 – 32 U 936/23 e, MDR 2024, 497 (Deutsche Umwelthilfe v Bayerische Motoren Werke AG)

OLG Stuttgart, Decision of 8 November 2023 – 12 U 170/22, MDR 2024, 38 (Deutsche Umwelthilfe v Mercedes Benz)

Japan

Osaka District Court Decision, 20 September 2000, Hanreijiho 1721 (2000), 3

Netherlands

Court of Appeals of The Hague, 302.332/01, 12 November 2024, Shell Plc and Stichting Milieu en Mens v Vereniging Milieudefensie et al

District Court of Amsterdam, C/13/719848 / HA ZA 22-524, 20 March 2024, Foundation to Promote the Fossil-Free Movement v Royal Airline N.V

District Court of The Hague, C/09/456689 / HA ZA 13-1396, 24 June 2015, Urgenda Foundation v The State of the Netherlands

C/09/571932/HA ZA 19–379, 26 May 2021, Milieudefensie et al. v Royal Dutch Shell

Supreme Court of the Netherlands, Case No. 19/00135, 20 December 2019, The State of the Netherlands v Urgenda Foundation

New Zealand

Smith v Fonterra Co-operative Group Ltd [2021] NZCA 552

[2024] NZSC 5

Norway

Norwegian Supreme Court, Case no. 20-051052SIV-HRET, Greenpeace Nordic Association v Ministry of Petroleum and Energy (2020)

Poland

District Court of Poznan, IX GC 1118/18, 31 July 2019 (Client Earth v Enea)

Switzerland

Cantonal Court of Zug, A1 2023 9, Decision of 17 December 2025

United Kingdom

Bristol and West Building Society v Mothew [1998] Ch 1

City Equitable Fire Insurance Company [1925] Ch 407

ClientEarth v Shell Plc and Others [2023] EWHC 1137 (Ch)

[2023] EWHC 1897 (Ch)

Cowan v Scargill [1985] Ch 270

Lungowe et al. v Vedanta Resources PLC and Konkola Copper Mines PLC [2016] EWHC 975 (TCC)

McGaughey and Anor v Universities Superannuation Scheme Ltd and Others [2022] EWHC 1233 (Ch)

[2023] EWCA Civ 873

Okpabi et al. v Royal Dutch Shell PLC and Shell Petroleum Development Company of Nigeria Ltd (SPDC) [2021] UKSC 3

Overend and Gurney v Gibb (1871–1872) L.R. 5 H.L. 480

R on the Application of the People and Planet v HM Treasury [2009] EWHC 3020

Stimpson v Southern Landlord Association [2010] BCC 387, 399

United States

Allied Chem. & Dye Corp. v Steel & Tube Co. 122 A. 142 (Del Ch 1923)

Aronson v Lewis 473 A.2d 805, 812 (Del 1984)

Assad v Seu No. 1:24-cv-00164 (D Haw., filed 8 April 2024)

Comer v Murphy Oil USA Inc 607 F.3d 1049 (5th Cir 2010)

Fentress v ExxonMobil Corp No. 4:16-cv-03484 (Fed Dist Ct, Southern Dist of Tex 2016)

Gantler v Stephens 965 A. 2d 695, 708-09 (Del 2009)

Hodge v U.S. Steel Corp., 64 N.J. Eq. 807 (NJ Ct Err & App 1903)

In re Caremark Int’l Inc. Derivative Litig. 698 A.2d 959 (Del Ch 1996)

Kivalina v ExxonMobil Corporation et al 696 F.3d 849 (9th Cir 2012)

Lynn v Peabody Energy Corp. No 4:15-cv-00916 (ED Mo 2017)

New York v ExxonMobil Corp., 65 Misc. 3d 1233(A), 49 ELR 20199 (NY Sup Ct 2019)

Ramirez v Exxon Mobil Corp. (2016) No 3:16-cv-3111-K (Fed Dist Ct, Northern Dist of Tex 2016)

