Climate Litigation Risks and International Framework Considerations

Climate litigation presents escalating risks to corporations across jurisdictions. This document analyses key recent cases, identifies primary risk factors, and provides actionable guidance for boards and executives. Primary risks include greenwashing allegations, environmental damages liability, and failures to meet disclosure requirements. Boards should prioritise:

1. Verification of environmental claims,

2. Alignment with international frameworks, and

3. Robust governance of climate-related disclosures.

This analysis builds upon recent empirical research from London Business School that quantifies the business impact of greenwashing, showing an average 1.34% drop in customer satisfaction scores for companies perceived to be overstating environmental claims. As that research demonstrated, the gap between environmental promises and implementation creates measurable harm to customer relationships. This document extends that understanding by examining how this same gap increasingly translates into legal and regulatory exposure through climate litigation across multiple jurisdictions.

This document provides a strategic overview of climate litigation risks. A forthcoming companion analysis will examine consumer deception cases in greater detail, with specific focus on greenwashing allegations against Apple and climate misinformation claims against major oil companies.

Overview

Climate litigation is increasingly shaping corporate risk, with lawsuits spanning consumer deception (e.g., greenwashing claims), environmental damages, and human rights violations. Recent cases in multiple jurisdictions highlight the growing accountability businesses face in the climate transition. Notable cases include:

• United States: Apple’s greenwashing lawsuit alleges that its “carbon neutral” Apple Watch models rely on carbon offsets that would have occurred regardless of its investment, failing the principle of additionality.

  The Apple greenwashing lawsuit represents a particularly instructive example of consumer deception risks related to carbon neutrality claims. A detailed analysis of the specific consumer protection violations alleged in this case and their implications for environmental marketing will be explored in our upcoming companion document.

• Brazil: Vale is being sued for heavy metal contamination impacting indigenous communities, demonstrating liability risks tied to extractive industries and environmental degradation.

• United Kingdom: The River Ouse in Sussex has been granted legal personhood, reinforcing the emerging trend of recognizing natural entities as rights-holders, which could lead to new legal challenges for polluters.

Boards must assess legal risks, governance responsibilities, and alignment with global commitments such as the Paris Agreement and corporate net-zero pledges.

Note on Jurisdictional Scope: Legal obligations for boards to assess and disclose climate risks vary by jurisdiction. For example:

• In the European Union, the Corporate Sustainability Due Diligence Directive (CSDDD) will apply from 2024 to companies with more than 1,000 employees and €450 million global turnover, with phased implementation and heightened requirements for high-impact sectors.

• In the United States, obligations stem from a combination of federal and state rules:

  • SEC Climate Disclosure Rule (2024): Applies to public companies. Climate disclosures are mandatory for companies with a public float over $75 million, with more rigorous GHG reporting for those over $700 million

  • California SB 253 & SB 261 (2026): Apply to companies "doing business" in California:

    • SB 253: Full Scope 1, 2, and 3 emissions reporting for companies with ≥$1 billion in global revenues

    • SB 261: Biennial climate risk reporting for companies with ≥$500 million in global revenues

Voluntary adherence to international standards (e.g. TCFD, UNGPs) remains an important signal of good governance for firms below regulatory thresholds.rnance for firms below regulatory

resholds.

Key Issues for Boards in Climate Litigation

Legal and Regulatory Exposure Across Jurisdictions

• Apple (United States): The lawsuit alleges Apple misled consumers by claiming carbon neutrality while relying on offset projects in Kenya and China that failed to meet additionality criteria. The carbon reductions would have happened without Apple’s involvement, violating consumer protection laws and FTC Green Guides.

• Vale (Brazil): The Federal Public Prosecutor’s lawsuit against Vale focuses on environmental damage and human rights violations. If found liable, Vale faces severe reputational and financial penalties, reinforcing the need for rigorous compliance with environmental impact assessments.

