Case study: Climate litigation & corporate accountability — a pilot that failed (and what it taught us)

By January 2025, climate litigation cases worldwide exceeded 2,666 filings across 55 jurisdictions—a 40% increase from 2022 levels according to the Grantham Research Institute's Global Climate Litigation Database. Yet in the Asia-Pacific region, where 60% of global greenhouse gas emissions originate, only 127 cases (4.8%) had been filed, with a mere 23% resulting in outcomes favourable to claimants. The stark disparity between regulatory ambition and legal enforcement reveals fundamental gaps in the corporate accountability infrastructure. In 2024, the Australian Securities and Investments Commission's high-profile failure to prosecute Santos Limited for alleged greenwashing—despite mounting a A$2.3 million investigation—crystallised the challenges facing climate litigation advocates across the region. The case demonstrated that even well-resourced regulators struggle to translate disclosure requirements into enforceable accountability mechanisms. For policy and compliance professionals operating in Asia-Pacific markets, understanding why this landmark enforcement action collapsed offers critical lessons for designing more robust corporate climate governance frameworks, aligning capex decisions with transition pathways, and navigating the rapidly evolving intersection of SEC climate rules, EU taxonomy requirements, and regional disclosure mandates.

Why It Matters

Climate litigation has emerged as a critical enforcement mechanism in the global transition architecture, operating where regulatory frameworks lag behind scientific imperatives. The International Energy Agency's 2024 World Energy Outlook projects that limiting warming to 1.5°C requires immediate capital reallocation: US$4.5 trillion annually in clean energy investment by 2030, accompanied by a 25% reduction in fossil fuel capex from 2023 levels. Yet corporate transition plans remain largely aspirational—a 2024 Transition Pathway Initiative analysis found that only 12% of Asia-Pacific companies in high-emitting sectors had transition plans aligned with Paris Agreement targets.

This implementation gap creates fertile ground for litigation. The legal theory underlying most corporate climate cases centres on disclosure adequacy: whether companies have accurately represented climate-related risks, transition strategies, and emissions trajectories to investors and stakeholders. The U.S. Securities and Exchange Commission's March 2024 climate disclosure rule—requiring registrants to disclose Scope 1 and 2 emissions, material climate risks, and transition plan expenditures—establishes a federal baseline that plaintiff attorneys are already leveraging in securities fraud claims. The EU's Corporate Sustainability Reporting Directive (CSRD), operative from January 2024, extends disclosure obligations to approximately 50,000 companies, with requirements for EU taxonomy-aligned capex reporting that creates new accountability vectors.

For Asia-Pacific compliance teams, the extraterritorial reach of these frameworks compounds regional disclosure mandates. Singapore's mandatory climate reporting for listed companies (effective 2025), Japan's ISSB-aligned disclosure requirements (2025), and Australia's proposed mandatory climate-related financial disclosures create overlapping compliance obligations. The Australian Santos case illustrates the enforcement challenges inherent in this fragmented landscape—regulatory agencies must prove not merely that disclosures were incomplete, but that they were materially misleading under applicable legal standards.

The financial stakes are substantial. A 2024 Commonwealth Climate and Law Initiative study estimated that Australian listed companies face A$12.4 billion in potential liability exposure from climate litigation, with financial services and extractive industries bearing 78% of identified risk. Corporate legal defence costs for climate cases average A$4.2 million per proceeding, creating significant budget implications for compliance functions regardless of litigation outcomes.

Key Concepts

Transition Plans and Capex Alignment: A corporate transition plan articulates the strategic pathway for aligning business models with climate targets, typically including interim emissions reduction milestones, capital expenditure commitments, and governance mechanisms. The Task Force on Climate-related Financial Disclosures (TCFD) framework—now incorporated into ISSB standards—requires disclosure of how organisations allocate capital toward transition objectives. Capex alignment refers to the proportion of capital expenditure directed toward activities compatible with stated climate goals. The EU taxonomy provides a classification system for assessing this alignment, requiring companies to report taxonomy-eligible and taxonomy-aligned capex percentages. In litigation contexts, discrepancies between stated transition ambitions and actual capital allocation patterns form the evidentiary basis for greenwashing claims. A company announcing net-zero targets while directing >80% of capex toward fossil fuel exploration creates documentary evidence of potential misrepresentation.

