Climate change advisory opinions under international law: Sector implications for private actors  

The past 18 months have seen an unprecedented focus of international courts and tribunals on the legal dimensions of climate change. In rapid succession, the International Tribunal for the Law of the Sea (ITLOS), the Inter-American Court of Human Rights (IACtHR), and the International Court of Justice (ICJ) have each delivered landmark advisory opinions that clarify States’ international law obligations with respect to mitigating and preventing climate change (together, the Opinions).  

Further to our deep dive on the ITLOS Opinion last year, this article focuses on the conclusions which can be drawn from all three Opinions, and considers their collective impact, with a particular focus on private actors.  

The Opinions have each reached robust, groundbreaking conclusions about what States are obliged to do to satisfy their obligations under international law in respect of climate change. While the Opinions are not binding and are directed at States, as discussed below, they also carry significant and wide-ranging implications for private actors, across all sectors. They are expected to shape the landscape of domestic legislation and regulation in years to come, as well as to become a feature of climate litigation. Taken together, the Opinions may lead to the emergence of a more stringent, legally grounded regime of climate governance in which both governments and corporations are expected to act decisively.  

Overview of the three Opinions 

The Opinions have been delivered following a detailed and rigorous process over several years involving the submissions of an unprecedented numbers of States, international organisations and NGOs and the collection of expert evidence on the science of climate change.  

In other words, the IACtHR concluded that States party to the American Convention on Human Rights have an obligation to integrate climate change measures into their legal and institutional frameworks in order to protect fundamental rights (such as the rights to life, health, property, and an adequate environment) from climate-related harm. 

Most recently, the ICJ delivered a historic advisory opinion on States’ obligations in respect of climate change (see our posts here and here). In its opinion – requested by the UN General Assembly – the ICJ clarified, for the first time at the global level, the legal duties of States under international law to protect the climate system. The Court found that the principal international climate agreements (the United Nations Framework Convention on Climate Change (UNFCCC), Kyoto Protocol, and Paris Agreement), together with customary international law, lay down binding and stringent obligations for States to ensure the protection of the climate system and other parts of the environment from anthropogenic GHG emissions, and that breach of these obligations constitutes an internationally wrongful act engaging State responsibility.  

Crucially, the ICJ confirmed that States have a duty to prevent significant harm to the climate system under general international law. The Court stressed that this duty requires States to exercise “stringent due diligence” and use “all means at their disposal” to prevent activities within their jurisdiction or control from causing climate harm and explicitly extends to the conduct of private actors. States must therefore control and regulate private actors to ensure their activities do not inflict climate-related damage. The ICJ’s opinion thus aligns with and reinforces the ITLOS and IACtHR findings – that States cannot stand by as private emissions sources contribute to climate change; they must take active measures to supervise and curb such activities.  

Indeed, the ICJ opinion addressed the practical implications of these obligations, especially regarding fossil fuel-related activity. The Court indicated that it “may be an internationally wrongful act for States to fail to take action to protect the climate system from GHG emissions — including through fossil fuel production, fossil fuel consumption, the granting of fossil fuel exploration licences or the provision of fossil fuel subsidies.” 

What do the Opinions mean for private actors? 

Together the Opinions make clear that the climate obligations of States cannot be discharged without far-reaching consequences for private actors. Across ITLOS, IACtHR, and ICJ, the message is consistent: businesses must expect and be prepared to adapt to tighter regulation, heightened due diligence obligations, and a potential increase in exposure to litigation. 

Increasing and stricter domestic regulation on climate change 

The Opinions underscore that States are responsible for regulation of private actors within their jurisdiction and control, and that failure to adequately regulate corporate activity which contributes to climate change may itself amount to an internationally wrongful act attributable to States. These findings can be expected to create further pressure for States to bolster domestic measures in relation to climate change by introducing robust regulatory oversight of private actors as a way for States to limit their own liability at an international level.  

For private actors this could mean bans or limits on the development of new fossil fuel projects or other GHG-intensive business activities, but also more broadly: (i) more stringent regulation on climate issues, (ii) compelling or incentivising companies to reduce GHG emissions, (iii) the introduction of GHG emissions limits and/or (iv) the use of economic incentives to create or shift demand to sustainable solutions, to name a few. Any such legislative measures are likely to create challenges – but also opportunities - for businesses. 

Stringent due diligence and reporting requirements  

The Opinions each recognise that States have stringent obligations of due diligence in managing potential climate impacts through domestic measures, including in relation to activities of private actors. This is likely to lead States to address these obligations in their domestic legal frameworks both through more extensive reporting requirements and more impactful enforcement mechanisms. While change may initially focus on the energy sector (particularly fossil fuels), it will undoubtedly impact on all sectors as regulatory reporting requirements evolve.  

Moreover, for private actors this could mean stronger due diligence, disclosure and reporting requirements across their entire value chains, which may cross jurisdictions. Such measures could encompass: (i) carrying out and publishing the results of environment impact assessments for planned activities, (ii) continuously monitoring and reporting activities that may cause climate change-related harm, (iii) identifying, preventing, and mitigating adverse impacts on the environment, (iv) disclosing GHG emissions and sustainability efforts, (v) introducing enforcement mechanisms to ensure that GHG emissions do not significantly harm the environment, (vi) avoiding greenwashing or undue influence over public policy and regulation, and (vii) potentially creating frameworks addressing liability for harm caused to the environment, including transboundary pollution.  