334 F. Supp. 3d 832 (N.D. Tex. 2018)

Sarah von Colditz derivatively on behalf of ExxonMobil Corporation v Woods No 3:19-cv-01067 (Fed Dist Ct, Northern Dist of Tex 2019)

Stone v Ritter 911 A.2d 362, 372–73 (Del. 2006)

TSC Industries, Inc. v Northway, Inc. 426 US 438 (US 1976)

Walt Disney Co. Derivative Litig. 907 A.2d 693, 749 (Del Ch 2005)

Williams derivatively on behalf of PG&E v Earley No 3:18-cv-07128-EDL (Fed Dist Ct, Northern Dist of Cal 2018)

York County v Rambo No 3:19-cv-00994 (Fed Dist Ct, Northern Dist of Cal 2019)

Zapata Corporation v Maldonado 430 A.2d 779 (Del 1981)

National Contact Points under the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct

Australian NCP

Australian bushfire victims and Friends of the Earth Australia/ANZ Bank (2020)

Austrian NCP

Greenpeace and Fridays for Future Austria/OMV (2024)

Dutch NCP

4NGOs/ING Bank (2017)

Indigenous leaders of AIDESEP and FECONAU et al./ Louis Dreyfus Company B.V. (2022)

VU Climate Change & Sustainability Law Clinic, North Sea Fossil Free, Scientists for Future NL, Scientist Rebellion NL and Deutsche Umwelthilfe/ONE Dyas B.V. (2024)

German NCP

Germanwatch/Volkswagen (2007)

Greenpeace Germany/Vattenfall (2010)

Italian NCP

FOCSIV et al./FCA Italy (2022)

Legalità per il clima on behalf of 38 others/Gruppo Veronesi (2021)

Legalità per il clima on behalf of 10 others/ENI (2022)

Legalità per il clima on behalf of 45 others/Cremonini (2022)

Survival International/Pasubio (2022)

Japanese NCP

Market Forces/SMBC, MUFG and Mizuho (2019)

Luxemburgish NCP

Greenpeace Luxembourg/ Fonds de Compensation de la Sécurité sociale SICAV FIS (2024)

Norwegian NCP

Norwegian Climate Network and Concerned Scientists Norway/Statoil (2011)

Polish NCP

Development YES – Open-Pit Mines NO! Foundation/Group PZU (2018)

Slovenian NCP

Focus Association for Sustainable Development and others/Ascent Resources (2019)

Swiss NCP

Society for Threatened Peoples/BKW Group (2020)

UK NCP

Client Earth/BP (2019)

Global Witness/UK Export Finance (UKEF) (2020)

Possible (The 10:10 Foundation)/British Airways and Virgin Atlantic (2023)

The Lifescape Project et al./Drax Group (2021)

The Philippine Movement for Climate Justice et al./Standard Chartered Bank (2024)

US NCP

Client Earth/Cargill (2023)

Divest Invest Protect, Indigenous Peoples Law and Policy Program, and Women’s Earth and Climate Action Network (WECAN)/Credit Suisse (2020)

Friends of the Earth US/ Export-Import Bank of the Unted States (EXIM) (2023)

Friends of the Earth US and the Articulation of Indigenous Peoples of Brazil (APIB)/BlackRock (2024)

Inclusive Development International et al./Marsh (2023)

Other Litigation

Commission on Human Rights of the Philippines (CHRP), National Inquiry on Climate Change – Report (2022)

Greenpeace Southeast Asia et al. v Chevron et al. (Republic of the Philippines, Commission of Human Rights) (Petition, 2016)

Joint Summary of the Amicus Curiae In Re: National Inquiry on the Impact of Climate Change on the Human Rights of the Filipino People (CHR-NI-2016-0001) (2018) <https://climate.law.columbia.edu/sites/default/files/content/docs/Joint-Summary-Amicus_0.pdf>

2

Table of Legislation

Australia

Corporations Act 2001 (Cth)

Superannuation Industry (Supervision) Act 1993 (SIS Act)

Brazil

Federal Law n. 6.404/1976 (Companies Act)

European Union

Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards, [2023] OJ L, 2023/2772 (ESRS)

