The Impact On Private Actors (Inclusive Of Insurers / Reinsurers) Of The Recent Advisory Opinion Of The International Court Of Justice On The Obligations Of States In Respect Of Climate Change

The Advisory Opinion of the International Court of Justice on the obligations of States in respect of climate change (“the Opinion”), delivered on 23 July 2025, is hailed as a landmark advisory opinion on climate change in international law. The Court was of the opinion that States have definite legal obligations / legal duties under customary international law, regardless of their participation in climate treaties, in order to address the climate crisis, which it described as “existential”. Those States, being signatories to climate treaties, also have binding obligations / legal duties under those treaties, to address the climate crisis. 

Although the Opinion deals only with States' obligations in relation to climate change, its influence will extend far beyond governments, affecting private actors, across numerous industries, including the global insurance industry. This article highlights the Opinion's significance for all States and explores its implications for private actors, including corporate actors and participants in the global insurance market. 

The Opinion was delivered by the Court in response to a request from the United Nations General Assembly to answer certain questions posed by it. The Opinion (being a 133 page document), and although a non-binding Opinion on States:

• Details the extensive legal obligations of States under international law to protect the climate system and the environment from anthropogenic greenhouse gas emissions.
• Describes and explains the legal consequences for States in relation to these obligations for the ‘acts and omissions' of States where they have caused significant harm to the climate system and the environment.

In the relatively short period of time since the delivery of the Opinion on 23 July 2025, there has been substantial commentary (by various authors notably and readily complimented by AI generated literature) on the Opinion. This commentary / literature has generally focused on the key findings of the Opinion, the legal consequences for States for failing to meet their obligations, and has also observed that the Opinion constitutes a significant blow to the fossil fuel industry in particular. 

However, the Opinion's ramifications for private actors are equally significant. The reason for this may be fairly obvious but is also bolstered by what was said by the Court in the body of the Opinion, and in particular in relation to one of the fundamental obligations identified by it, that being the “domestic mitigation obligation” of a State, and in turn an important allied or subsidiary obligation, that being one of “due diligence” of a State. The Court described these obligations as extending to “activities carried out by private actors”. Regarding the obligation of “due diligence” the Court stated that:

• This obligation “is particularly relevant in a situation in which the activities in question are mostly carried out by private persons or entities”.
• A State is required to be proactive and to take all reasonable measures, which may include “putting in place a national system, including legislation, administrative procedures and an enforcement mechanism, and exercising adequate vigilance to make such a system function effectively…”.

There is much that can be said as to why the Opinion cannot be disregarded by States themselves, but there are two particular reasons for this.

The first is that, while the Opinion is not legally binding on States, it does and will carry considerable weight and influence. Previous advisory opinions (and there have been few) have been used to shape legal arguments and to develop international law. Arguably then, an advisory opinion may be regarded as constituting a source of (binding) international law.

The second relates to the Court's views regarding the potential difficulty of evoking responsibility or attributing harm to a particular actor / wrongdoer, in any legal context (which would apply equally in international law). Significantly, in this context, and lest a State or States may not necessarily be readily inclined to take note of and adhere to the Opinion, the Court proffered that: 

• “…while climate change is caused by cumulative GHG emissions, it is scientifically possible to determine each States' total contribution to global emissions, taking into account both historical and current emissions”; and
• “… causation of damage is not a requirement for the determination of responsibility as such”. The Court recalled “that the fact that the damage was the result of concurrent causes is not sufficient to exempt [a State] from any obligation to make reparation”. In the Court's view, the existing legal “standard of “a sufficiently direct and certain causal nexus” between an alleged wrongful action or omission and the alleged damage is flexible enough to address the challenges arising in respect of the phenomenon of climate change”.

It follows that States' obligations will increasingly be transferred to private actors, necessarily incentivised by the very real implications for States arising out of and in consequence of the Opinion.

Private actors are likely to be faced with additional and heightened regulatory and compliance requirements in relation to their own climate change and environmental obligations. They, and here we must include directors and officers of corporate entities, stand to be at higher risk of being held accountable for their contributions to climate change, by both governments and other private actors. The Opinion is expected to fuel ongoing and future litigation against States. It is also likely to be referred to and cited in legal proceedings against private entities in support of arguments as to why private entities have not complied with their duties in relation to climate change risks. 

This development will draw the insurance and reinsurance industries, primarily in relation to non-life insurance, as also insurance lawyers, further into climate-related issues, including:

• Managing rising liability risks, especially in the context of general liability, professional indemnity and directors' and officers' coverage, with increased focus on fiduciary duties, and also dealing with additional claims as a result of rising liability risks.
• Prudential / regulatory authorities even more so requiring insurers to take account of risks in their own risk insolvency assessments, and to further integrate climate change risk into their supervision of the insurance industry and their own risk management processes.
• Revisiting policy wordings to better address and account for climate risks.
• Developing innovative products and risk management solutions, such as parametric insurance and alternative risk transfer mechanisms.
• Adjusting pricing to reflect increased risk and finding innovative alternative pricing solutions, while also working to expand market capacity and reduce the natural catastrophe protection gap, particularly in lower-income countries.

While many insurers / reinsurers are at the vanguard of understanding and evaluating climate change risk, the Opinion is likely to accelerate the industry's engagement with climate-related challenges. Notably, there is limited literature on this subject to date. 

In the context of the message hopefully conveyed in this article, it must be remembered that Africa is one of the regions most impacted by the adverse effects of climate change. This fact may serve to amplify the impact of the Opinion for African countries and their respective private actors.

*This article first appeared in Africa Ahead

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.