Climate litigation against companies is growing rapidly and becoming a central concern for the board of directors. In international markets, this theme is already among the three main risks monitored by the boards. At the same time that environmental, social and governance (ESG) practices face increasing challenges and regulatory pressures.
Historically, most climatic cases were moved against governments. But this trend is changing. A report published by Grantham Research Institute on Climate Change and the Environment and London School of Economics and Political Science It points out that about 230 processes aligned with climate issues have been moved against corporations and commercial associations since 2015. According to the latest data available, more than two thirds began between 2020 and 2023, even occurring in new countries such as Portugal and Panama.
“Climate litigation is among the main concerns of business councils in Europe and is considered one of the three main risks mapped by companies,” says Anelise Lara, an experienced executive in the oil and gas sector and counselor of international companies such as Total and Trident Energy.
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According to Anelise, organizations and civil society are preparing for increasingly complex legal proceedings. In addition, international courts begin to be called to deliberate on climate change. Although they still represent a very small slice – only 5% of cases – many of them have great potential to influence national processes.
There are some known cases. In 2021, for example, a Dutch court ordered Shell to reduce its emissions by 45% by 2030, becoming the first company in court to align its operations with the Paris Agreement. The decision considered historical has established a relevant precedent for other companies in the energy sector. More recently, in 2024, Total Energies undergoes a similar process.
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Another situation that has been closely monitored occurs in Peru. Nine years ago, farmer Saul Luciano Lliuya sued the German RWE, arguing that the company’s emissions contributed to the melting of glaciers in the Andes, threatening the city of Huaraz. There is no final decision yet. And likewise, one can configure an important international precedent.
In this context, the energy transition is one of the largest points of attention of companies, society, governments, worldwide. Anelise Lara recalls that making this transition while the “aircraft is on flight” requires balance the reduction of emissions without compromising energy safety and dramatically raising costs for consumers. This global dilemma directly affects the economic and political stability of countries.
Donald Trump’s decision to resume impulse to fossil fuels has a great impact around the world. We see, for example, the case of Europe. Detailing required information required by the Corporate Sustainability Reports Directive (CSRD) has generated criticism and should be relaxed to make local industries more competitive and respond to Trump’s president’s promise to eliminate regulations.
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Despite current pressures, including on ESG practices, there will be no setback in the view of the counselor. “Let’s go through a longer period of transition,” he believes. Net zero goals initially planned for 2050 will have to be extended to 2070 or by 2080. “There will be consequences. Countries and communities should adapt to the climate effects, which will be increasingly severe,” he adds.
The most severe and frequent extreme phenomena will require countries to increasingly invest in adaptation to climate change, even affecting the insurance industry. The cost of protection against these disasters tends to grow, with impacts on governments, companies and the general population.
In recent years, corporate governance has evolved to include more transparency and internal control, and this trend is now reflected in sustainability. The market requires concrete metrics and indicators, and companies need to adapt to an increasingly complex climate and regulatory risk scenario. Administration councils face the challenge of balanced economic growth, environmental responsibility and energy security – one of the largest strategic dilemmas of the coming decades.