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements, and related reports of certain types of undertakings, [2013] OJ L 182/19 (Accounting Directive)

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, [2014] OJ L 330 (NFRD)

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, [2022] OJ L 322 (CSRD)

Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859, [2023] OJ L (CSDDD)

Regulation (EU) 2017/821 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas, [2017] OJ L 130/1

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector, [2019] OJ L 317/1

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment [2020] OJ L 198/13

Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (Regulation on deforestation-free products) [2023] OJ L 184/1

Fiji

Companies Act 2015, Act No. 25 of 2015

Climate Change Act 2021, Act No. 17 of 2021

France

Code civil, Loi n° 1804-1 du 21 mars 1804, Journal officiel de la République française

Code de commerce, [Code du commerce], Loi n° 2000-657 du 13 juillet 2000, Journal officiel de la République française

Loi n° 2015-992 du 17 août 2015 relative à la transition énergétique pour la croissance verte, Journal officiel de la République française

Loi n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, Journal officiel de la République française

Ordonnance n° 2017–1180 du 19 juillet 2017 relative à la publication d’informations non financières par certaines grandes entreprises et certains groupes d’entreprises (2017) Journal officiel de la République française

Germany

Aktiengesetz vom 6. September 1965 (BGBl. I p. 1089) [Stock Corporation Act]

Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten (Lieferkettensorgfaltspflichtgesetz) vom 16 Juli 2021 (BGBl. I 2021, 2959)

Japan

Civil Code, Act No. 89 of 1896

Netherlands

Burgerlijk Wetboek (BW), Stb. 1992, 302 [Civil Code]

Dutch Responsible and Sustainable International Business Conduct Bill 2022, Kamerstuk 35880 (unofficial English translation)

Nigeria

Companies and Allied Matters Act, 2020, Federal Republic of Nigeria Official Gazette A2 2020 No.3

Singapore

Companies Act (Cap 50, 2006 Rev Ed)

Switzerland

Civil Code of 10 December 1907, SR 210

Federal Act on the Amendment of the Swiss Civil Code, Part Five: The Code of Obligations, of 30 March 1911, SR 220

Federal Act on Climate Protection Goals, Innovation and Strengthening Energy Security of 30 September 2022, SR 810.1

UK

Companies Act 2006 (c 46)

3

Table of Treaties

European Convention on Human Rights, 4 November 1950, in force 3 September 1953, 213 UNTS 221

Kyoto Protocol to the United Nations Framework Convention to Climate Change, 11 December 1997, in force 16 February 2005, 2303 UNTS 162

Montreal Protocol on Substances that Deplete the Ozone Layer, 16 September 1987, in force 1 January 1989, 1522 UNTS 3

Paris Agreement, 12 December 2015, in force 4 November 2016, 330 UNTS 3

United Nations Framework Convention to Climate Change, 9 May 1992, in force 21 March 1994, 1771 UNTS

Vienna Convention on the Law of Treaties, 23 May 1969, in force 27 January 1980, 1155 UNTS 331

4

Table of UN Documents

Human Rights Council

Billy et al. v Australia, Views adopted by the Committee under article 5(4) of the Optional Protocol, concerning communication No. 3624/2019, CCPR/C/135/D/3624/2019 (22 September 2022)

Annex II: Individual opinion by Committee Member Gentian Zyberi (concurring) (22 September 2022)

Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’, Annex to UNHRC, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie, A/HRC/17/31 (21 March 2011)

Human rights and climate change, HRC/7/23 (28 March 2008).

