A new era of climate accountability: unpacking the implications of new international advisory opinions for corporations

Marco Sella
Sella Torlaschi, Milan
m.sella@sella-torlaschi.com

In July 2025, the Inter-American Court of Justice (IACtHR) delivered a groundbreaking advisory opinion in which it unanimously found that the present situation of accelerated global temperature rise constitutes a climate emergency that can only be addressed adequately by urgent and effective mitigation and adaptation actions.

The Court considered that the obligation to guarantee the free and full exercise of the rights under the American Convention on Human Rights ‘extends beyond the relationship between state agents and the people subject to its jurisdiction, encompassing also the duty, in the private sphere, to prevent third parties from violating the protected rights’,^[1] and called on business enterprises to play an ‘essential role’ in addressing the climate emergency.^[2]

Weeks later, the International Court of Justice (ICJ) found unanimously that all states have a duty under customary international law to prevent significant harm to the environment in the context of climate change. This duty requires states to (among other things) put in place rules and measures which are designed to ‘achieve the deep, rapid, and sustained reductions of GHG emissions that are necessary for the prevention of significant harm to the climate system’.^[3] The ICJ also specified that these measures ‘must regulate the conduct of public and private operators within the States’ jurisdiction or control and be accompanied by effective enforcement and monitoring mechanisms to ensure their implementation’.^[4]

While these two opinions are not themselves legally binding, they offer authoritative statements on the current state of international law. Together, they help clarify state requirements to mitigate and adapt to climate change and the legal consequences of inaction, with important flow on impacts for corporations and investors.  

In a webinar earlier this month, the IBA Oil & Gas Law Committee supported by the Business Human Rights Committee, Power Law Committee, Energy, Environment, Natural Resources and Infrastructure Law Section (SEERIL), Asia Pacific Regional Forum, African Regional Forum and Legal Policy & Research Unit brought together legal experts from Africa, Asia, Oceania, the EU, Latin America, North America and beyond, to unpack what these opinions mean for businesses and the lawyers who advise them.

This article summarises highlights from the conversation. Watch a recording of the webinar here.

Two courts, two different mandates and approaches

Opening the session and outlining the key findings made by the two courts, Marco Sella (Secretary-Treasurer, Oil and Gas Law Committee), observed that the advisory opinions arrived at a critical moment, amid growing debate about the effectiveness of existing climate and environmental treaties. In particular, he underlined how, despite the different areas in which they exercise their jurisdiction, the two Courts reached similar conclusions regarding the responsibilities that states are called upon to assume with regard to the effects of climate change.

Considering the approaches of the two courts, Clara Pacce Pinto Serva (Vice Chair, Business Human Rights Committee) observed that the IACtHR has the power to advance the human rights agenda rather than merely interpret it. Its findings are binding on the states within its jurisdiction, and influence the reasoning of domestic courts. By way of example, Clara cited a milestone 2018 decision of Brazil’s Supreme Court ruling which, relying on reasoning from the IACtHR, ruled that transgender individuals were allowed to change their official legal name and gender.

Clara emphasised that the IACtHR opinion explicitly extends beyond states to private actors, calling on companies to conduct human rights and climate due diligence in line with the UN Guiding Principles on Business and Human Rights (UNGPs). She observed that as a consequence of the opinion, states and corporations within the jurisdiction of the IACtHR must now perform integrated risk analyses on the intersection between climate change and human rights.

Clara noted that by contrast, the ICJ’s opinion focused on reaffirmed existing obligations rather than creating new ones. In Clara’s view, both opinions will likely stimulate new climate litigation, and influence legislative and corporate accountability going forward.

Heightened liability risks for states, corporations and financial institutions

Dominique Hogan-Doran SC (Chair, Bar Issues Commission Regulation Committee) discussed how the ICJ’s findings reverberate through domestic legal and corporate frameworks.

Dominique highlighted two critical findings of the ICJ. First, the ICJ found that failure of a state to take appropriate action to protect the climate system from GHG emissions including through fossil fuel production, fossil fuel consumption, the granting of fossil fuel exploration licenses or the provision of fossil fuel subsidies may constitute an internationally wrongful act which is attributable to that state. Second, the ICJ observed that a state’s failure to regulate the activities of private actors may amount to a breach of that state’s duty to exercise regulatory due diligence.

Dominique observed that together, these findings introduce heightened liability risks for states and the corporations in their jurisdiction or control. This could prompt significant legislative reform and state review of environmental laws especially for major emitters such as Australia which is the world’s second global emitter and among the largest exporters of coal and gas. The implications extend beyond energy sectors: financial institutions such as banks, pension funds and insurance companies face new expectations to assess, measure and disclose climate-related financial risks. These are no longer optional ESG concerns but inform the exercise of fiduciary duties. Regulators now expect directors and trustees to act in beneficiaries’ best interests by integrating climate risk into investment decisions.

Dominique further noted emerging transition risks as economies move toward low-carbon pathways. The ICJ opinion could catalyse the introduction of emission disclosure requirements, enhanced scrutiny of financing, new environmental impact assessments and even climate-linked taxation to fund state obligations. In addition, she pointed out, this transition also creates positive investment opportunities in sustainable and low-carbon initiatives. 

Raising the bar for directors and fiduciaries

Lisa DeMarco (Senior Partner and CEO, Resilient LLP) highlighted that the ICJ’s finding that states could be held responsible for the actions or inactions of corporations within their jurisdiction or control signals a major development for corporate governance, expanding how materiality and duty of care are assessed. In the wake of the opinion, company directors must now evaluate the long-term, intergenerational impact of corporate decisions, not just short-term financial outcomes, when discharging their duties as directors and fiduciaries.