Materiality Thresholds in Climate Disclosure: Securities law distinguishes between information that is merely relevant and information that is "material"—meaning a reasonable investor would consider it important in making investment decisions. The SEC's 2024 rule applies a financial materiality standard: climate information must be disclosed when it would significantly affect financial statements or business operations. The EU's CSRD employs "double materiality," requiring disclosure of both financial impacts on the company and the company's impacts on environment and society. For litigation purposes, establishing materiality determines whether disclosure failures constitute actionable violations. The Santos case hinged partly on whether the company's net-zero pathway representations were material to investor decision-making—a question that proved difficult to resolve through regulatory enforcement.

Scope 3 Emissions and Value Chain Accountability: Scope 3 emissions encompass indirect emissions occurring in a company's value chain, including purchased goods, transportation, product use, and end-of-life treatment. For fossil fuel companies, Scope 3 emissions from product combustion typically represent >85% of lifecycle emissions, making them determinative for assessing climate impact. The SEC's 2024 rule requires Scope 3 disclosure only when material and included in emissions reduction targets—a significant narrowing from proposed requirements. The EU's CSRD mandates comprehensive Scope 3 reporting under the European Sustainability Reporting Standards (ESRS). Litigation strategies increasingly target Scope 3 representations, arguing that net-zero claims excluding product emissions are inherently misleading.

Regulatory Enforcement Discretion and Evidence Standards: Climate disclosure enforcement operates through administrative proceedings (regulatory agencies), civil litigation (private plaintiffs or attorneys-general), and quasi-judicial tribunals. Each forum applies different evidence standards and procedural requirements. Administrative enforcement typically requires proving violations occurred, while civil fraud claims demand evidence of scienter (intent to deceive) and investor reliance. The Santos case demonstrated that regulatory agencies may decline enforcement even when technical violations exist, exercising prosecutorial discretion based on resource constraints, precedential implications, or evidentiary weaknesses.

What's Working and What Isn't

What's Working

Strategic Litigation by NGO Coalitions: Environmental NGOs have developed sophisticated litigation strategies targeting both corporations and governments. ClientEarth's 2023 shareholder action against Shell's board—alleging directors breached fiduciary duties by failing to adequately manage climate risk—survived initial procedural challenges, establishing precedent for director-level accountability. In Australia, the Environmental Defenders Office secured a 2024 Federal Court ruling requiring environmental impact assessments to consider downstream emissions, expanding the scope of regulatory review for major projects.

Mandatory Disclosure Framework Convergence: The International Sustainability Standards Board's IFRS S1 and S2 standards, released in June 2023, are achieving rapid adoption across Asia-Pacific jurisdictions. By January 2025, Singapore, Japan, Hong Kong, Malaysia, and Australia had announced alignment timelines, creating consistent disclosure expectations that reduce compliance complexity and strengthen enforcement baselines. This harmonisation enables cross-jurisdictional comparability essential for institutional investor engagement.

Investor-Led Engagement and Escalation Pathways: Climate Action 100+, representing investors with US$68 trillion in assets under management, has secured transition plan commitments from 75% of focus companies since 2017. The initiative's 2024 benchmark assessment introduced quantitative capex alignment metrics, enabling systematic monitoring of implementation. When engagement fails, participating investors increasingly support shareholder resolutions and litigation—creating escalation pressure that reinforces disclosure compliance.

Jurisdictional Learning from European Precedents: The 2024 Dutch Supreme Court affirmation of the Milieudefensie v. Shell ruling—requiring Shell to reduce absolute emissions 45% by 2030—provides a template for Asia-Pacific litigation strategies. Australian and Japanese plaintiff groups have explicitly cited the decision in pending cases, adapting legal theories to local doctrinal frameworks. This cross-pollination accelerates the development of climate accountability jurisprudence.

