Background
On March 29, 2023, the United Nations General Assembly asked the International Court of Justice to issue an advisory opinion on states' obligations under international law relating to climate change. The request was led by several states, particularly those most vulnerable to the effects of climate change, such as the Pacific island nation of Vanuatu.
The court was asked to address two key questions:
- What legal obligations do states have under international law to prevent climate change and protect the environment?
- What are the legal consequences for states that breach those obligations and cause significant harm to other states?
On July 23, 2025, the court issued its highly anticipated advisory opinion. This landmark development goes further than any previous international instrument in setting out state responsibility for environmental harm and paves the way for states to bear financial liability for damage caused to other states. Although not legally binding, the advisory opinion is expected to be highly persuasive as soft law, influencing the interpretation and application of international legal principles in both domestic and international law.
We expect the advisory opinion to increase legal exposure for companies in high-emission sectors, lead to stricter government climate policies, and for states to use it in investor-state disputes as a pretext for potentially unlawful conduct.
Key Findings
The court's advisory opinion provides important clarification of states' legal obligations in relation to climate change. Key takeaways include:
- Duty to Prevent Harm: states are under a legal obligation to prevent significant harm to the environment of other states. They have a legal obligation to act where there is a risk of future harm, even if none has yet occurred, or where existing harm may worsen.
- Cumulative Conduct Can Trigger Liability: A state may be liable even if its individual actions, viewed in isolation, are not significant. This is important because it prevents states from avoiding liability by arguing that they contributed only in part to the environmental harm.
- Obligation of Due Diligence: States must exercise due diligence and take all available measures to prevent significant environmental harm to other states, including harm caused by private businesses. They have a legal duty to adopt and enforce adequate regulatory frameworks. Accordingly, liability arises not from the mere occurrence of harm, but from a state's failure to prevent it due to a lack of due diligence.
- Environmental Human Rights: The court found that the right to a clean, healthy, and sustainable environment is inseparable from, and essential to, the enjoyment of other fundamental human rights. This includes the rights to life, health, and an adequate standard of living.
- Consequences of Breach: When a state breaches
these obligations, it may have to:
- cease the harmful conduct if ongoing;
- provide assurances of non-repetition; and
- make full reparation for the damage caused.
- Causation in Climate Claims: The court set out a framework for establishing causation in state-to-state claims and emphasized that complexity should not prevent the imposition of liability. This is significant, as causation has often been regarded as an insurmountable hurdle in such cases.
What does this mean for your business?
- Increased Litigation Risk
In the short term, states with significant environmental footprints face the greatest legal exposure because the advisory opinion primarily concerns the obligations of states toward other states.
However, the court's findings will likely influence domestic litigation:
- Claimants and litigation funders have already shown significant interest in climate change related cases, with 226 new cases filed globally in 2024 alone, this trend is expected to continue (See "Global Trends in Climate Change Litigation: 2025 Snapshot" accessed here). Although the advisory opinion is not binding, it will encourage claimants to pursue novel environmental claims against businesses. In doing so, claimants can rely on the advisory opinion to shape their arguments, particularly on key issues such as causation, where it provides a useful framework that could be applied to private litigation claims by analogy.
- In the medium to long term, the advisory opinion will also lend support to administrative law claims under domestic law that seek to put legal pressure on states to tighten regulation of carbon intensive businesses. The effect of this is likely to be to incentivise further litigation seeking to block projects on rule of law grounds.
2.Stricter Regulatory Environment
The advisory opinion may lead to a stricter regulatory environment for businesses that operate in high-emission sectors such as energy and mining. In particular, businesses can expect stricter licensing conditions for high-emission projects, more rigorous climate impact assessments as part of the regulatory approval process, and tighter environmental planning requirements.
Businesses may also face increased pressure to decarbonise operations, adopt cleaner technologies, or fund offsetting initiatives.
3.Relevance to Investor-State Disputes
The advisory opinion may be used by some states as a pretext to justify politically motivated regulatory action. For example, states may frame measures as necessary to comply with the advisory opinion to justify seizing control of strategically important assets or to impose stricter environmental conditions.
States may also rely on the advisory opinion in defence of investment treaty claims, asserting that conduct which might otherwise appear politically motivated was a legitimate exercise of sovereign powers in pursuit of international environmental obligations.
Conclusion
The ICJ's advisory opinion represents a significant step toward increased legal scrutiny of states' environmental practices. Although the opinion is not binding and does not directly apply to private entities, it is likely to have indirect but material implications for businesses, particularly those operating in high-emission sectors. Companies should proactively monitor legal and regulatory developments and prepare for heightened litigation risk.
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.
