International Court of Justice Advisory Opinion on the Obligations of States in respect of Climate Change: what it may mean for businesses

Background to the Opinion

In 2019, a group of students from the University of the South Pacific in Fiji established a grassroots organisation aiming to persuade Pacific Islands governments to bring the issue of climate change before the ICJ. These efforts were championed by Vanuatu, which in mid-2022 through its Permanent Mission to the United Nations (“UN”) assembled a core group of States to draft a UN General Assembly Resolution requesting an advisory opinion to the ICJ.

On 29 March 2023, the UN General Assembly adopted by consensus Resolution 77/276, which submitted the following questions to the ICJ:

1. What are the obligations of States under international law to ensure the protection of the climate system and other parts of the environment from anthropogenic emissions of greenhouse gases for States and for present and future generations?
2. What are the legal consequences under these obligations for States where they, by their acts and omissions, have caused significant harm to the climate system and other parts of the environment, with respect to:
   1. States, including, in particular, small island developing States, which due to their geographical circumstances and level of development, are injured or specially affected by or are particularly vulnerable to the adverse effects of climate change?
   2. Peoples and individuals of the present and future generations affected by the adverse effects of climate change?

What is an advisory opinion?

The ICJ is the principal judicial organ of the UN. In addition to ruling on disputes between States, the ICJ also issues advisory opinions on the legal questions referred to it by UN organs and specialised agencies. The UN General Assembly, as a UN organ, may request advisory opinions on “any legal question”. Except in rare cases (this case not being one of them), an advisory opinion of the ICJ is non-binding. Despite having no binding force, ICJ advisory opinions carry significant legal authority, and they contribute to the clarification and development of international law.

What did the Opinion conclude?

The Opinion was adopted unanimously by the ICJ. This was only the fifth time in the ICJ's nearly 80-year history that a unanimous opinion has been adopted. The Opinion was also the result of the highest level of participation in the ICJ's (or its predecessor, the Permanent Court of International Justice's) history. Nearly 100 States made written and/or oral submissions in addition to the participation of several international and non-governmental organisations. Some key takeaways from the Opinion are:

1. Climate change treaties impose binding obligations on States to protect the climate system from greenhouse gas emissions. The ICJ confirmed that specific obligations under treaties do not preclude the application of broader norms of international law when assessing States' international legal obligations in relation to climate change.
2. The duty to prevent significant harm to the environment is an obligation to act with due diligence. This entails a duty to take all available steps to prevent significant environmental harm to other States (including harm caused by private actors). Failing to prevent harm due to a lack of due diligence can lead to international legal responsibility. Therefore, the Opinion stressed the duty of States to regulate the activities of businesses as a matter of due diligence.
3. Each State may separately invoke the responsibility of every State which has committed an international wrongful act resulting in damage to the climate system and other parts of the environment.

What could the Opinion mean for businesses?

The Opinion is likely to have a wider impact for businesses, particularly those in operating in high-emission sectors.

Corporate compliance and new regulations

The Opinion may increase regulatory oversight over certain projects, with more rigorous criteria to secure approvals for certain projects. This may include stricter environmental impact assessments (EIAs), and greater requirements to reduce the emissions impact of projects and provide for mitigation measurements (such as carbon capture). Heightened due diligence and disclosure obligations may also be expected. Businesses would be well-advised to ensure that they have vigorous measures in place to assess any regulatory changes and ensure ongoing compliance.

Climate litigation

The Opinion recognised that a clean, healthy and sustainable environment is a human right. Recent years have already seen an increase in domestic climate litigation in several jurisdictions, which is likely to continue. Claimants may rely on the Opinion in claims before domestic courts against businesses concerning alleged accountability for the emissions caused by their activities. The conclusions of the Opinion may encourage further claims to be brought.

Investment arbitration

Many investment arbitrations relate to investments in the energy sector. Within those cases, there often are arguments as to whether measures which negatively affected investments were adopted in order to comply with international climate change obligations. The Opinion may make it more difficult for an investor in a carbon-intensive or otherwise polluting industry to prove that a measure taken to combat climate change was in breach of investment protection standards set out in investment treaties. By the same token, renewable energy investors may be able to rely on the Opinion when challenging measures adopted by States which are alleged to favour carbon-intensive or polluting industries over renewable energy.

We are here to help

We understand the diverse environmental considerations for business across all sectors. We support clients around the world across the diverse areas of practice that are touched by climate change. We also have significant experience of acting for investors and States in arbitrations in the energy sector. Please feel free to contact us if you would like to learn more.

Authored by Markus Burgstaller, Tobias Faber and Scott Macpherson.