1. Introduction
On 23 July 2025, the International Court of Justice (ICJ) handed down its much-anticipated Advisory Opinion on the Obligations of States in Respect of Climate Change. Footnote 1 While the focus of the opinion was the climate-related international obligations and responsibilities of nation States,Footnote 2 the ICJ also emphasised the role of international law in indirectly shaping the regulation of private corporate conduct resulting in greenhouse gas (GHG) emissions or otherwise harming the global climate system.Footnote 3 Specifically, the Court ruled that States’ customary and treaty law obligations to protect the climate system from anthropogenic GHG emissions require the adoption, implementation and enforcement of domestic rules and measures to ‘regulate the conduct of public and private operators within the States’ jurisdiction or control’.Footnote 4
This Advisory Opinion is just one judicial ruling among many recent legal and regulatory developments helping to shape the accountability of corporate actors for their climate actions and impacts.Footnote 5 Increased attention to the climate change contributions of corporate actors has been driven by growing understanding of their significant role in GHG emissions production,Footnote 6 alongside improvements in climate science that allow attribution of specific impacts to particular polluting entities, thereby establishing their individual and collective responsibility.Footnote 7 The resulting legal and regulatory developments are taking place at and across multiple levels of governance, within international, domestic/regionalFootnote 8 and transnational legal settings.Footnote 9 This article maps some of the most significant developments and the interactions between them, arguing that they are giving rise to an ever denser legal ‘ecosystem’Footnote 10 for corporate climate accountability, which operates within and beyond the realm of the State (designated here as ‘global’).Footnote 11 An ecosystem framing is used as a metaphor to describe the growing interaction between developments and legal activity occurring at different levels, and to consider whether this interactivity gives rise to systemic properties associated with enhanced accountability for corporate actors.Footnote 12
In exploring the emerging legal and regulatory ecosystem for global corporate climate accountability, this article seeks to fill a significant gap in the literature and practice concerning the global legal and governance framework for corporate climate accountability. It analyses both regulatory developments that help strengthen and raise the ambition of corporate climate action, as well as avenues for litigation and enforcement in circumstances where companies fail to meet applicable standards and/or cause damage through their activities. As most existing knowledge on this topic has been produced in advanced economies of the global North,Footnote 13 there is also a pressing need to encompass developments across the fast-developing corporate climate accountability space of the global South,Footnote 14 such as in countries of the Asia-Pacific.Footnote 15
It is acknowledged that, at this early stage of development of the broader field of global corporate climate accountability, fundamental concepts—including ideas of accountability and even what is covered by the notion of the ‘corporation’—are fluid.Footnote 16 A key objective of this article is thus to provide the foundations for critical analysis of the role played by law and regulation—at multiple governance levels—in contributing to global corporate climate accountability. To this end, the article lays out several conceptualisations and hypotheses to guide such analysis, which will inform the authors’ future research agenda and, it is hoped, the development of broader, emerging scholarship on this topic.
The remainder of the article proceeds as follows. Section 2 establishes the scope of corporations and climate accountability as understood in this article and highlights key drivers of the current focus on private corporate climate action and responsibilities (in addition to and distinct from those of States). Section 3 then maps key elements of the emerging legal ecosystem for global corporate climate accountability, discussing developments occurring at multiple governance levels in international, domestic/regional and transnational law. Applying the ecosystem metaphor, intersecting activities occurring at these different levels can be conceptualised as elements of ‘nodes’ in the evolving ecosystem,Footnote 17 with ever-increasing interactions between them leading to a greater density of applicable norms and mechanisms for their implementation and enforcement. Section 4.1 examines examples of the types of interactions taking place between the ecosystem’s nodes, which are both broadening these nodes and blurring the boundaries between them. These interactions may take a variety of forms, such as the adoption of international legal interpretations in domestic and regional climate cases,Footnote 18 harmonised processes of standard-setting focused on ‘interoperability’ of requirements for corporate climate conduct between jurisdictions,Footnote 19 or coordinated domestic campaigns and litigation that generate transnational climate responsibility for particular corporate actors.Footnote 20 Section 4.2 suggests that a consequence of these increasing interactions may be to amplify companies’ accountability for their climate actions or inaction by limiting the remaining places they can find refuge from legal and regulatory scrutiny. Equally, though, the increasing complexity of the emerging ecosystem—as well as the multiple forums it offers for norm development, implementation and enforcement—may ultimately serve to dilute corporate accountability for resultant climate harms by fragmenting the applicable global legal and governance system. Section 5 concludes, offering reflections about potential trends in global corporate climate accountability that might be investigated further in future research.
2. Corporate climate accountability: concepts and drivers
While the impacts of climate change manifest at different geographic scales (global, national, local),Footnote 21 the climate system operates through regional and global atmospheric processes,Footnote 22 meaning the causes of and responsibility for these changes are not similarly localised. Discussions of accountability for climate impacts have traditionally focused on States, reflecting their primary role both as the subjects of international climate obligations, such as those under the Paris Agreement,Footnote 23 and the source of laws and regulatory measures shaping the behaviour of private entities like companies operating in States’ territories or under their jurisdiction or control.Footnote 24 In international law, for example, the conventional position has been that ‘international law does not matter for corporations if not through the State’.Footnote 25 However, these assumptions are being challenged by the increasing understanding of the important place of corporations in processes of global climate change.Footnote 26
The following section explores some of the principal factors driving the turn toward corporate climate accountability, including a greater focus on climate issues in domestic and regional corporate legal frameworks, increasing climate litigation against corporate actors and developments in climate attribution science that could buttress arguments seeking to link corporate GHG emissions to particular climate harms. Acknowledging that this is a nascent and fast-evolving area of legal scholarship, the section first briefly discusses different concepts of ‘the corporation’ and ‘corporate accountability’. These understandings provide foundations for the notion of climate accountability of corporations employed in this article and discussion in later sections of relevant legal and regulatory developments.
2.1. Understanding corporate accountability in a global context
‘Accountability’ is a concept that resists precise definition.Footnote 27 Despite a remarkable increase in accountability-focused scholarship, particularly in the latter decades of the twentieth century,Footnote 28 no decisive consensus has emerged on what accountability in a contemporary context entails, excludes, or requires.Footnote 29 It has aptly been described as ‘a concept with adjectives’,Footnote 30 reflecting a diversity of forms, focal points and levels of abstraction. Contemporary categorisations of accountability include those described as legal, political, social, financial, ethical, procedural and technical. Of these categories, it is often the distinction between legal and non-legal, or ‘hard’ and ‘soft’, forms of accountability that attracts the greatest emphasis.Footnote 31 Despite this distinction, both legal and non-legal requirements commonly underpin accountability.