Lisa also highlighted that the ICJ’s emphasis on the link between climate change and human rights could encourage states – particularly those with constitutional environmental rights – to further their actions to address climate change, and could also bolster arguments made against states and corporations who have failure to take such action. Implications for investor–state dispute settlement could also be significant.

‘The decisions provide considerable impetus for countries to enact and enforce domestic climate laws and those that do nothing are more likely to be subject to investor-state and other climate-related disputes,’ adds DeMarco  

Impetus for stronger climate law and policy making

Lisa highlighted regulatory measures against corporations such as carbon pricing regimes and climate risk disclosure frameworks as important elements for states in considering whether they had discharged their obligations to develop and implement 1.5-aligned Nationally Determined Contributions under the Paris Agreement, as is called for by the ICJ. 

Offering a perspective from Singapore, Elsa Chen (Co-Head, Competition & Foreign Investment Review Practice and ESG & Public Policy Practice, Allen & Gledhill LLP) highlighted that while Singapore’s emissions are modest, its exposure to climate risk is significant. Elsa noted that the advisory opinions support Singapore’s trajectory of gradual legislative adaptation, data-driven policymaking and regional cooperation.

She highlighted that the ICJ opinion gives impetus for the Singapore Government’s planned higher carbon taxes within the next year, expanded carbon credit trading and stronger climate disclosure requirements – each of which will have significant impacts for corporations both within and outside Singapore.

Further, noting Singapore’s regional corporate reach, she cautioned companies to evaluate cross-border climate exposure within their supply chains and to track climate regulatory developments in neighbouring jurisdictions like Indonesia and the Philippines as all states work to align their regulatory frameworks with the requirements of the advisory opinions.

Laying the groundwork for future advisory opinions

Wangui Kaniaru (Partner, Anjarwalla & Khanna LLP / Chair, IBA Law Firm Management Committee ESG Subcommittee) praised the ICJ opinion for establishing a compelling basis for scientific evidence of climate change causes and impacts based on the information and findings of the Intergovernmental Panel on Climate Change (IPCC). The decision reframes the debate from ‘if’ states and corporations must act to ‘how’, emphasising the scientific basis for action to secure the right to a clean and healthy environment as a justiciable human right.

She noted that similar issues are currently before the African Court on Human and Peoples’ Rights, which has been asked to opine on (among other things), African States’ obligations to safeguard individuals’ and peoples’ rights in the context of climate change, and states’ responsibilities to ensure that climate change treaties are implemented by multinational corporations and non-state actors operating in Africa.

The ICJ opinion, Wangui observed, provides a baseline vocabulary for African lawyers and policymakers to strengthen domestic and regional regulatory frameworks.

Wangui further discussed the challenge for African countries whose development trajectories rely on increased emissions. The advisory opinions and the ongoing African Court proceedings could help ensure that NDCs remain ambitious yet realistic, balancing growth with sustainability.

She highlighted that IFRS S1 and S2 sustainability standards, already adopted in Nigeria, Kenya and several African countries, are catalysing conversations on corporate climate risk and due diligence, showing how international legal opinions can trigger domestic corporate decarbonisation discussions and transition pathways.

Looking ahead to COP30 and the IBA Annual Conference

In closing, the panellists agreed that these advisory opinions mark a turning point in global climate governance. They transform moral imperatives into legal duties, creating a strong expectation that states and corporations act urgently to mitigate and adapt to climate change in a manner consistent with upholding human rights.

The opinions provide impetus for increased regulation and international and domestic litigation, mainstream the importance of climate risk as central to corporate legal compliance, fiduciary and directors’ duties, as well as sustainable business strategy. Lawyers must stand ready to help businesses navigate these developments.

In concluding remarks, John Vellone (Communications Officer, Power Law Committee) highlighted that these discussions would continue at the IBA Annual Conference in Toronto in early November 2025, where climate change featured prominently across many sessions. Session topics included climate litigation, the implications of climate change for maritime and water law and evolving questions of risk allocation and force majeure against the backdrop of increasingly abnormal weather events. The conference also explored challenges linked to integrating carbon credit markets into legal practice and how decarbonisation and climate resilience are shaping the next generation of infrastructure projects. As John highlighted, these sessions provided valuable opportunities for lawyers to further examine how climate change continues to redefine global legal and commercial landscapes.

The ICJ advisory opinion has proven to be a central point of focus on the international stage at UNFCCC COP30 in Belem (see ‘Climate crisis: ICJ opinion and finance set to dominate COP30 talks’), with UN experts releasing a statement at the beginning of the conference calling on states to negotiate in good faith and urgently implement the UNFCCC and Paris Agreement in accordance with the requirements laid out in the opinion. Both the ICJ and IACtHR opinions were subject to discussion in an official side event during the conference examining how law firms, legal associations and practitioners can support implementation of government and corporate climate goals, convened by the IBA in collaboration with the American Bar Association and Federal Council of the Brazilian Bar Association.

Discussions continued at this year’s annual Climate Law and Governance Day, where legal experts from the IBA Water Law Committee and IBA Bar Issues Commission joined academic experts to explore the impacts of the opinions for corporations and legal practitioners, and the role of bar associations in equipping lawyers to advise clients effectively.

This article was prepared with the assistance of the IBA Legal Policy & Research Unit (LPRU), with particular thanks to LPRU intern Ogonna Onwudiegwu.

Notes