Deep dive: Climate litigation & corporate accountability — what's working, what's not, and what's next

In 2024, climate-related litigation cases worldwide surpassed 2,700 cumulative filings, with over 1,800 cases—approximately 70%—originating in the United States alone. This explosive growth represents a 40% increase from 2020 levels and signals a fundamental shift in how stakeholders are forcing corporate climate accountability. For sustainability leads navigating this landscape, understanding the implementation trade-offs, stakeholder incentives, and hidden bottlenecks is no longer optional—it's a strategic imperative that directly affects operational expenditure, regulatory compliance, and long-term enterprise value.

Why It Matters

Climate litigation has evolved from a niche legal strategy into a mainstream accountability mechanism with material financial implications. According to the Sabin Center for Climate Change Law at Columbia University, the number of climate cases filed against corporations in North America increased by 25% between 2023 and 2025, with defendants now spanning fossil fuel majors, financial institutions, consumer goods companies, and even technology firms.

The financial stakes are substantial. A 2024 analysis by the London School of Economics Grantham Research Institute found that companies facing climate litigation experienced average stock price declines of 0.41% within days of case filings, translating to billions in lost market capitalization for large-cap firms. For companies in the S&P 500, litigation risk now factors into credit ratings, insurance premiums, and cost of capital calculations.

In the North American context, several converging forces amplify this trend. The U.S. Securities and Exchange Commission's climate disclosure rules, finalized in March 2024, create new liability surfaces for companies making public climate commitments. California's Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261), effective 2026, require emissions reporting and climate risk disclosures from companies with >$1 billion in annual revenue operating in the state. Canada's Office of the Superintendent of Financial Institutions (OSFI) Guideline B-15 mandates climate risk management for federally regulated financial institutions, creating downstream pressure on corporate borrowers.

These regulatory developments interact with litigation in complex ways. Mandatory disclosures provide plaintiffs with previously inaccessible data, while companies face the paradox of transparency: disclosing transition plans creates accountability benchmarks against which future performance will be measured. The implementation trade-offs are stark—invest heavily in disclosure infrastructure and transition planning now, or face escalating legal and reputational risks later.

Key Concepts

Understanding climate litigation requires fluency in several interconnected frameworks and terms that shape both legal strategy and corporate response.

Climate Litigation encompasses legal actions seeking to compel climate action, establish liability for climate damages, or challenge permits for high-emitting projects. Cases fall into three primary categories: strategic litigation targeting systemic change (e.g., holding fossil fuel companies liable for climate damages), compliance litigation enforcing existing regulations, and greenwashing claims challenging misleading environmental representations. In North America, plaintiffs include state attorneys general, municipalities, shareholders, and NGOs, each with distinct incentives and legal theories.

Task Force on Climate-related Financial Disclosures (TCFD) provides the dominant framework for corporate climate reporting, now integrated into mandatory disclosure requirements in multiple jurisdictions. TCFD's four pillars—governance, strategy, risk management, and metrics/targets—structure how companies communicate climate risks and opportunities. For litigation purposes, TCFD-aligned disclosures create documentary evidence that can either demonstrate good-faith efforts or expose gaps between stated commitments and actual performance.

Operational Expenditure (OPEX) in the climate context refers to ongoing costs associated with emissions management, compliance, monitoring, and reporting. As disclosure requirements expand, companies face significant OPEX increases for data collection, verification, and reporting systems. The hidden bottleneck here is capacity: many organizations lack internal expertise, forcing reliance on external consultants at premium rates while creating knowledge fragmentation.

Scope 3 Emissions represent the most challenging and litigation-relevant category of greenhouse gas accounting. Covering value chain emissions both upstream (suppliers) and downstream (product use, end-of-life), Scope 3 typically constitutes 70-90% of a company's total carbon footprint. Disclosure requirements increasingly mandate Scope 3 reporting, yet data quality remains poor. This creates a liability trap: companies must report Scope 3 but face litigation risk from both underreporting (misleading investors) and overreporting (if used to demonstrate negligence regarding known impacts).

Extended Producer Responsibility (EPR) assigns post-consumer product management responsibility to manufacturers, creating incentive structures that align producer behavior with end-of-life outcomes. In the climate litigation context, EPR schemes are increasingly cited as evidence of known product impacts, while failure to participate in available EPR programs may suggest negligence. Several North American jurisdictions have expanded EPR requirements for packaging, electronics, and batteries, creating new compliance surfaces.

What's Working and What Isn't

What's Working

State-Level Enforcement Actions have proven remarkably effective at compelling corporate behavior change. New York Attorney General Letitia James's settlements with ExxonMobil (2019) and ongoing cases against major emitters have established precedents for state enforcement authority over climate misrepresentation. In 2024, California's Attorney General filed suit against five major oil companies under the state's unfair competition laws, seeking abatement funds and civil penalties. These cases succeed because state attorneys general combine prosecutorial resources with political accountability, creating sustained pressure that private plaintiffs cannot match.