While the terms ‘accountability’ and ‘responsibility’ are often used interchangeably, they are treated in this article as distinct although closely related concepts. Responsibility is understood as a dimension of accountability rather than an equivalent concept. Corporate responsibility encompasses both normative and soft-law expectations of corporate actors as well as the mandatory obligations of corporations.Footnote 32 The term ‘obligation’ refers to formal responsibilities—typically legal in nature—backed by regulatory authority and typically subject to enforcement.Footnote 33
In the corporate accountability context, legal mechanisms may involve a combination of the global and the domestic whereby international legal rules are enforced through national legal systems, whether criminal or civil. Such mechanisms may be supplemented and supported by internal corporate governance along with financial and social forms of accountability. In such cases, the expectations and requirements of investors, customers, civil society and the public at large operate to incentivise accountability by creating a situation where the reputational damage associated with being unaccountable becomes a significant risk to profitability and the business model. While there is a focus in this article on legal accountability, the relative weight and interaction of these different forms of accountability in the corporate climate context merits closer attention; a question the authors intend to take up in future research.
As the power and influence of corporations—particularly transnational corporations and companies with internationalised corporate structures—has grown over the past century,Footnote 34 so too has their impact on individuals, communities, economies and the environment on a global scale. This expanding reach, and the capacity to affect large numbers of people and environments across borders, provides a strong rationale for requiring corporations to be accountable for their decisions and actions.Footnote 35 Nevertheless, companies remain creatures of domestic law, subject to national regulation imposed by the States in which they are incorporated and/or operate. Given the globalised nature of corporate activity, however, regulatory frameworks are increasingly required to operate not only at the national level, but also at the regional, transnational and international levels.
How corporations are theorised in law has material implications for how corporate actors can and should be held accountable for their conduct, including the transborder impacts of their activities and decisions.Footnote 36 At a foundational level, a corporation is a legal entity created by individuals, typically for business activities.Footnote 37 While there are many different types of corporations worldwide,Footnote 38 this article does not focus on any particular corporate form, nor any specific industry. This is consistent with the trend in corporate climate litigation to embrace ‘diversity in the range of sectors and companies being targeted over time’.Footnote 39
Within public international law, the corporation has tended to be theorised in three main ways: (i) as analogous to the individual and hence subject to national legal orders through the conferral of legal personality and thereby ‘nationality’; (ii) as a para-statal entity, arguably meriting direct international legal address; or (iii) as a comparator to international institutions.Footnote 40 Of these three characterisations, it is the purposive, individualist approach that has generally been designated the ‘touchstone’ for international legal purposes,Footnote 41 with the attribution of nationality to corporations seen by many as indispensable for their global regulation.Footnote 42 The dominance of the individualist, nationality-based approach has concrete implications for corporate climate accountability: it determines which State bears regulatory jurisdiction, structures the grounds on which litigation may proceed and shapes how responsibility is attributed across complex transnational corporate groups.
Global mechanisms for holding corporations accountable for their conduct, particularly where this results in transborder impacts, have in the past been described as woefully inadequate,Footnote 43 relying upon an ‘incomplete patchwork’ of national and global, legal and non-legal, regulatory requirements.Footnote 44 Overlaying a global perspective inevitably creates jurisdictional complexity, prompting the view that there is no single ‘problem of global accountability’, rather there are many.Footnote 45 This picture is further complicated by the uneven ways in which international law engages with corporations. While direct international legal obligations on corporations exist, they remain narrow and exceptional, confined to discrete contexts such as investor-State dispute resolution provisions and stabilisation clauses in investment treaties.Footnote 46 In contrast, the business and human rights field has seen a significant expansion of normative corporate expectations, most notably through the United Nations Guiding Principles on Business and Human Rights (UNGPs), which establish an independent corporate responsibility to respect human rights, albeit with the State remaining the primary duty-bearer and guarantor of those rights.Footnote 47
Despite this complexity, the case for corporate climate accountability is particularly compelling. Corporate decisions that contribute to the emission of GHGs and/or support, finance and enable GHG-intensive activities are rightly the concern of a diverse global community, extending beyond States to encompass international organisations, civil society and the individuals and communities affected by corporate actions. At a normative level, therefore, the underlying premise of this article is that holding corporate actors to account for actions and decisions that contribute to climate change is both appropriate and necessary. Accountability, after all, lies at the heart of the quest for climate justice, helping ensure that the necessary behavioural shifts to address climate change actually occur.Footnote 48
2.2. Underpinnings of corporate climate accountability
Corporate climate accountability is a relatively new but fast-growing area of research and practical interest.Footnote 49 Drawing on accountability scholarship from international law, political science, international relations and organisational behaviour and psychology,Footnote 50 this article conceptualises ‘corporate climate accountability’ as encompassing three broad, interrelated elements. The first concerns obligations placed on companies to acknowledge and manage their climate impacts, for example, obligations to disclose climate risks, set net zero targets and develop implementation plans for reducing emissions.Footnote 51 These obligations generally arise from national or regional (private) law and respond to growing societal expectations that businesses play their part in addressing ‘the urgent and existential threat posed by climate change’.Footnote 52 The second element encompasses requirements for companies to be answerable for the adequacy and appropriateness of their decisions and operations that create climate change impacts.Footnote 53 This element of answerability to another party for certain conduct is a common requirement identified across interdisciplinary accountability literature.Footnote 54 The third element builds on the first two (obligations and answerability) by focusing on the consequences that accrue when corporations do not meet relevant obligations and expectations. These consequences may have a ‘soft’ character, such as loss of reputation or consumer backlash, or may take ‘harder’ forms such as sanctions or penalties.Footnote 55
Three broad trends underpin the turn in climate accountability discourse and practice towards paying more attention to corporations. First, developments in corporate law and corporate governance favouring greater regulation of corporate activity with climate change consequences have meant that it is no longer possible for companies to ‘stay below the radar’ of accountability for their actions (or lack thereof) in the context of climate change.Footnote 56 A particularly notable development has been the promulgation of laws requiring companies to disclose and regularly report on how climate change poses risks for their businesses and what measures they are taking to manage those risks.Footnote 57 The European Union’s (EU) Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD),Footnote 58 for example, require companies to address adverse impacts on human rights and the environment, and to report both on how sustainability issues affect their financial performance (financial materiality) and how their activities impact sustainability matters (impact materiality),Footnote 59 albeit with obligations applying only to the largest companies.Footnote 60 In several jurisdictions, the duty of directors to act in a company’s best interests has been interpreted to require directors to consider climate risks and opportunities that affect the company’s financial performance.Footnote 61 Recent scholarship suggests that directors might be required to consider their company’s negative climate impacts even if doing so is unconnected to, or may conflict with, firm-specific shareholder returns.Footnote 62 Despite the threat of ‘anti-Environmental, Social and Governance’ (ESG) litigation and regulatory rollbacks in recent times (particularly in the United States (US)),Footnote 63 the overall trend towards greater regulation of corporate activities with climate change consequences remains strong.Footnote 64