• River Ouse (UK): The legal personhood granted to the River Ouse establishes new accountability standards for corporations. Businesses that pollute or harm the river could face lawsuits on behalf of the river itself, setting a precedent for environmental protection worldwide.

Companies must prepare for jurisdiction-specific legal challenges while ensuring compliance with global environmental standards.

Corporate Accountability Under International Climate Agreements

• The Paris Agreement (Article 6) governs carbon offset mechanisms, requiring additionality, transparency, and verification. Apple’s reliance on ineffective offset projects contradicts these principles.

• The UN Guiding Principles on Business and Human Rights mandate that corporations prevent environmental harm within their supply chains, making cases like Vale’s contamination lawsuit highly significant.

• Legal recognition of environmental rights (e.g., the River Ouse ruling) aligns with the Rights of Nature movement, which has been gaining momentum globally.

  
  

Financial and Reputational Risk to Corporate Strategy

• Investor scrutiny is intensifying, with ESG-focused funds requiring verification of climate commitments.

• Misleading sustainability claims could trigger SEC or EU-mandated investor disclosures, exposing firms to shareholder lawsuits.

• Market distortion risks arise when companies making legitimate sustainability efforts are undermined by misleading claims from competitors.

• Negative media attention and NGO activism can amplify legal and reputational risks, as seen in Apple’s and Vale’s cases.

Board Responsibilities and Fiduciary Duties

• Directors must ensure climate-related disclosures align with financial materiality frameworks such as TCFD (Task Force on Climate-Related Financial Disclosures).

• Courts are increasingly holding boards accountable for failing to oversee climate risks, making ESG governance essential.

• Shareholder activism around net-zero strategies is increasing, posing risks if corporate claims are unsubstantiated.

Key Actions for Boards in Addressing Climate Litigation Risks

• Legal Strategy: Strengthen oversight of sustainability claims and climate risk disclosures.

• Governance Review: Align ESG strategies with global frameworks, ensuring board accountability in climate action.

• Carbon Offset Audits: Implement independent verification of offset projects to prevent risks associated with non-additionality.

• Stakeholder Engagement: Enhance transparency with regulators, investors, and the public to maintain trust and credibility.

• Crisis Preparedness: Develop a litigation response framework to manage reputational and financial fallout from climate lawsuits.

• Consumer Protection Compliance: Review environmental marketing claims for potential consumer deception risks. Our upcoming companion analysis will provide detailed guidance on navigating these specific risks through examination of recent high-profile cases.

Conclusion

The rise of climate litigation underscores the need for strong corporate governance, compliance with international climate agreements, and transparent sustainability practices. Boards must anticipate evolving legal risks and ensure alignment with international regulatory frameworks, avoiding reputational and financial damage.

As you consider the climate litigation risks outlined in this article, we invite you to explore the self-assessment tool on the following page as a starting point for evaluating your organisation's current position. This framework provides an initial lens through which to examine your practices and identify potential areas for enhancement. For organisations where some elements may not yet be applicable due to size, industry, or maturity, consider incorporating these considerations into your strategic planning for future growth. Even organisations early in their sustainability journey can benefit from proactively designing governance structures and verification systems that will scale with their environmental commitments, potentially avoiding the litigation pitfalls that have challenged others. Building resilience against climate litigation risk is an evolving process rather than a one-time exercise.

While this document has provided a broad overview of climate litigation risks across multiple jurisdictions, the specific mechanics of consumer deception claims warrant deeper examination. Our forthcoming analysis will delve into two landmark cases—California v. Oil Majors and the Apple Watch class action—to provide practitioners with detailed insights into the evolving standards for environmental marketing claims and the growing legal risks of greenwashing.

DISCLAIMER: This document provides general information on climate litigation risks and is not legal advice. The analysis presented is for informational purposes only. Climate-related legal requirements vary significantly by jurisdiction, industry, and over time. Organisations should consult qualified legal counsel before implementing specific strategies or responses to climate litigation risks. The information provided does not establish an attorney-client relationship, and no liability is assumed for actions taken based on this document.