Report of the Special Rapporteur on extreme poverty and human rights, Climate change and poverty, A/HRC/41/39 (22 October 2019)

Report of the Special Rapporteur on the promotion and protection of human rights in the context of climate change, Ian Fry, Exploring approaches to enhance climate change legislation, supporting climate change litigation and advancing the principle of intergenerational justice, A/78/255 (28 July 2023)

Report of the Special Representative of the Secretary-General on the issue of Human Rights and Transnational Corporations and Other Business Enterprises: Mapping International Standards of Responsibility and Accountability for Corporate Acts’, A/HRC/4/35 (19 February 2007)

Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises’ comprised in UNHRC, Protect, respect and remedy: A framework for business and human rights, A/HRC/8/5 (7 April 2008)

Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie, Summary of five multi-stakeholder consultations, A/HRC/8/5/Add.1 (23 April 2008) [Consultation Report]

Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie. Addendum: Human rights and corporate law: trends and observations from a crossnational study conducted by the Special Representative, A/HRC/17/31/Add.2 (23 May 2011)

Report of the Working Group on the issue of human rights and transnational corporations and other business enterprises, A/HRC/29/28 (28 April 2015)

UNFCCC

Decision 1/CP.21, Adoption of the Paris Agreement (29 January 2016) FCCC/CP/2015/10, Add.1 (Paris Agreement)

Decision 1/CMA.3, Report of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement on its third session, held in Glasgow from 31 October to 13 November 2021. Addendum Part two: Action taken by the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement at its third session (8 March 2022), FCCC/PA/CMA/2021/10/Add.1 (Glasgow Climate Pact)

Decision 1/CP.21, Adoption of the Paris Agreement, FCCC/CP/2015/10, Add.1 (29 January 2016)

Decision 1/CMA.3, FCCC/PA/CMA/2021/10/Add.1 (8 March 2022)

Decision 1/CMA.5, FCCC/PA/CMA/2023/16/Add.1 (15 March 2024)

UNFCCC Secretariat, Nationally determined contributions under the Paris Agreement. Synthesis report by the secretariat, FCCC/PA/CMA/2021/2 (17 September 2021)

Nationally determined contributions under the Paris Agreement. Synthesis report by the secretariat UN, FCCC/PA/CMA/2025/8 (28 October 2025)

General Assembly

Human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment. Report of the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment, A/74/161 (15 July 2019)

International Covenant on Civil and Political Rights, A/RES/2200A (XXI) (16 December 1966)

Protection of Global Climate for Present and Future Generations of Mankind, A/Res. 43/53 (6 December 1988)

The human right to a clean, healthy and sustainable environment, A/RES/76/300 (28 July 2022)

Transforming our world: the 2030 Agenda for Sustainable Development, A/RES/70/1 (21 October 2015)

OHCHR

Frequently Asked Questions on Human Rights and Climate Change. Fact Sheet No. 38 (2021)

Key Messages on Human Rights and Climate Change (2016) <https://www.ohchr.org/sites/default/files/KeyMessages_on_HR_CC.pdf>

Response to Request from BankTrack for Advice Regarding the Application of the UNGP in the Context of the Banking Sector (2017)

Submission of the Office of the OHCHR to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change, ‘Understanding Human Rights and Climate Change’ (2016)

The Corporate Responsibility to Respect Human Rights. An Interpretive Guide (2012)

The issue of the applicability of the Guiding Principles on Business and Human Rights to minority shareholdings (2013) <https://web.dev.ohchr.un-icc.cloud/sites/default/files/Documents/Issues/Business/LetterSOMO.pdf>

Understanding Human Rights and Climate Change (Submission of the Office of the High Commissioner for Human Rights to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change, 26 November 2015)

Zeid urges climate change ambition as Paris deal enters into force (2016) <https://​www.​ohchr.​org/en/2016/11/zeid-urges-climate-change-ambition-paris-deal-enters-force>

Other

Committee on the Elimination of Discrimination Against Women/Committee on Economic, Social and Cultural Rights/Committee on the Protection of the Rights of All Migrant Workers and Members of their Families/Committee on the Rights of the Child/ Committee on the Rights of Persons with Disabilities (Five UN human rights treaty bodies), Joint Statement on ‘Human Rights and Climate Change’ (2019) <https://www.ohchr.org/en/statements/2019/09/five-un-human-rights-treaty​-bodies-issue-joint-statement-human-rights-and>

ITLOS, Request for an Advisory Opinion submitted by the Commission of Small Island States on Climate Change and International Law, Advisory Opinion (21 May 2024)