Second, there has been a rise in climate litigation against companies that pursues various legal pathways in the quest for climate accountability. Since 2015, climate litigation, particularly in the global North, has had a strong accountability focus.Footnote 65 While the majority of cases continue to be filed against States and government authorities, growing awareness of the role of carbon majors—major global oil, gas, coal, and cement producers that have generated a large share of worldwide industrial GHG emissions—in the climate crisis has seen increasing corporate climate litigation.Footnote 66 In 2024, for example, around 20 per cent of climate lawsuits globally (1 in 5) were filed against companies or their directors and officers.Footnote 67 The pathways pursued in such litigation included exercising shareholder rights, tort claims and consumer protection cases.Footnote 68 In this regard, the strengthening of anti-greenwashing regulatory frameworks across several jurisdictions has provided a valuable ‘hook’ for corporate climate litigation.Footnote 69 Across the board there is also greater appetite for risk among litigants to test novel legal strategies that would push the boundaries of corporate climate accountability. An exemplar is the pending ‘test case’ filed in the United Kingdom (UK) by the victims of Typhoon Odette in the Philippines against Shell.Footnote 70 The plaintiffs argue that Shell’s actions contributed to climate change, which made Typhoon Odette significantly more likely and more severe.Footnote 71 Notably, this is the first case to directly link death, injury and property destruction in the global South to a fossil fuel giant operating in the global North.Footnote 72 It is anticipated that there will be continued growth in transnational corporate climate accountability litigation like the Typhoon Odette/Shell case in coming years.Footnote 73
A third factor influencing the corporate turn in discussions of climate accountability is important advances in climate attribution science, which bolster the prospects of successful litigation claims against corporate defendants (such as in the Typhoon Odette case). Traditionally, determining causation (in a legal sense)Footnote 74 has been one of the greatest obstacles to holding corporations accountable for the damage that results from the contribution their GHG emissions make to climate change.Footnote 75 An ongoing concern has been translating scientific evidence establishing that GHG emissions cause global climate change and increase the risk of associated impactsFootnote 76 to the specific circumstances of a particular event or set of impacts and links to the emissions of a defined actor or group of actors.Footnote 77 This makes the task of establishing causation ‘more tenuous than in the case of local sources of pollution,’ albeit—in the words of the ICJ in Obligations of States in respect of Climate Change—not ‘impossible in the climate change context’.Footnote 78
Recent advances in attribution science increasingly make it feasible to connect harms such as deaths from a single extreme weather event to the emissions of a particular carbon major,Footnote 79 or even to a particular GHG-emitting project undertaken by a company.Footnote 80 These scientific advances provide significant support to help answer the legal question of how a causal link can be established for the purpose of allocating responsibility for climate change impacts to key actors like carbon major companies. It is important to note that despite these developments there remain limitations, such as uncertainty about model projections and data gaps, which make it more difficult to establish a clear causal chain.Footnote 81 There are also challenges in ‘downscaling’ scientific evidence regarding impacts from a global focus to a regional or local one.Footnote 82 These challenges are particularly pronounced for climate harms occurring in the global South where there tends to be a lack of long-term, reliable observational records that are necessary to identify and understand climate extremes.Footnote 83 While these inequities across the climate science landscape are increasingly acknowledged,Footnote 84 advances in knowledge driven by research from groups such as the Union of Concerned ScientistsFootnote 85 is underpinning a wave of new lawsuits. Such cases allege deceptive practices and potential corporate fraud on the basis that many of the world’s largest fossil fuel companies—instead of acknowledging the harmful effects of their projects and committing to reductions in GHG emissions—have knowingly deceived the public about climate science and continue to do so.Footnote 86 As rapid developments in climate attribution science continue to provide more robust scientific evidence to underpin corporate climate cases, it is likely that litigation and other forms of accountability mechanisms will be increasingly engaged against companies.
3. Mapping the legal ecosystem for global corporate climate accountability
Alongside growing interest in the climate accountability of companies, a focus on global corporate climate accountability represents a new field of study that recognises that expectations of corporate behaviour, standards and regulatory measures regarding companies’ climate action are no longer developing solely at the domestic level.Footnote 87 Like other transborder impacts of corporate activity, climate change impacts do not fit neatly within either a national or international regulatory template. Thus, the legal content of the new field of global corporate climate accountability is being developed through a complex interplay of norm creation, norm harmonisation and norm enforcement processes operating at different governance levels.Footnote 88 While the basis of global corporate accountability in this area remains varied and is still evolving, it comprises a combination of legal rules, principles of self-regulation, shareholder and investor preferences and powers and social accountability mechanisms and consequences, such as reputational damage and consumer ostracism.
This section maps three main nodes of activity which are playing pivotal roles in shaping this legal and regulatory ecosystem across the levels of international law, domestic/regional law and transnational law.Footnote 89 While specific legal and regulatory developments can be identified which are associated primarily with a particular governance level or node, it is acknowledged that these nodes are not discrete and there are often multi-directional interactions between them, which will be discussed further in Section 4. These interacting nodes contribute to the formation of a legal and regulatory ecosystem for global corporate climate accountability that is both dynamic and constantly evolving (as represented in Figure 1).
Figure showing nodes of the evolving legal ecosystem for global corporate climate accountability with the expanding scope of different nodes represented by the concentric circles and multidirectional interactions between them represented by arrows.
Figure 1. Long description
Three nodes in the evolving legal ecosystem for global corporate climate accountability are represented which include a node where there are intersecting activities at the international law level, a node where there are intersecting activities at the level of regional or domestic law, and a node where there are intersecting activities occurring in transnational law, beyond the state. The figure illustrates these nodes as expanding in scope as more intersecting activities occur in each (represented by the concentric circles) and as interacting among themselves (represented by the bidirectional, multiple arrows).
3.1. International legal activity node
The first of the three nodes examined concerns the ‘top-down’ role of international law in shaping global corporate climate accountability, encompassing its operation and effects both beyond the State and beyond conventional climate law.Footnote 90 While the corporation has long been a feature of international legal practice and argument,Footnote 91 it has nevertheless been addressed only indirectly by public international law.Footnote 92 This node of corporate climate accountability is thus characterised by a complex international legal environment in which States rather than corporations tend to be the focus of multiple, overlapping international legal frameworks that contain principles and standards relevant for global climate action. While the traditionally State-centric nature of international law limits its ability to target corporations directly, it nevertheless indirectly impacts corporate behaviour by establishing obligations on States to regulate private actors through the conferral of nationality.Footnote 93 Importantly, in relation to corporate climate accountability, these obligations are not limited to those instruments of international law that specifically address climate change but are also drawn from other areas or regimes of international law, such as law of the sea, human rights and customary international law obligations.Footnote 94
Looking first at international law’s role in shaping climate accountability beyond the State—specifically corporate climate accountability—it is apparent that a traditionally State-centric focus has considerably constrained its ability in this regard. For much of the past thirty years, international legal responsibilities in relation to climate change have tended to reflect the conventional view of international law as regulating the conduct of States.Footnote 95 From the perspective of regulatory infrastructure, there is no international equivalent to the domestic corporate law system designed to constrain and direct the behaviour of companies. Although global efforts to regulate corporations, particularly large transnational companies, have taken both a legal and normative approach,Footnote 96 corporations are not directly bound by international law except in some limited circumstances.Footnote 97 Accordingly, the legal framework for regulating climate change through international legal mechanisms has not been designed to address corporate actors. As a result, at the global level, the adoption, implementation and enforcement of rules imposing responsibilities and standards of behaviour on corporations does not match the significant and expanding impacts of these actors.Footnote 98
Nevertheless, increasing interest in corporate accountability for climate impacts is reflective of a broader trend in international legal approaches to include non-State actors as a focus of analysis.Footnote 99 Since at least the turn of the twenty-first century, there has been significant growth in scholarship and practice dedicated to the question of corporate responsibility and accountability under international law,Footnote 100 including from the interdisciplinary field of business and human rights.Footnote 101 As evidenced by normative frameworks such as the UNGPs,Footnote 102 the international legal rights and obligations of States are increasingly being construed in light of their indirect application to corporations.