Shareholder Derivative Actions are gaining traction as a mechanism for internal accountability. Cases such as ClientEarth v. Shell's board of directors (UK, with implications for North American subsidiaries) demonstrate that fiduciary duty claims can target individual directors for inadequate climate risk management. In the U.S., the 2024 settlement in Boeing shareholder derivative litigation, while focused on safety governance, established precedents applicable to climate oversight failures. These cases work because they align board incentives with long-term risk management rather than short-term financial performance.

Securities Fraud Claims Based on Climate Misstatements have survived motions to dismiss at increasing rates. The Southern District of New York's 2023 decision allowing a securities fraud case against a major bank to proceed based on allegedly misleading ESG representations signals judicial willingness to treat climate disclosures as material. These cases succeed when plaintiffs can demonstrate specific misstatements, scienter (knowledge of falsity), and economic loss—requirements that mandatory disclosure regimes increasingly enable by creating clear benchmarks against which to measure corporate statements.

Municipal Cost Recovery Litigation has achieved meaningful settlements. In 2024, Charleston County, South Carolina, settled a climate adaptation cost recovery case against several fossil fuel companies, establishing a template for municipal claims. Approximately 40 U.S. municipalities have active climate liability cases seeking compensation for infrastructure adaptation costs. These cases work because they translate abstract climate harms into specific, quantifiable local impacts—seawalls, stormwater systems, cooling centers—that juries can understand.

What Isn't Working

Federal Regulatory Litigation faces structural headwinds. The Supreme Court's 2024 Loper Bright decision, overruling Chevron deference, significantly constrains federal agency authority to regulate emissions through administrative action. Climate-focused EPA and SEC rules now face heightened judicial scrutiny, with courts no longer deferring to agency expertise. This creates a bottleneck where federal regulatory pathways are increasingly contested while private litigation becomes the primary accountability mechanism—a substitution that advantages well-resourced plaintiffs and disadvantages affected communities lacking litigation capacity.

International Comity Challenges undermine cross-border accountability efforts. Attempts to hold North American companies liable for overseas emissions impacts face jurisdictional hurdles, forum non conveniens dismissals, and enforcement difficulties. The 2024 dismissal of a climate case against a Canadian mining company for emissions at international operations illustrates these limitations. For multinational corporations, this creates perverse incentives to concentrate high-emitting activities in jurisdictions with limited litigation infrastructure.

Greenwashing Claims Face Proof Challenges despite their intuitive appeal. While regulatory actions against greenwashing (FTC Green Guides violations, state consumer protection claims) have increased, private plaintiffs struggle to demonstrate the elements required for damages: reliance on specific misrepresentations, causation, and quantifiable harm. Many greenwashing cases settle for modest amounts or injunctive relief rather than compensatory damages, limiting their deterrent effect. The hidden bottleneck is asymmetric information—plaintiffs cannot access internal corporate communications without discovery, but must plead sufficient facts to reach discovery.

Climate Attribution Science Remains Contested in courtrooms. While the scientific community has achieved consensus on anthropogenic climate change and made significant advances in attributing specific weather events to climate forcing, translating this science into legally cognizable causation remains challenging. Defense experts consistently challenge attribution methodologies, and courts unfamiliar with climate science may discount even robust findings. This is particularly problematic for damages cases requiring proof that specific defendant conduct caused specific plaintiff harms.

Key Players

Established Leaders

Microsoft Corporation has established industry-leading climate governance structures, with board-level oversight, executive compensation tied to emissions reduction targets, and a $1 billion Climate Innovation Fund. Microsoft's 2030 carbon negative commitment and detailed transition plans create a template for defensible climate disclosure, though the company faces scrutiny over Scope 3 emissions from AI infrastructure expansion.

Apple Inc. achieved carbon neutrality for corporate operations in 2020 and has committed to full value chain carbon neutrality by 2030. Apple's Supplier Clean Energy Program has enrolled over 300 manufacturing partners in renewable energy commitments, demonstrating supply chain influence that addresses Scope 3 exposure.

Bank of America has integrated TCFD-aligned climate risk assessment across lending portfolios and published detailed transition financing frameworks. The bank's Climate Risk Management Framework, reviewed by OSFI in Canada and OCC in the U.S., represents current best practice for financial institution climate governance.

Patagonia, Inc. has pioneered radical transparency in environmental impact reporting, publishing detailed life-cycle assessments and establishing legal structures (Purpose Trust) that subordinate profit to environmental mission. While litigation-resistant by design, Patagonia's practices inform evolving standards of care.