What Isn't Working

Regulatory Enforcement Capacity Constraints: The Santos case exposed fundamental gaps in regulatory enforcement infrastructure. The Australian Securities and Investments Commission allocated A$2.3 million and 18 months to investigating Santos's net-zero representations, ultimately declining to prosecute due to evidentiary challenges. With limited specialist expertise in emissions accounting and climate science, regulators struggle to build cases meeting civil penalty standards. ASIC's annual enforcement budget of A$520 million must cover all corporate misconduct—climate greenwashing competes with financial fraud, market manipulation, and consumer protection priorities.

Temporal Mismatch Between Disclosure and Accountability: Climate disclosures address forward-looking projections—2030 targets, 2050 net-zero commitments, transition pathway assumptions. Legal accountability mechanisms are designed for historical misrepresentation. Proving that a company's 2024 transition plan disclosure was misleading requires demonstrating that management knew or should have known the stated pathway was infeasible at the time of disclosure. This evidentiary burden is exceptionally difficult to meet when plans depend on technological developments, policy frameworks, and market conditions that remain uncertain.

Fragmented Liability Frameworks Across Jurisdictions: Despite convergence in disclosure standards, liability frameworks remain jurisdiction-specific. A company listed in Australia, operating in Southeast Asia, and reporting under EU taxonomy requirements faces three distinct enforcement regimes with different materiality standards, limitation periods, and remedy structures. This fragmentation enables regulatory arbitrage and complicates plaintiff strategy. The Santos case was brought under Australian corporations law—a different framework would apply to the same conduct in European or American courts.

Private Litigation Cost Barriers: Class action securities fraud claims require substantial upfront investment in expert witnesses, document review, and procedural motions. In Australia, third-party litigation funding has partially addressed these barriers, but funders prioritise cases with high damages potential and clear liability pathways. Climate cases—involving novel legal theories, complex scientific evidence, and uncertain damages quantification—struggle to attract funding. The average climate securities case costs A$8-15 million to litigate through trial, with no recovery if unsuccessful.

Key Players

Established Leaders

ClientEarth — The London-based environmental law organisation has pioneered corporate accountability litigation across multiple jurisdictions since 2007. Their 2023 Shell board action established novel theories of director liability for climate governance failures. ClientEarth maintains offices in Brussels, Berlin, Warsaw, Beijing, and Los Angeles, with annual revenue exceeding £25 million supporting strategic litigation, policy advocacy, and capacity building for local legal groups.

Environmental Defenders Office (Australia) — Australia's largest environmental legal centre provides litigation support, policy analysis, and community legal education. EDO secured landmark rulings in Sharma v. Minister for the Environment (duty of care to young people) and Gloucester Resources v. Minister for Planning (climate impacts in project approval), establishing Australian precedents that influence regional jurisprudence.

Climate Action 100+ — The investor-led engagement initiative coordinates shareholder pressure on systemically important emitters. The coalition's Net Zero Company Benchmark assesses 171 focus companies against disclosure, governance, and implementation criteria, creating accountability metrics that complement litigation strategies. 2024 benchmark results showed only 18% of companies had fully aligned transition plans.

Sabin Center for Climate Change Law (Columbia University) — The academic research centre maintains the Global Climate Litigation Database, tracking cases across 55 jurisdictions. Their analytical resources—including litigation trend reports, jurisdictional assessments, and doctrinal analyses—provide essential infrastructure for plaintiff strategies and academic research.

Emerging Startups

Rho Impact (Singapore) — Provides AI-powered transition plan assessment tools enabling investors and litigators to evaluate capex alignment and emissions trajectory credibility. Their platform analysed >2,000 corporate transition plans in 2024, identifying discrepancies between stated commitments and capital allocation patterns that inform engagement and enforcement strategies.

Manifest Climate (Toronto/Sydney) — Offers climate risk scenario analysis and TCFD disclosure gap assessment. Their regulatory intelligence platform tracks disclosure requirements across 40 jurisdictions, helping compliance teams navigate fragmented frameworks. Series A funding of US$20 million in 2024 supported Asia-Pacific expansion.