The relevance of States’ international climate obligations for the regulation and accountability of corporations has been highlighted in several advisory opinions of international courts and tribunals, including the recent ICJ opinion on Obligations of States in respect of Climate Change mentioned in Section 1. The first of these opinions was delivered by the International Tribunal for the Law of the Sea (ITLOS) in May 2024,Footnote 103 followed by the Inter-American Court of Human Rights (IACtHR) and ICJ opinions in May and July 2025 respectively.Footnote 104 In clarifying States’ climate change obligations under international law, these advisory opinions do not create direct legal duties for corporations. However, they do put both States and businesses on notice regarding the responsibility of the former to regulate corporations to comply with international obligations and, to a greater or lesser degree, the purpose and form such regulation needs to take, particularly the applicable standard of due diligence used in judging the adequacy of States’ measures.Footnote 105
In addition to demonstrating the corporate implications of international legal obligations around climate change, the advisory opinions have unambiguously reinforced the role of international law more broadly in regulating climate impacts. The global climate treaties—the 1992 United Nations Framework Convention on Climate Change (UNFCCC),Footnote 106 1997 Kyoto ProtocolFootnote 107 and 2015 Paris AgreementFootnote 108—provide a focused framework for addressing the problem of climate change through international law. However, they have not been the sole locus of international climate law,Footnote 109 nor do they constitute a lex specialis on climate change that overrides States’ other legal rights and obligations.Footnote 110 In fact, as the significance of climate change impacts has grown, and the science underpinning the phenomenon has firmed, climate change has increasingly been addressed through other areas of international law, including international environmental law, law of the sea, human rights, international humanitarian law and trade law.Footnote 111 While each of the ITLOS, IACtHR and ICJ advisory opinions applied a different core lens to the question of State obligations for climate change, each also affirmed the complementary and mutually reinforcing nature of climate obligations across multiple international legal regimes.Footnote 112 This approach underscores how the top-down operation of international law establishes States’ duties to address climate change—and by extension to regulate corporate actors contributing to climate impacts—through an interconnected set of international legal sources rather than from climate change treaties alone.
3.2. Domestic/regional legal activity node
While regulation at the domestic level, and in regional settings like that of the EU, is primarily driven by localised factors such as voters’ preferences and the state of the economy, it is not immune to external forces that shape global business and trade. Legal and regulatory developments to address climate change had been unfolding at pace globallyFootnote 113 until the US installed a second Trump administration in the White House with an agenda that includes reversing US and international climate policy and promoting the extraction and consumption of fossil fuels.Footnote 114 In 2025, the US fossil fuel industry and its allies launched a multi-pronged assault against sustainable investing, which involved suing asset managers, pension funds and US federal agencies.Footnote 115 These developments contributed to the weakening of global commitments and the demise of the Net Zero Banking Alliance,Footnote 116 emboldened critics of EU sustainability regulations to call for delaying implementation and watering-down of standards,Footnote 117 and encouraged some major oil and gas companies to double down on fossil fuels and abandon business diversification towards renewables.Footnote 118 In March 2026, the Trump administration and French oil company, TotalEnergies, announced that they had reached an agreement whereby the US government would reimburse the company the amount it paid for leases to develop offshore wind energy if the company instead invested in oil and gas projects. In addition, TotalEnergies pledged not to develop any new US offshore wind projects.Footnote 119 In April 2026, a similar arrangement between the Trump administration and Global Infrastructure Partners was announced.Footnote 120 In June 2026, New York attorney general, Letitia James, alongside the attorneys general of Connecticut, Maine, Massachusetts, New Jersey, Rhode Island and Vermont, filed a lawsuit seeking to overturn the government’s arrangement with TotalEnergies.Footnote 121
While some governments have responded to these shocks by following suit, many others remain committed to climate action domestically and multilaterally.Footnote 122 On balance, domestic and regional-level EU corporate climate accountability continues to develop, albeit more slowly than before, contributing to the overall growth of the multi-level, multi-actor accountability ecosystem. The rest of this section highlights two examples at different ends of the spectrum of corporate climate accountability trends occurring in the domestic/regional legal activity node: the Dutch climate case of Milieudefensie et al v Shell, and efforts to reduce the scope of EU corporate sustainability regulation.
In the realm of domestic climate litigation, Milieudefensie Footnote 123 is a groundbreaking precedent as it was the first judicial decision in the world to affirm that companies have a legal obligation to reduce carbon emissions to combat dangerous climate change.Footnote 124 Milieudefensie argued that Shell’s failure to reduce its carbon dioxide (CO2) emissions by 45 per cent (or at least 35 per cent or 25 per cent) by 2030 relative to 2019 levels is a tortious act in violation of unwritten law pertaining to ‘proper social conduct’ and hence unlawful pursuant to Article 6:162(2) of the Dutch Civil Code.Footnote 125 What amounts to proper social conduct requires a judicial determination of the ‘social standard of care’.Footnote 126 The Hague District Court, in determining this standard of care, looked to legislation, general legal principles, fundamental rights, case law and expert reports.Footnote 127 The Court held that a key legal basis for informing the standard of care is human rights law. While human rights law is primarily directed at States vis-à-vis obligations owed to their citizens, human rights law can also inform the social standard of care that companies are required to meet. The Court held that contributing to climate change is contributing to the violation of human rights, namely Articles 2 and 8 of the European Convention on Human Rights.Footnote 128 As such, companies which do not reduce their CO2 emissions and continue to contribute to climate change are in breach of human rights law and the social standard of care.
In overturning the District Court’s ruling that Shell was required to reduce its emissions by 45 per cent by 2030 (relative to 2019 levels), the Hague Court of Appeal departed from the lower court on the issue of setting a specific emissions reduction target.Footnote 129 However, it agreed with the District Court in holding that companies have a legal obligation to reduce carbon emissions.Footnote 130 At the heart of this litigation is the quest to overhaul a company’s business model—one that has been highly profitable and earns its shareholders billions of dollars—and to compel an oil and gas major to be accountable for emissions that are produced when its products are used by customers. Over 90 per cent of Shell’s emissions are such ‘downstream’ or ‘Scope 3’ emissions.Footnote 131 This raises difficult questions such as whether courts ought to be ordering major transitions of this kind when the company in question is carrying out lawful business activities (albeit those that harm people and planet).Footnote 132 More broadly, the case raises questions about the role of companies versus the State in achieving emissions reductions.