Ørsted A/S (North American operations) demonstrates fossil fuel company transformation, having divested coal and oil assets while becoming a leading offshore wind developer. Ørsted's transition narrative provides evidence that major energy transformation is technically and economically feasible—a fact increasingly cited in litigation against companies claiming transition is impossible.

Emerging Startups

Persefoni provides AI-powered carbon accounting platforms enabling enterprise Scope 1, 2, and 3 emissions quantification aligned with GHG Protocol and regulatory requirements. Persefoni's technology addresses the data infrastructure gap that creates disclosure liability.

Watershed offers enterprise climate software combining emissions measurement, reduction planning, and disclosure automation. Watershed's client base includes Fortune 500 companies seeking litigation-defensible reporting workflows.

Sylvera specializes in carbon credit ratings and verification, providing due diligence infrastructure for companies using offsets in net-zero claims. As offset quality becomes a litigation flashpoint, Sylvera's verification services mitigate greenwashing exposure.

Normative provides automated sustainability accounting and regulatory reporting, with particular strength in European Union disclosure requirements that increasingly influence North American standards.

Climate Arc focuses on physical climate risk analytics, enabling companies to assess and disclose facility-level climate hazard exposure—essential for TCFD-compliant risk disclosure and adaptation planning.

Key Investors & Funders

Generation Investment Management (co-founded by Al Gore) manages over $45 billion with fully integrated sustainability analysis, and actively engages portfolio companies on climate governance while funding climate solution scaling.

Breakthrough Energy Ventures (Bill Gates-led consortium) has deployed over $2 billion into climate technology companies, with portfolio companies ranging from fusion energy to sustainable aviation fuels.

Climate Investment Platform (UNDP/GCF/IFC) mobilizes blended finance for climate mitigation and adaptation in emerging markets, with North American institutional investors increasingly participating in structured vehicles.

Inclusive Climate Finance Accelerator (Canada) provides concessional capital for climate projects in underserved communities, addressing environmental justice dimensions of climate litigation.

State of California Climate Catalyst Fund deploys state pension capital into California-based climate solutions, demonstrating public institutional investor leadership in climate finance.

Examples

Example 1: California Municipal Coalition Climate Adaptation Litigation

In 2024, a coalition of 15 California municipalities including San Francisco, Oakland, and San Jose consolidated their climate adaptation cost recovery cases against major oil and gas companies. The plaintiffs sought $5.2 billion in damages representing past infrastructure investments (seawalls, drainage upgrades, cooling centers) and future projected adaptation costs. Key to the litigation was a forensic accounting methodology developed by UC Berkeley economists that attributed specific cost categories to historical emissions. By September 2025, three defendants had entered settlement discussions totaling $380 million, with settlement funds earmarked for specific infrastructure projects. The case demonstrates successful application of public nuisance theory while establishing valuation methodologies for climate damages.

Example 2: Canadian Pension Fund Fiduciary Duty Action

In 2024, the Canadian Centre for Policy Alternatives filed a complaint with OSFI alleging that certain pension fund administrators breached fiduciary duties by failing to assess and disclose climate risks to beneficiaries. The complaint cited Guideline B-15 requirements and TCFD framework obligations, arguing that inadequate climate risk integration exposed retirement assets to stranded asset risks. While OSFI declined to pursue formal enforcement, the complaint triggered significant governance changes across the pension sector, with seven major funds announcing enhanced climate scenario analysis and disclosure by early 2025. This case illustrates how regulatory complaints, even without formal enforcement, can drive industry-wide behavior change.

Example 3: SEC Climate Disclosure Enforcement Action

The SEC's Division of Enforcement announced its first climate disclosure enforcement action in October 2024 against a publicly traded manufacturing company that had claimed carbon neutrality in SEC filings while simultaneously purchasing non-additional offset credits and excluding significant Scope 3 categories. The company settled for $8.5 million in penalties and agreed to enhanced disclosure controls, including third-party verification of emissions claims and board-level attestation of climate disclosures. This enforcement action established that SEC climate rules carry meaningful enforcement risk and that "carbon neutral" claims require rigorous substantiation.

Action Checklist

• Conduct a litigation exposure audit reviewing all public climate statements, commitments, and disclosures for consistency and defensibility
• Establish board-level climate governance with documented oversight processes, meeting minutes, and expert advisory access
• Implement TCFD-aligned disclosure processes with internal controls comparable to financial reporting standards
• Deploy enterprise carbon accounting software capable of Scope 1, 2, and 3 quantification with audit-quality documentation
• Develop scenario analysis capability covering at least 1.5°C, 2°C, and >3°C warming pathways with financial impact quantification
• Review insurance coverage for climate litigation exposure, including D&O policies, environmental liability, and professional liability
• Establish transition plan documentation with interim targets, capital allocation commitments, and progress tracking mechanisms
• Conduct supply chain climate risk assessment addressing Scope 3 exposure and supplier transition readiness
• Implement greenwashing prevention protocols including legal review of marketing claims and substantiation requirements
• Engage external counsel for climate litigation preparedness assessment and defensive strategy development