TruCost (S&P Global Division) — Provides emissions data, carbon pricing analytics, and physical risk assessment used in litigation discovery and damages quantification. Their Scope 3 methodology has become a de facto standard for evaluating corporate emissions claims, with data cited in multiple pending cases.

Benchmark Gensuite (Melbourne) — Develops compliance management software integrating environmental, social, and governance obligations. Their climate litigation risk module helps legal departments monitor case developments and assess exposure based on disclosure practices and peer comparisons.

Key Investors & Funders

Omidyar Network — The philanthropic investment firm has deployed >US$50 million in climate litigation support since 2020, funding organisations including ClientEarth, the Sabin Center, and regional legal capacity building. Their theory of change emphasises legal accountability as essential infrastructure for transition enforcement.

European Climate Foundation — Provides €15 million annually for climate litigation and legal capacity building, with particular focus on European enforcement mechanisms and cross-jurisdictional coordination. ECF's litigation programme has supported precedent-setting cases in Netherlands, Germany, and Poland.

Grantham Foundation for the Protection of the Environment — Funds the Grantham Research Institute at LSE, which maintains the Global Climate Litigation Database and produces analytical resources supporting plaintiff strategies. Annual grant-making exceeds US$10 million for climate law research and advocacy.

IMM Investment (Australia) — Leading litigation funder that has backed Australian environmental class actions. Their 2024 assessment identified climate disclosure cases as an emerging portfolio category, with A$25 million allocated for case evaluation and potential funding.

Examples

1. ASIC v. Santos — The Failed Enforcement Action That Reshaped Australian Climate Litigation

In August 2023, the Australian Securities and Investments Commission announced an investigation into Santos Limited, Australia's second-largest oil and gas producer, following complaints that the company's 2020 Climate Change Report contained misleading representations about its net-zero pathway. The Australasian Centre for Corporate Responsibility had filed a formal complaint alleging that Santos's net-zero target was "factually incorrect" because it excluded Scope 3 emissions representing 95% of lifecycle carbon impact.

ASIC investigators spent 18 months reviewing 47,000 documents, interviewing Santos executives, and engaging climate science experts. The investigation cost A$2.3 million—representing significant allocation from ASIC's environmental, social, and governance enforcement budget. The core legal theory relied on Section 1041H of the Corporations Act (misleading conduct in financial services) and Section 12DA of the ASIC Act (false representations).

In February 2025, ASIC announced it would not pursue enforcement action. The Commission's statement cited evidentiary challenges: proving that Santos's net-zero pathway representations were misleading at the time of publication—rather than becoming unachievable due to subsequent developments—required evidence of management's contemporaneous knowledge that the pathway was infeasible. Internal documents showed Santos executives genuinely believed in the pathway's viability, even if external analysts questioned its assumptions.

The failure crystallised several lessons for compliance professionals. First, good-faith belief in disclosed projections provides substantial protection against enforcement, even when projections prove unrealistic. Second, regulatory enforcement requires significant specialist capacity that agencies may lack. Third, private litigation—with its different evidentiary standards and discovery tools—may prove more effective than administrative enforcement for climate accountability.

Post-investigation, Santos strengthened its transition plan disclosures, added Scope 3 emissions reduction targets, and increased climate governance board oversight—suggesting that investigation pressure, even without prosecution, generated compliance improvements.

2. Kiko Network v. JERA — Japanese Shareholder Activism Tests Corporate Climate Accountability

In June 2024, Kiko Network—Japan's leading climate advocacy organisation—filed Japan's first climate-focused shareholder derivative action against JERA Co., Inc., the world's largest buyer of liquefied natural gas. The litigation alleged that JERA's board breached fiduciary duties by pursuing thermal power expansion inconsistent with Japan's 2050 carbon neutrality commitment, exposing shareholders to stranded asset risk.

The case represented a strategic adaptation of European precedents to Japanese corporate law. Kiko Network's legal team collaborated with ClientEarth to develop arguments translating Dutch and British director duty frameworks into Japanese corporate governance doctrine. The complaint cited JERA's ¥2.1 trillion (US$14 billion) planned investment in new gas-fired generation—capex that would operate until 2060, beyond any Paris-aligned retirement timeline.