Milieudefensie has filed an appeal.Footnote 133 In addition, the group announced in May 2025 that it is filing a second lawsuit against Shell. This second case is another global first in seeking to use legal mechanisms to ban a company from all new oil and gas extraction.Footnote 134 At the other end of the spectrum are developments in corporate sustainability regulation occurring at the European regional level. The CSDDD and CSRD, discussed in terms of their transnational effects in Section 3.3, are required to be implemented into the domestic law of all twenty-seven EU Member States, hence their consideration here as examples of legal developments in the domestic/regional legal activity node. On 26 February 2025, the European Commission presented an Omnibus package to scale back the scope of its ambitious corporate sustainability regulations for the purpose of enhancing business competitiveness within the EU.Footnote 135 The amendments, which took effect on 18 March 2026, significantly raised the thresholds for both directives, dramatically reducing the number of companies subject to these regulations as well as watering down their climate related obligations,Footnote 136 marking a significant step by the EU to slow its climate and sustainability agenda. At the same time, China has stepped up its domestic efforts with its Corporate Sustainability Disclosure Standards (CSDS), which—like the CSRD requirements—are rooted in a double materiality approach to evaluating sustainability-related impacts, dependencies, risks and opportunities.Footnote 137 These contrasting approaches—with the EU prioritising deregulation to achieve a level playing field in business and trade whereas China is pressing ahead with stronger regulation in recognition of growing systemic risks—demonstrate the complex policy choices that are being taken domestically and regionally to develop a denser and more sophisticated corporate climate accountability ecosystem that transcends borders as well as interacting with international and transnational legal activity.
3.3. Transnational legal activity node
Corporate climate accountability norms are also developing in a transnational node that sits between, and across, the international and domestic levels. These transnational processes occupy the space between top-down international laws and bottom-up domestic regulation and respond, in part, to the transnational nature of climate change impacts and their attribution to different actors.
The field of transnational law is now well-established but continuously evolving to address the limits of the traditionally State-centric focus of international law—limits which have constrained a global approach to both corporate accountability and climate accountability.Footnote 138 The transnational aspect highlights activities and interactions that transcend national boundaries, without limiting participants to States, thereby acknowledging increasingly complex global connections and diverse cross-border actors. In his early formulation, for instance, Jessup described transnational law as ‘all law which regulates actions or events that transcend national frontiers’.Footnote 139 Furthermore, a transnational framing broadens the scope of inquiry beyond formal international law, such as that described in Section 3.1, to include non-legal norms, institutional initiatives and corporate self-regulation. Methodologically, a transnational approach allows ‘an analytic means for assessing transnationally induced change in a globalized world’.Footnote 140
Understanding of transnational legal and regulatory processes continues to broaden in response to changing historical, social and political contexts,Footnote 141 with corporate climate accountability extending the field to include other complex legal regimes and new and emerging multi-scalar actors. Corporate climate accountability norms are developing in this transnational node in a multitude of ways, including by drawing on transnational litigation outcomes, soft law, informal law or other forms of international standard-setting and regulation.Footnote 142 As Etty et al explain, ‘climate change law has broken through the traditional boundaries of international law, requiring a shift to the new paradigm of transnational law’.Footnote 143
While there are still far fewer corporate climate litigation cases that can be categorised as purely ‘transnational’Footnote 144 than those that are usually grouped into international or domestic/regional nodes, transnational corporate climate litigation is nonetheless an emerging field. In Lliuya v RWE,Footnote 145 for example, the Higher Regional Court of Hamm (Germany) considered claims made by Lliuya, a Peruvian famer, against Germany’s largest electricity producer. While the Court dismissed the claim for lack of concrete risk to the plaintiff’s property, it recognised potential transnational corporate liability for contributions to climate change.Footnote 146 Similar cases against companies such as HolcimFootnote 147 and TotalEnergiesFootnote 148 are ongoing at the time of writing. 2025 ended with the initiation of several further transnational climate actions, including a ‘greenwashing’ claim against Brazilian multinational meat processing company JBS brought in New York State by advocacy group Mighty Earth;Footnote 149 a letter of claim from farmers in Pakistan to two of Germany’s (and the world’s) biggest GHG emitters, RWE and Heidelberg Materials, for damage arising out of Pakistan’s 2022 floods;Footnote 150 and as mentioned in Section 2.2, the initiation of legal action in the UK High Court by victims of Typhoon Odette in the Philippines against Shell for climate loss and damage.Footnote 151
Transnational environmental cases that are not primarily focused on climate issues also raise the potential for transnational corporate climate accountability by interrogating questions of transnational jurisdiction and standing. This includes several cases brought in the UK by non-UK actors against UK companies and their non-UK subsidiaries. In Vedanta Resources v Lungowe, for example, a group of claimants—citizens from the Chingola District of Zambia—were able to bring tortious claims against a UK parent company and Zambian-based subsidiary in a UK court in relation to the pollution of waterways in Zambia.Footnote 152 More recently, in the case of Mariana v BHP, the UK and Australian arms of major resources company, BHP, were held liable in a UK court for environmental harm resulting from the collapse of the Fundão Dam in Brazil.Footnote 153
Corporate climate accountability norms and enforcement in the transnational space also develop through soft law, informal law or other forms of standard-setting. This article does not seek to resolve debates about the role of hard and soft (primarily voluntary) law and standards in climate change law.Footnote 154 Instead, it starts from the position articulated by Lin (in discussing urban climate change law) that ‘soft law and hard law not only support and complement one another, but the interaction between them can also result in a synergistic expansion of governance that adds to the overall coherence of the transnational climate change regime complex’.Footnote 155 Transnational soft law norms for corporate accountability emerge from transnational climate networks such as citiesFootnote 156 or local governments,Footnote 157 regional corporate climate obligations such as the due diligence requirements of the Organization of American States,Footnote 158 and broader corporate standards such as the UNGPs and Organisation for Economic Cooperation and Development’s (OECD) Guidelines for Multinational Enterprises and Due Diligence Guidelines for Responsible Business Conduct.Footnote 159
Transnational corporate climate accountability also includes the ways in which national or regional legal regimes have a transnational impact on other States or corporations. Examples include the EU’s Carbon Border Adjustment MechanismFootnote 160 and regional corporate sustainability directives (the CSDDD and CSRD),Footnote 161 or the interaction between domestic environmental and climate laws and investment treaties.Footnote 162 The recent advisory opinions of the ICJ and other international courts and tribunals acknowledge this transnational legal complexity and affirm the role of various legal and regulatory regimes in informing climate change accountability norms.Footnote 163
4. Interactions between ecosystem nodes and their consequences
In biological ecosystems, there is a constantly interacting, changing set of relationships between component parts that contributes to certain emergent characteristics of the system.Footnote 164 These characteristics are not observable at the level of the ecosystem’s sub-systems but rather emerge due to the interactions between different components.Footnote 165 In a similar way, conceptualising legal and regulatory developments around global corporate climate accountability as part of an emerging ‘ecosystem’ can help to make visible the increasingly dense array of multi-directional interactions taking place between different nodes of activity that contribute to certain emergent characteristics of the system. The article uses this ecosystem analogy to examine legal and regulatory interactions across multiple governance levels (nodes) and to discern emergent systemic characteristics or properties that arise from such interactions, such as the capacity of the system to generate accountability effects.