Koskenniemi M, ‘Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law’ (Report of the Study Group of the International Law Commission), A/CN.4/L.682 (13 April 2006)

Rio Declaration on Environment and Development, A/CONF.151/6/ Rev.1 (13 June 1992)

UN Development Programme (UNDP), ‘Human Rights Due Diligence and the Environment (HRDD+E) – A Guide for Business’ (Draft as of 10 November 2023) <https://www.undp.org/sites/g/files/zskgke326/files/2023-12/undp-unwg_​hrdde_​guide_draft.pdf>

UNEP, Climate Change and Human Rights (2015)

Emissions Gap Report 2020

Emissions Gap Report 2021

Emissions Gap Report 2023

UNEP FI, ‘A legal framework for the integration of environmental, social and governance issues into institutional investment’ (2005) <https://www.unepfi.org/wordpress/wp-content/uploads/2022/07/Freshfields-A-legal-framework-for-the-integration-of-ESG-issues-into-institutional-investment.pdf>

‘Climate Risk to global economy. CEO Briefing’ (2001) https://www.unepfi.org/fileadmin/publications/cc/CEO_briefing_climate_change_2002_en.pdf

UN Forum on Business and Human Rights, ‘What human rights responsibilities apply to businesses with respect to climate change?’ (2018) <https://​2018​un​forum​bhr.​sched.com/event/GZ5c/what-human-rights-responsibilities-apply-to-busi​nesses-with-respect-to-climate-change>

‘Addressing climate change: the business and human rights connection’ (Conference Session, 27 November 2019) <https://2019unforumbhr.sched.com/event/U9Gp/addressing-climate-change-the-business-and-human-rights-connection>

UN High‑Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities, ‘Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions’ (2022) <https://www.un.org/sites/un2.un.org/files/high-level_expert_group_n7b.pdf>

UN Working Group on the issue of human rights and transnational corporations and other business enterprises, Guidance on National Action Plans on Business and Human Rights (2016) <https://www.ohchr.org/sites/default/files/Documents/Issues/Business/UNWG_NAPGuidance.pdf>

UNGPs 10+ A Roadmap for the Next Decade of Business and Human Rights (2021) <https://www.ohchr.org/sites/default/files/2021-12/ungps10plusroadmap.pdf>

‘Information Note on Climate Change and the Guiding Principles on Business and Human Rights’ (2023) <https://www.ohchr.org/sites/default/files/documents/issues/business/workinggroupbusiness/Information-Note-Climate-Change-and-UNGPs.pdf>

Working Group on the issue of human rights and transnational corporations and other business enterprises and several UN Special Rapporteurs, Letter to Saudi Aramco, AL OTH 53/2023 (26 June 2023)

World Commission on Environment and Development (WCED), Our Common Future, A/42/427 (4 August 1987)

5

Table of Community Documents

Commission Documents (COM)

Action Plan: Financing Sustainable Growth (8 March 2018) COM(2018) 97 final

Guidelines on non-financial reporting: Supplement on reporting climate-related information, C(2019) 4490 final

Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937, COM(2022) 71 final

Proposal for a Directive of the European Parliament and of the Council amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements, 2025/0045 (COD), 10 December 2025

Stepping up Europe’s 2030 climate ambition (17 September 2020) COM(2020) 562 final

The European Green Deal (11 December 2019) COM(2019) 640 final

Other

European Commission, ‘Corporate Social Responsibility, Responsible Business Conduct, and Business & Human Rights – Overview of Progress’ (2019) <https://ec.europa.eu/docsroom/documents/34963>

Guidelines on non-financial reporting: Supplement on reporting climate-related information [2019] OJ C 209

‘Special Eurobarometer 513. Climate Change’ (2021) <https://europa.eu/eurobarometer/surveys/detail/2273>

Smit L and others, Study on due diligence requirements through the supply chain (European Commission Publications Office 2020) <https://op.europa.eu/en/publication-detail/-/publication/8ba0a8fd-4c83-11ea-b8b7-01aa75ed71a1/lan​guage-​en>