JERA's defence centred on Japan's energy security context and government policy alignment. The company argued that natural gas represented a necessary transition fuel given nuclear power uncertainty following Fukushima, and that its investment decisions reflected legitimate business judgment within Japan's Basic Energy Plan framework.

As of January 2025, the case remains pending in Tokyo District Court. Procedural motions have established that climate-related fiduciary duty claims are justiciable under Japanese law—itself a significant precedent. Regardless of outcome, the litigation has catalysed governance improvements: JERA established a Board Climate Committee in September 2024 and published enhanced transition plan documentation including scenario analysis across multiple temperature pathways.

The case demonstrates that litigation pressure can accelerate corporate governance adaptation even before judicial resolution. For Asia-Pacific compliance teams, JERA illustrates how domestic litigation can leverage international precedents while accommodating local legal and policy contexts.

3. REST Superannuation — Successful Settlement Establishes Australian Investment Duty Standards

In November 2024, REST Industry Super—managing A$92 billion in retirement savings—reached a landmark settlement in McVeigh v. REST, the case that catalysed Australian climate litigation. Mark McVeigh, a REST member, had filed claims in 2018 alleging the fund breached trustee duties by failing to adequately disclose and manage climate-related financial risks.

The settlement, valued at A$3.2 million (including legal costs), required REST to implement comprehensive climate governance reforms: portfolio-level emissions measurement and disclosure, Paris-aligned investment policies, engagement and divestment protocols for high-carbon assets, and annual reporting against TCFD recommendations. REST also committed to achieving net-zero portfolio emissions by 2050 with interim 2030 targets.

The case established that Australian superannuation trustees have fiduciary obligations encompassing climate risk management—a precedent affecting A$3.5 trillion in retirement savings. Following the settlement, the Association of Superannuation Funds of Australia issued guidance confirming that prudent investment requires climate risk integration, while APRA's prudential standards were revised to explicitly address climate-related financial risks.

For compliance professionals, REST illustrates the multiplicative impact of strategic litigation. A single A$3.2 million case generated industry-wide governance changes, regulatory guidance updates, and investment policy shifts affecting trillions in managed assets. The unit economics of climate litigation—when cases target systemic pressure points—can generate returns far exceeding direct settlement values.

Action Checklist

• Audit transition plan alignment with capex allocation: Compare stated emissions reduction targets against actual capital expenditure patterns. Identify discrepancies where >20% of capex flows to activities inconsistent with transition pathways, as these create documentary evidence supporting greenwashing allegations.

• Implement Scope 3 emissions measurement and disclosure protocols: Even where not legally required, voluntary Scope 3 disclosure reduces litigation exposure by demonstrating good faith and comprehensive emissions accounting. Engage third-party verification to establish measurement credibility.

• Establish board-level climate governance oversight: Create dedicated board committee or assign explicit climate responsibility to existing committees. Document decision-making processes to establish that directors fulfilled fiduciary duties in managing climate-related risks.

• Develop multi-jurisdictional disclosure compliance matrices: Map SEC, EU CSRD, ISSB, and regional disclosure requirements to identify overlapping obligations. Prioritise alignment with most stringent applicable standards to reduce fragmentation risk.

• Engage litigation funding and insurance assessments: Evaluate Directors & Officers insurance coverage for climate-related claims. Commission external assessment of litigation exposure based on disclosure practices, industry position, and jurisdictional risk factors.

• Monitor regulatory enforcement developments across key jurisdictions: Track ASIC, SEC, European Securities and Markets Authority, and regional regulator enforcement actions for disclosure precedents affecting your industry. Adjust compliance practices based on emerging enforcement priorities.

FAQ

Q: How do SEC climate disclosure rules interact with EU taxonomy requirements for Asia-Pacific companies?