This section explores examples of the kinds of interactions between nodes of the emerging regulatory and legal ecosystem that are playing out in practice and their potential consequences. Such interactions may occur, for example, in the context of articulation of legal consequences for companies’ climate actions (or omissions) which create harms; in establishing standards or soft law expectations of company behaviour in addressing climate change; or as part of coalition building and norm diffusion processes shaped by different stakeholders, including the local communities affected by corporate climate actions.
The four examples discussed in Section 4.1—which concern multi-directional judicial dialogue, hybridised carbon markets’ regulation, investment arbitration and negotiation, and norm diffusion processes mediated by multi-level stakeholders—were chosen as illustrative of prominent yet distinct interactions occurring across international, domestic/regional and transnational legal activity nodes with important corporate climate accountability implications, but are not intended to be exhaustive and, indeed, potential interactions are expected to evolve over time. Section 4.2 posits preliminary hypotheses about how these nodal interactions might give rise to emergent systemic properties that help shape global corporate accountability, whether this is in the direction of amplification or dilution of the responsibility of companies for their climate actions and impacts.
4.1. Examples of interactions
4.1.1. Multi-directional judicial dialogue and international advisory opinions
The ITLOS, IACtHR and ICJ climate change advisory opinions attest to the fact that climate law can no longer (if it ever could) be considered self-contained; whether in terms of the actors it addresses, the legal regimes from which it is sourced, or the forums in which it may be applied. As noted in Section 3.1, these three advisory opinions presented an expanded notion and scope of what can be considered ‘international’ climate law, encompassing obligations from an array of international legal regimes and extending indirectly to non-State actors through the domestic implementation of States’ duties. Furthermore, the content and application of the advisory opinions demonstrates how multi-directional interactions between the international, domestic/regional and transnational levels are blurring the boundaries between these nodes of activity. This is evident both in the way the international judicial bodies concerned have considered domestic, European and transnational legal practice in their reasoning and findings, and in the fact that their rulings have already been deployed in domestic and transnational contexts.
All three advisory opinions were characterised by the unprecedented participation of States, international organisations and other groups in proceedings.Footnote 166 Notably, extensive references to the climate case law of international, regional and domestic courts and tribunals featured in written and oral submissions to the ICJ.Footnote 167 The advisory opinions themselves also aligned with precedent emerging from a number of domestic and regional cases interpreting States’ obligations under climate law and, as a result, shaping corporate climate accountability. For example, the ICJ engaged with regional human rights jurisprudence, citing the judgment of the European Court of Human Rights (ECtHR) in the KlimaSeniorinnen v Switzerland case.Footnote 168 The IACtHR referred to several domestic precedents, including cases brought in Belgian,Footnote 169 Dutch,Footnote 170 and GermanFootnote 171 courts by civil society and citizens against their respective governments as well as ECtHR jurisprudence.Footnote 172
In turn, the international climate change advisory opinions are being invoked in domestic and transnational litigation. For example, a Brazilian federal court in August 2025 repeatedly cited the IACtHR opinion in its decision to halt the Candiota coal mine project until climate considerations were properly assessed.Footnote 173 Within a week of the ICJ handing down its advisory opinion, it was referenced in South African proceedings challenging the government’s authorisation of Shell’s offshore oil and gas project.Footnote 174 In South Korea, the ICJ advisory opinion has informed policy discussions and proposed legislative amendments to align the country’s nationally determined contribution (NDC) under the Paris Agreement with international obligations.Footnote 175 In the Netherlands, Greenpeace and residents of the Caribbean island of Bonaire successfully invoked the ICJ opinion in a case that found that the Dutch government’s climate plan fails to adequately protect the island from rising sea levels.Footnote 176 These examples demonstrate the potential for international legal developments to both be influenced by and, in turn, influence domestic and transnational legal practice relevant to corporate climate accountability, blurring the boundaries between these nodes through multi-directional judicial dialogue.Footnote 177 While the practical implications of this new set of cases in holding companies to account for their climate-relevant actions are difficult to assess at this early stage, it can be said that the advisory opinions are amplifying arguments based in domestic legal requirements to provide a firmer legal basis for findings of State and/or associated corporate accountability for climate harms.
4.1.2. Hybridisation of international law through carbon markets
Another example of interaction between the nodes can be seen in the establishment and operation of carbon markets globally, with significant implications for corporate climate accountability. Carbon markets are mechanisms that allow entities to trade emissions allowances or carbon credits, either within compliance schemes established by governments or through voluntary markets where companies purchase offsets to compensate for their emissions.Footnote 178 The development of these markets illustrates how interactions between international, transnational and domestic or regional spheres have evolved to blur traditional boundaries between these nodes of regulatory activity.
The Kyoto Protocol’s Joint Implementation and Clean Development Mechanism (CDM)Footnote 179 established an early framework for achieving international climate commitments through transactions between private entities, including corporations, through their purchase of carbon credits generated by emissions reduction projects in other jurisdictions.Footnote 180 This created a hybrid regulatory space where public international law sets the overarching architecture and compliance obligations for States,Footnote 181 but where these are implemented by corporations. The Paris Agreement’s Article 6 mechanismsFootnote 182 represent a further evolution of this approach, establishing international frameworks for voluntary cooperation that depend fundamentally on State authorisation, coupled with domestic and transnational private market activity.Footnote 183
The emergence of private transnational standard-setting bodies regulating carbon markets further illustrates the blurring of boundaries between nodes. By developing methodologies and certification projects, non-profit entities such as VerraFootnote 184 and Gold StandardFootnote 185 operate as transnational governance actors, composed of multiple stakeholders from multiple jurisdictions.Footnote 186 While these bodies lack formal legal authority, their certification decisions nevertheless can have legal and economic consequences through multiple pathways. For example, credits certified by these standards are recognised and traded in compliance and voluntary markets, their standards are incorporated by reference into domestic regulations in some jurisdictions,Footnote 187 and courts are increasingly considering whether credits meet these transnational standards when assessing the validity of corporate climate claims.Footnote 188 This creates a form of transnational governance where private bodies shape corporate behaviour and accountability through transnational standard-setting that operates alongside, and interacts with, both international treaty frameworks and domestic legal systems.
As global carbon markets continue to evolve, the locus of enforcement and accountability has become increasingly dispersed across multiple jurisdictions and regulatory nodes. Companies participating in carbon markets face potential liability not only under international frameworks and domestic or regional implementing regulations, but also through consumer protection statutes, securities law and civil tort claims related to allegedly fraudulent or misleading carbon credit claims. A range of recent cases illustrate this dispersion.Footnote 189 For example, Delta Air Lines faces an ongoing US class action lawsuit over its claims to be ‘the world’s first carbon-neutral airline’, with plaintiffs challenging the validity of carbon offsets purchased by the airline.Footnote 190 Tech giant Apple has also faced litigation in both the US and Germany over ‘carbon neutral’ claims for its Apple Watch, with a German court finding in 2025 that the offset projects relied upon had insufficient duration to support carbon neutrality claims.Footnote 191 These domestic proceedings frequently reference transnational standards and international commitments, while their outcomes in turn inform the evolution of private governance standards and feed into international negotiations about market mechanisms.