Increasingly, end-use emissions may also be considered as part of project approvals, which may introduce further challenges for businesses, and require careful planning and continuous engagement with climate change-related risks. 

A human rights framework for corporate regulation 

The IACtHR and ICJ Opinions recognise that the protection of the climate system and other parts of the environment and the right to a clean, healthy and sustainable environment are essential to the enjoyment of other human rights. These findings are relevant in the context of corporate human rights due diligence, as part of recognising that corporations are required to respect human rights and avoid and remediate any human rights violations linked to their activities. In particular, the IACtHR’s opinion, which addressed climate change through a human rights lens, could lead to further obligations on private actors with respect to climate change mitigation and adaptation.  

The conclusions in the Opinions linking climate inaction with a violation of human rights duties may also be relied on by litigants arguing for stronger climate action on human rights grounds, and be used to emphasise the need for private actors to assess human rights impacts and climate risks across operations, supply chains, and financing.

More generally, the ICJ and IACtHR Opinions both align with and support the relevance of several "soft law" instruments on the topic of business and human rights. This may influence the ongoing negotiation of the United Nations business and human rights treaty, as well as how the obligation to address the human rights implications of climate change is addressed in future international agreements.  

Increasing litigation risk  

While the Opinions are non-binding, they are nevertheless influential and definitive interpretations of State obligations under international law. The clear recognition by the ICJ, IACtHR and ITLOS that international law imposes enforceable duties in respect of climate change – and that failure to act on climate change may give rise to responsibility under international law – is likely to influence both the progress of international negotiations (such as at the upcoming COP30) and the decisions of domestic and regional courts.  

In particular, even though they address State obligations, we can nonetheless expect the findings to be relied on in climate-related litigation worldwide, including as another reference point in claims involving private actors which seek to assess corporate conduct with respect to climate change. For example, in reaching their conclusion in the Milieudefensie case, when assessing the obligations of Shell under Dutch law, the Dutch courts relied not only on "soft law" which addresses businesses (such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises), but also on various existing international agreements on climate change, including the Paris Agreement, which set out the obligations of States. Courts may similarly look to the Opinions in formulating the standards against which corporate conduct is assessed under domestic law. 

Claimants may also seek to rely on the Opinions to bring domestic or international claims either directly against high-emitting actors or indirectly so as to challenge government approvals for carbon-intensive projects, especially if such projects or actors are said to cause transboundary harm to the climate system.  

There has already been an emphasis in domestic litigation on States' obligations under the Paris Agreement and the UNFCCC. While such treaties and international legal frameworks bind States, they have been influential on how courts have interpreted and applied domestic laws to private actors. Further momentum has been created by international decisions such as the European Court of Human Rights ruling that found Switzerland to be in breach of the European Convention on Human Rights for failing to take sufficient action on climate change (see our briefing here). Such increasing climate-related litigation, including before domestic courts, could be expected to have implications for businesses as States respond proactively to the risk of facing the same, to tighten regulatory and legal requirements.  

In this context, the ICJ observed that while issues of attribution and causation of damage in climate litigation present challenges, they are not insurmountable. Domestic courts have already found that high emitters could in principle be financially liable for the consequences of emissions caused by their activities. The ICJ’s finding may be relied on to further support the argument that causation in climate change litigation can be addressed within established legal frameworks, and may contribute to claims being pursued against businesses whose actions are said to cause or contribute to climate harm.  

Opportunities for industry 

While there are various risks arising from the Opinions, there are also opportunities for businesses, to improve both their own operations and their market position. An increased focus on climate impact is likely to drive efficiencies in many areas, including through the development of novel technologies, leading to new industries or new growth opportunities. For example, the ICJ's emphasis on the role of technology transfer between States in enabling climate mitigation and adaptation efforts may mean a growth in public-private partnerships around climate tech. 

Enhanced environmental credentials are likely to be attractive in many markets and may give rise to additional investment from investors and customers managing their own climate risk in their supply chains. Businesses which can think ahead to the evolving regulatory environment may be able to position themselves as industry leaders, influence policy and legislative development, spot new opportunities and beat their competition to those new opportunities.  

What should private actors do from here? 

Taken together, the Opinions indicate a converging legal landscape around climate change: potential stricter regulation of corporate emissions, the expansion of reporting and due diligence requirements, the possible development of liability frameworks for transboundary harms, and stronger judicial oversight, including the interpretation and application of domestic law with climate change in mind. Private actors are no longer at the periphery of international climate law; they are at its centre, because without influencing the behaviour of private actors, States will not meet their obligations.   

Overall, the Opinions serve as an important reminder for private actors to anticipate the likelihood of climate change-related regulatory changes and to proactively review their own operations and policies to consider their alignment with available international scientific standards and the international climate framework, as part of managing their own risk in this increasingly complex context. Identifying and implementing robust systems and processes to assess, prioritise, manage and report on climate change-related risks is today, more critical than ever before.  

In particular, the Opinions highlight that global businesses need to look at climate change risk, and anticipate change, in a holistic way. The businesses that navigate most successfully through this critical period will not consider this issue solely on a jurisdiction-by-jurisdiction basis, or along business lines or divisions, nor will they consider these issues to be the sole province of risk or legal teams. Instead, they will integrate climate issues across their organisation, recognising the global direction of travel which is represented by these Opinions and the risks and opportunities they present.  

If you would like to discuss what this means for your business, please do not hesitate to contact us.