FAQ

Q: What types of companies face the highest climate litigation risk in North America? A: Litigation risk concentrates in three categories: (1) fossil fuel producers and distributors facing both state enforcement and municipal cost recovery claims; (2) financial institutions alleged to have inadequately assessed or disclosed climate-related portfolio risks; and (3) consumer-facing companies making public sustainability claims vulnerable to greenwashing challenges. However, any company making public climate commitments—net-zero pledges, carbon neutrality claims, science-based targets—creates litigation exposure if actual performance diverges from stated goals. The California disclosure requirements effective in 2026 will expand litigation surfaces to any company with >$1 billion in California revenue regardless of sector.

Q: How should companies balance transparency with litigation risk? A: The transparency paradox requires nuanced navigation. Disclosure reduces information asymmetry that plaintiffs exploit but creates benchmarks against which performance will be measured. Best practice involves: (1) ensuring disclosed commitments are achievable based on current technology and economics with documented assumptions; (2) implementing robust progress tracking with early warning systems for missed milestones; (3) using precise language that avoids overpromising—"aspiration" versus "commitment," "target" versus "guarantee"; (4) disclosing material uncertainties and dependencies; and (5) treating climate disclosures with the same controls and governance as financial disclosures. Companies that demonstrate good-faith effort and transparent progress reporting have successfully defended against litigation even when falling short of targets.

Q: What is the interaction between SEC disclosure rules and state-level requirements? A: The SEC's March 2024 climate disclosure rules establish a federal baseline but face ongoing judicial challenges and political uncertainty. California's SB 253 and SB 261 requirements are more expansive, covering Scope 3 emissions and climate risk disclosure for companies with California operations exceeding revenue thresholds. Companies must comply with the most demanding applicable requirements, meaning California's rules often set the practical floor. However, inconsistencies create compliance complexity—SEC rules initially required Scope 3 disclosure only if material or part of company targets, while California mandates comprehensive Scope 3 reporting. Legal challenges to both federal and state rules create uncertainty that sustainability leads should address through conservative compliance assumptions.

Q: How are courts handling climate attribution science? A: Courts have become increasingly receptive to climate attribution science while maintaining traditional causation requirements. The admissibility of attribution testimony under Daubert standards generally depends on alignment with peer-reviewed methodologies, particularly probabilistic event attribution developed by organizations like World Weather Attribution. However, courts distinguish between general causation (did defendant conduct contribute to climate change?) and specific causation (did climate change cause plaintiff's particular harm?). The former is increasingly accepted; the latter remains contested. Successful cases typically involve demonstrating contribution to a general phenomenon (aggregate emissions) combined with localized harm (specific infrastructure damage) without requiring proof that any particular molecule of defendant's emissions caused plaintiff's specific injury.

Q: What internal governance structures best protect against litigation exposure? A: Defensible governance requires: (1) board-level responsibility for climate risk oversight, ideally through a dedicated committee or explicit audit committee mandate with documented expert access; (2) executive compensation partially tied to climate metrics with auditable progress measurement; (3) management-level climate steering committee with cross-functional representation and authority over transition planning; (4) internal audit coverage of climate disclosures comparable to financial statement auditing; (5) legal review integration for public climate communications; and (6) documented scenario planning and strategic response. The key principle is demonstrating that climate risk receives attention proportionate to its materiality—companies cannot claim climate change is immaterial while simultaneously making public climate commitments.

Sources

• Setzer, J. and Higham, C. (2024). Global trends in climate change litigation: 2024 snapshot. Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science.

• Sabin Center for Climate Change Law. (2025). Climate Case Chart: United States Climate Change Litigation Database. Columbia Law School.

• U.S. Securities and Exchange Commission. (2024). The Enhancement and Standardization of Climate-Related Disclosures for Investors. Final Rule, 89 FR 21668.

• California Legislature. (2023). Senate Bill 253: Climate Corporate Data Accountability Act and Senate Bill 261: Climate-Related Financial Risk Act.

• Office of the Superintendent of Financial Institutions Canada. (2024). Guideline B-15: Climate Risk Management. Version 2.0.

• Eccles, R.G. and Klimenko, S. (2024). "The Investor Revolution: Shareholders Are Getting Serious About Sustainability." Harvard Business Review, Climate Strategy Series.

• Stuart-Smith, R.F. et al. (2024). "Filling the evidentiary gap in climate litigation." Nature Climate Change 14, 1-8.

• Ganguly, G., Setzer, J., and Heyvaert, V. (2024). "If at first you don't succeed: Suing corporations for climate change." Oxford Journal of Legal Studies 44(2), 308-332.