From the perspective of corporate climate accountability, the operation of global carbon markets reveals inherent tensions in this multi-nodal regulatory structure. Critics contend that carbon markets enable companies to purchase the right to continue polluting rather than reducing their own emissions, effectively allowing wealthy corporations in the global North to offset their climate responsibilities by financing projects in the global South while maintaining business-as-usual operations.Footnote 192 Investigations have revealed widespread problems with the integrity of carbon credits,Footnote 193 including projects that would have occurred anyway (i.e. those lacking additionality), those that overestimate emissions reductions and those causing harm to local communities. These critiques highlight how the diffusion of accountability across international, domestic/regional and transnational nodes can, in some instances, dilute corporate responsibility, enabling companies to claim climate action through credit purchases that comply with international frameworks and transnational standards, even where domestic courts or civil society investigations subsequently reveal such credits delivered minimal or no genuine climate benefit.
4.1.3. Investment arbitration and negotiation
Investment arbitration and negotiation sit notionally within the transnational node of activity,Footnote 194 but investor-State relations underscore the way in which corporate climate accountability is both broadening and blurring the boundaries between nodes. Investor-State dispute settlement processes under bilateral or multilateral investment treaties have been criticised for the risk that multinational corporations could constrain or challenge a State’s capacity to implement domestic environmental or climate legislation—a form of ‘regulatory chill’.Footnote 195 The reality is more complex,Footnote 196 involves multidirectional interactions between nodes and is often obscured by confidentiality provisions.
For example, the now discontinued investment arbitration proceedings in RWE v Netherlands,Footnote 197 brought by German utility RWE against the Netherlands over its timeline for phasing out coal-fired power plants, highlights how investment arbitration can be employed by corporations to avoid accountability and influence domestic climate action. The proceedings were brought under the Energy Charter Treaty,Footnote 198 designed under international law to strengthen energy cooperation between signatory States, but which has been criticised for stalling both domestic climate action and preventing the achievement of international climate goals.Footnote 199 On the other hand, mixed outcomes of, and backlash to, energy investor-State disputes in some Asian countries,Footnote 200 and the recent decision of several African States to terminate bilateral investment treaties on grounds including domestic environmental protections,Footnote 201 show how investor-State relations can also be leveraged by nation States to maintain sovereignty over domestic environmental and climate decisions—decisions that can either increase or dilute corporate climate accountability depending on a given State’s energy, foreign affairs, investment or environmental aims.
Following the ICJ’s climate advisory opinion, it is clear that the transnational investment treaty framework also interacts with international climate law.Footnote 202 The expanded obligation, articulated by the ICJ, on States to regulate fossil fuel activities by private actors within their jurisdiction and fossil fuel licensing and subsidy regimes has broader implications for the investment treaty framework.Footnote 203 This framework is one which is arguably more premised on the protection of corporate fossil fuel assets and interests than on the obligations of States to regulate those assets and interests.Footnote 204 As demonstrated by Hommes and Ankersmit, the current system of investor-State dispute resolution cannot be seen in isolation from the interests of the oil industry given Shell’s significant role in its origins.Footnote 205 In her separate declaration appended to the ICJ climate advisory opinion, Judge Sarah Cleveland dealt with investor-State relations explicitly, stating, ‘the interpretation of investment instruments must be informed by States’ obligations in respect of climate change under international law, including the stringent due diligence standard to which States are bound in implementing such obligations.’Footnote 206
4.1.4. Coalition building and norm diffusion
Coalition building and norm diffusion processes shaped by myriad stakeholders play a significant role both in the emerging corporate climate accountability ecosystem and in stretching the traditional boundaries of international, transnational, regional and domestic law. Domestic corporate climate litigation, for example, is often brought by affected local and/or Indigenous communities (or, increasingly, shareholder activist groups).Footnote 207 But such action can be supported, funded or led by local and transnational environmental non-governmental organisations (NGOs), climate activist and transnational advocacy networks,Footnote 208 public interest lawyers and philanthropic sponsors.Footnote 209
Trends in climate litigation often represent the climate accountability aims of transnational climate movements,Footnote 210 and successful climate litigation approaches in one domestic jurisdiction can be emulated in another. For instance, the success of a duty of care argument in the Urgenda caseFootnote 211—in which an environmental group and Dutch citizens sought to hold the Dutch Government to account for climate change impacts by way of enhanced GHG emission targets—has been sought to be replicated both in climate cases against governments,Footnote 212 and in corporate climate litigation.Footnote 213 The Urgenda precedent was also cited in State submissions to the ICJ advisory opinion proceedings, as discussed in Section 4.1.1. Soft law, domestic law or other forms of standard-setting might also arise from transnational litigation outcomes or climate legislation in other jurisdictions, for example, attempts to introduce duty of care legislation for climate harm.Footnote 214 These interactions are multi-directional: while transnational networks facilitate norm diffusion and can influence domestic climate action, localised insights, litigation successes and knowledge sharing infuse the transnational movement of climate norms, broadening the scope of corporate climate accountability from the domestic all the way to proceedings before the ICJ.
Corporate interests also play a role in norm diffusion by lobbying and working with national governments and transnational and international bodies to establish the ‘rules of engagement’ for corporate climate accountability across scales.Footnote 215 Corporate climate litigation outcomes that favour defendants may have a strong normative effect, carrying ‘warnings’ about the potential success of litigation strategies to prospective litigants across the globe. A potentially accountability-constraining offshoot is seen in the increasing prevalence of corporate-initiated Strategic Lawsuits Against Public Participation (SLAPP) suits,Footnote 216 that could render public interest climate actions financially untenable. Equally though, corporate interests have an important role to play in corporate climate accountability ambition-raising and standard setting that could improve accountability at all levels.Footnote 217 Lobbying activities around the imposition of new national emissions reduction targets are no longer solely the domain of fossil fuel companies but increasingly also feature transnational coalitions of ‘progressive business’ pushing for stronger commitments to align their internal target-setting and compliance activities across jurisdictions.Footnote 218
4.2. Emergent accountability properties of the legal and regulatory ecosystem
One of the questions raised by using an ecosystem metaphor in analysing the emerging and interacting set of legal and regulatory developments regarding global corporate climate action is whether this interactivity, and its increasing complexity, generates emergent systemic properties,Footnote 219 such as greater corporate accountability. While there are early indications that the increasing density of the ecosystem of applicable norms and implementation mechanisms outlined in the previous sections will lead to increased corporate climate accountability, the diffusion of accountability across international, domestic/regional and transnational nodes also risks diluting corporate responsibility. For example, the increased risk of liability for climate harm and damage across multiple jurisdictions arising out of multi-directional judicial dialogue should in theory reduce spaces for corporate legal ‘refuge’,Footnote 220 but does not prevent companies continuously rearranging their corporate affairs or their structures to avoid accountability, or engaging in their own forms of coalition building and normative diffusion, such as lobbying or pursuing retaliatory costs litigation against public interest groups.Footnote 221
It is also important not to treat the results of an increasingly dense global corporate climate accountability ecosystem as homogeneous. As was highlighted in Section 1, regional variations and differences between the global South and North experiences must also be considered. Similarly, varying outcomes depending on the type of accountability mechanism (whether utilising formal legal interventions or normative approaches) may also be evident. These unresolved issues all provide fruitful entry points for future research exploring the global corporate climate accountability legal and regulatory ecosystem and its potential to enhance the ambition and effectiveness of corporate climate action.
