The District Court of The Hague’s decision in the matter of Milieudefensie et al. v. Shell, issued in May 2021, is an unprecedented ruling, holding a fossil-fuel company accountable for its alleged contribution to climate change. The decision provides ample opportunity to discuss climate change litigation against corporations, and the legal responsibility of such actors in the climate context more broadly.

Businesses are increasingly expected to consider the environmental and social impacts of their undertakings. In recent years, the focus has shifted to climate-change-related aspects of corporate behaviour. While climate change litigation against corporations continues to evolve globally, there is a growing debate with regard to directors’ duties: are directors expected to consider climate-change-related risks in their decision making? If yes, to what extent? The issue has received considerable attention from commentators in relation to common law jurisdictions, but so far it has been less discussed in relation to civil law countries. This article attempts to contribute to filling this gap by presenting a comparative analysis, with a main focus on claims based on corporate and securities law.

Climate change affects businesses significantly. Corporations are increasingly expected to consider the impacts of climate change on their business and, conversely, the impacts of their business on the global climate, which calls for adequate measures to reduce climate-related risks. Despite the widely accepted need for swift and quite drastic reductions of greenhouse gas emissions to limit global temperature rise in line with the Paris Agreement, specific and binding legal obligations for corporations mandating such reductions are scarce. Potentially filling this regulatory gap, international best practices for private sector enterprises to address climate change related issues are quickly emerging, and regulators are beginning to transpose them into binding legal frameworks. In addition, courts are increasingly called upon to review climate-related business decisions and strategies. Climate change reporting and, more recently, climate change due diligence are core aspects in this complex debate. This article explores and contextualizes these developments from a transnational perspective, with a main focus on Europe.

Given the absence of a comprehensive regulatory framework, international recommendations and best practices on corporate responsibility in the area of climate change are emerging. Due to their financial materiality, climate change risks have recently gained widespread recognition by international organizations and financial regulators. Accordingly, sound corporate governance requires companies to have regard to climate change issues. The authors propose the term ‘Corporate Climate Responsibility’ to frame various trends in legal doctrine and market developments.

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