A: Asia-Pacific companies with U.S. securities registrations must comply with SEC climate disclosure requirements for Scope 1, 2, and (where material) Scope 3 emissions, material climate risks, and climate-related financial impacts. Companies with EU operations exceeding €150 million revenue additionally face CSRD obligations including taxonomy-aligned capex reporting. The frameworks employ different materiality standards—SEC uses financial materiality while CSRD applies double materiality—creating potential disclosure asymmetries. Compliance teams should prepare consolidated climate data capable of satisfying both frameworks, using the more demanding EU standards as baseline. Japan's ISSB-aligned requirements (effective 2025) add a third layer, though ISSB's financial materiality approach aligns more closely with SEC than CSRD standards.

Q: What evidence standards apply to climate greenwashing claims in regulatory versus private litigation?

A: Regulatory enforcement typically requires proving that statements were false or misleading and that the company made them in connection with regulated activities. The Santos case demonstrated that regulators struggle when defendants can show good-faith belief in disclosed projections. Private securities fraud claims impose additional requirements: plaintiffs must prove scienter (knowledge or reckless disregard of falsity), materiality (a reasonable investor would consider the information important), reliance (investors acted on the misrepresentation), and damages (quantifiable financial loss). However, private litigation provides discovery tools—document subpoenas, depositions, expert testimony—that can uncover evidence unavailable to regulators. Class action mechanisms also aggregate claims, making cases economically viable despite individual damages being small.

Q: How should compliance teams prioritise climate litigation risk mitigation given limited resources?

A: Prioritisation should focus on exposure concentration. First, assess industry-specific risk: extractive industries, financial services, and carbon-intensive manufacturing face highest litigation probability based on 2024 case filing patterns. Second, evaluate disclosure vulnerability by comparing public commitments against operational reality—gaps between net-zero pledges and capex allocation create primary liability vectors. Third, consider jurisdictional exposure: companies subject to EU CSRD face stricter disclosure requirements and active enforcement; Australian-listed entities operate in a jurisdiction with demonstrated plaintiff activity. Resource allocation should emphasise proactive disclosure enhancement over reactive litigation defence, as the Santos case demonstrated that investigation costs and reputational damage occur regardless of prosecution outcomes.

Q: What role do litigation funders play in climate accountability cases, and how does funding availability affect case selection?

A: Third-party litigation funders provide capital for legal fees, expert witnesses, and court costs in exchange for a share of successful recoveries (typically 20-40%). In Australia, funders have backed environmental class actions including climate-related securities claims. However, funders apply commercial viability criteria: cases must demonstrate clear liability pathways, quantifiable damages, and defendant solvency. Climate cases present challenges on all three dimensions—novel legal theories, uncertain damages quantification, and long-duration proceedings. The A$25 million that IMM Investment allocated for climate case evaluation in 2024 signals growing funder interest, but funding remains concentrated in cases against large, asset-rich defendants with documented disclosure deficiencies. Smaller companies may face reduced litigation risk simply because plaintiffs cannot attract funding for cases against them.

Sources

1. Grantham Research Institute on Climate Change and the Environment. (2024). Global Trends in Climate Change Litigation: 2024 Snapshot. London School of Economics. Retrieved January 2025.

2. International Energy Agency. (2024). World Energy Outlook 2024. Paris: IEA Publications. Chapter 3: Investment Trends in the Energy Transition.

3. Transition Pathway Initiative. (2024). TPI State of Transition Report 2024: Asia-Pacific Edition. London: Grantham Research Institute.

4. U.S. Securities and Exchange Commission. (2024). The Enhancement and Standardization of Climate-Related Disclosures for Investors. Final Rule, Release No. 33-11275. March 2024.

5. Commonwealth Climate and Law Initiative. (2024). Climate Risk and Directors' Duties: Australia Assessment 2024. Sydney: CCLI.

6. Climate Action 100+. (2024). Net Zero Company Benchmark: 2024 Results and Analysis. London: Investor Initiatives Secretariat.

7. Sabin Center for Climate Change Law. (2025). Climate Case Chart Database. New York: Columbia Law School.

8. Australian Securities and Investments Commission. (2025). ASIC Statement on Santos Investigation Outcome. Media Release 25-015MR. February 2025.