Taking a more conceptual approach as an underpinning for pursuing such future research, it is possible to map the different potential consequences of growing interactions between ecosystem nodes and their implications for corporate climate accountability in a simplified form. Employing this approach, a spectrum of emergent accountability effects (from diluted to amplified) can be considered that might stem from lesser and greater levels of legal and regulatory density and interactivity. At its simplest level, this conceptual mapping yields four key potential scenarios and associated preliminary hypotheses about how law and regulation are shaping the climate accountability of corporations.
A first preliminary hypothesis is that, with increasing legal and regulatory density of the relevant ecosystem and enhanced interactivity between its component parts, global climate accountability for corporate actors will be amplified. For example, with the growth and spread of corporate climate regulations like disclosure requirements and transition planning obligations,Footnote 222 coupled with an increasing exposure of companies to litigation and regulatory enforcement risk on climate grounds,Footnote 223 enhanced corporate climate accountability might be the expected result.Footnote 224
A second and opposite scenario, involving a loosening of corporate climate regulation and growing ‘backlash’ litigation challenging the need for companies to act on climate change, can be seen in the US currently with ‘anti-ESG’ litigation and regulatory rollbacks in some US states.Footnote 225 This situation of ‘lessening’ density of legal and regulatory requirements is hypothesised to dilute corporate climate accountability.
A third possibility, however, is that a growing density of legal and regulatory requirements leads to fragmentation and regulatory arbitrage,Footnote 226 increased pushback and legal action by corporations against public interest litigationFootnote 227 and/or lobbying from corporate regulatees who drive the direction of interactions in the ecosystem towards the dilution of strict accountability measures. Arguably, the EU Omnibus package winding back legislation for corporate sustainability reporting and due diligenceFootnote 228 represents an example of this phenomenon, with a reduction in the scope of regulation coming after a period of increasing stringency in applicable standards. The operation of global carbon marketsFootnote 229 represents another example where increased interactions across nodes may result in greater density but also fragmentation that may potentially undermine corporate climate accountability.
This third set of cases may also illustrate effects associated with the quality of legal and regulatory developments emerging around global corporate climate action. In other words, increased density comprised of certain forms of regulation and practice (say, perhaps, mandatory regulatory requirements and robust enforcement) may lead to greater accountability, while density of other types (say, voluntary measures with limited compliance options) might not.
Finally, far fewer situations are expected to arise that would correspond to a scenario of less density in the interaction of legal and regulatory developments, but amplified accountability.Footnote 230 GHG pollution is, after all, an exemplar of market failureFootnote 231 or ‘Tragedy of the Commons’Footnote 232 where the impacts of emissions—particularly from private entities—have been externalised to the global climate system and society as a whole.Footnote 233 Legal and regulatory norms, such as the temperature goal under the Paris Agreement,Footnote 234 and regulatory measures such as carbon pricing,Footnote 235 have hence been required to incentivise corporate climate action and to control the extent of GHG pollution.
5. Conclusion
This article has described the context for a greater focus on corporate climate accountability and mapped interacting and intersecting legal and regulatory developments at multiple levels of governance—from the domestic to the international—that are helping to generate a global legal and regulatory ecosystem. It is argued that such developments are accompanied by increasing interactions between and across international, domestic/regional and transnational ‘nodes’ of activity. These nodal interactions are multi-directional and include international judicial decisions and soft law implementation, transnational and domestic or regional litigation, domestic and transnational coalition building and norm diffusion, the development of domestic and regional regulatory frameworks, and harmonised standard-setting.
At this early stage of the development of the research field and practice of global corporate climate accountability, it is unclear whether growing density and interactivity of the emerging regulatory and legal ecosystem may contribute to systemic properties that enhance accountability for companies’ climate action or simply provide means for its ultimate dilution. The working theory proposed by the article—to be tested in further research (that of the authors and hopefully also other interested scholars and practitioners)—is that greater legal and regulatory density and interactivity across the system will generate systemic benefits for corporate climate accountability. Conversely, reducing legal and regulatory development or rollback—with concomitant decreases in the interactivity across system nodes—might be expected to have negative consequences for the climate accountability of corporate actors.
As acknowledged throughout this article, global corporate climate accountability is a fast-evolving and dynamic space which has only recently emerged as a focus of legal scholarship. For this reason, the article has focused on mapping key existing legal and regulatory developments and positing how interactions across different nodes of activity may generate different outcomes for corporate climate accountability. It is recognised that such mapping at the present time reflects a global North bias given the focus of relevant scholarship, regulation and analysis on advanced economies, with significant gaps in understanding remaining around developments regarding corporate climate accountability across areas of the global South, such as the countries of the Asia-Pacific. Filling these gaps in knowledge and advancing understanding of the global legal and governance framework for companies to be held accountable for their climate actions and impact is an important area for future research endeavour.
This article has sought to highlight some examples of the interactive features of the emerging ecosystem and developed a preliminary conceptual framework for understanding systemic properties that may arise that are relevant for accountability effects. Specific issues that might be taken forward as part of a future research agenda could include the effects of regulatory rollbacks and ‘anti-regulatory’ climate litigation on corporate climate accountability, the role of transnational climate advocacy and litigation seeking remedies for corporate climate harms in driving greater accountability, and the implications of international climate rulings on States’ responsibilities for regulating private conduct for enhancing domestic and regional corporate climate action. There is also scope for a more nuanced understanding—as indicated above—of how the landscape of corporate climate accountability is evolving within and across countries of the global South, as well as the different considerations and interactions that come into play for different corporate forms such as State-owned enterprises or family firms.
By contributing to the mapping of an emerging, multi-nodal accountability ecosystem, the intention of this article has been to provide a basis for critical analysis of global corporate climate accountability and the role of law and regulatory developments in contributing to that objective. It is possible that already, with the developments to date, the world is witnessing a gravitational pull of law and regulation towards enhanced corporate climate accountability, which will strengthen over time.Footnote 236 Given worsening climate change and inadequate efforts to reduce GHG emissions by States and other actors, such an outcome would be a welcome one, providing the legal and governance infrastructure needed to hold companies accountable for their substantial contributions to the climate crisis as a matter of global climate justice.
Acknowledgments
Earlier versions of this article were presented as part of ‘Write Club’ sessions hosted by the Laureate Program on Global Corporate Climate Accountability at the University of Melbourne. The authors are very appreciative of Chris Hilson, Megan Bowman, Nina Araneta-Alana and Elisa Morgera, and the two anonymous reviewers, for their helpful comments on earlier versions of the article. The authors are also grateful for the expert assistance with footnotes provided by Alex Qian and acknowledge financial support for the research provided by the Australian Research Council pursuant to Professor Peel’s Laureate Fellowship (FL240100065 — Transforming international law for corporate climate accountability).
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