6

Table of OECD Documents

Official Documents

Guidelines for Multinational Enterprises, C/M(91)12/FINAL (5 June 1991)

Guidelines for Multinational Enterprises, C(2000)96/REV1 (27 June 2000)

Guidelines for Multinational Enterprises, C(2011)59/FINAL (25 May 2011)

Guidelines for Multinational Enterprises on Responsible Business Conduct (8 June 2023) https://doi.org/10.1787/81f92357-en

OECD Declaration on International Investment and Multinational Enterprises, C(76)99/FINAL (21 June 1976)

Second Revised Decision of the Council on the Guidelines for Multinational Enterprises, included in the revised edition 1984 of the Declaration on International Investment and Multinational Enterprises, C(84)90 (21 June 1984)

Other

Building more resilient and sustainable global value chains through responsible business conduct (2021) <https://mneguidelines.oecd.org/Building-more-resilient-and-sustainable-global-value-chains-through-responsible-business-con​duct.​pdf>

Climate Change and Corporate Governance (2022) <https://www.oecd.org/content/dam/oecd/en/publications/reports/2022/06/climate-change-and-corporate-governance_551e0831/272d85c3-en.pdf>

Effective Carbon Rates 2018: Pricing Carbon Emissions Through Taxes and Emissions Trading (2018)

Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading (2021)

G20/OECD Principles of Corporate Governance 2015 (2015)

G20/OECD Principles of Corporate Governance 2023 (2023)

Handbook on Environmental Due Diligence in Mineral Supply Chains (OECD Publishing 2023) <https://www.oecd.org/en/publications/2023/09/handbook-on-en​vi​ro​nmen​tal-due-diligence-in-mineral-supply-chains_ed05507f.html>

Managing Climate Risks and Impacts Through Due Diligence for Responsible Business Conduct: A Tool for Institutional Investors (2023) <https://www.oecd.org/content/dam/oecd/en/publications/reports/2023/10/managing-climate-risks-and-impacts-through-due-diligence-for-responsible-business-con​duct_​024e​5002/​8aee4fce-en.pdf>

Nieuwenkamp, ‘Two secrets concerning a value chain approach to corporate climate change risk-management’ (OECD Insights, 2015) <https://​friends​of​the​oecd​guidelines.wordpress.com/2015/11/30/two-secrets-concerning-a-value-chain-approach-to-corporate-climate-change-risk-management/>

OECD Business and Finance Outlook 2020: Sustainable and Resilient Finance (2020) <https://www.oecd.org/en/publications/oecd-business-and-finance-outlook-​2020_​eb61fd29-en.html>

OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans, Green Finance and Investment’ (2022) <https://doi.org/10.1787/7c68a1ee-en>

OECD Working Party on Responsible Business Conduct, ‘Consultation Draft: Targeted Update of the OECD Guidelines for Multinational Enterprises and their Implementation Procedures’ (2023)

Stocktaking Report on the OECD Guidelines for Multinational Enterprises (2022) <https://mneguidelines.oecd.org/consultation-draft-public-con​sul​ta​tion​tar​geted-update-of-the-oecd-guidelines-for-multinational-enterprises.pdf>

7

Table of TCFD Documents

2023 Status Report (2023) <https://assets.bbhub.io/company/sites/60/2023/09/2023-Status-Report.pdf>

Final Report – Recommendations of the Task Force on Climate-related Financial Disclosures (2017) <https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Report-062817.pdf>

Guidance on Metrics, Targets, and Transition Plans (2021) <https://assets.bbhub.io/company/sites/60/2021/07/2021-Metrics_Targets_Guidance-1.pdf>

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures (2021) <https://assets.bbhub.io/company/sites/60/2021/07/2021-​TCFD-Implementing_Guidance.pdf>

Technical Supplement. The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities (2017) <https://www.tcfdhub.org/resource/tcfd-recommendations-technical-supplement-the-use-of-scenario-analysis-in-dis​clo​sure-of-climate-related-risks-and-opportunities/>