Climate Litigation: the evolution of liability across the entire value chain

​Climate litigation has matured into a systemic business risk with direct implications for corporate strategy, governance, capital allocation, and market access. Courts and regulatory authorities are increasingly treating climate change as a legal risk that must be anticipated, managed, and disclosed with analytical rigor. Companies are now expected to take responsibility for their emissions, environmental impacts, and climate risks, moving beyond direct operations to encompass the entire asset lifecycle and the broader value chain.

The extension of liability to the value chain

There is a fundamental shift in legal responsibility, evolving from a focus on direct operational emissions to a systemic examination of supply and distribution networks. This evolution reflects a growing legal consensus that climate risk is generated and amplified through complex networks of suppliers, subsidiaries, financiers, and end users. This shift is manifesting through diverse legal mechanisms across key global jurisdictions:

• Europe: this trend has found formal codification within a regulatory architecture that includes the CSDDD, CSRD, EU Taxonomy, and SFDR. These provisions transform environmental due diligence into a legally enforceable obligation, requiring large companies to identify, prevent, and mitigate environmental harm throughout their entire value chain.
• North America: in the absence of comprehensive due diligence statutes, plaintiffs utilize various legal pathways, relying on tort law, disclosure obligations, securities laws, and consumer protection regulations. The objective is often to recover climate-related costs and impose greater transparency on financing activities and supply chains.
• South America: the risk landscape is characterized by the recognition of constitutional rights to a healthy environment, which courts interpret as including climate stability. Litigation aims to link corporate activity to phenomena such as deforestation and water stress, with courts prepared to suspend projects or mandate structural remediation.
• Asia-Pacific: while Australia is positioned at the higher end of the risk spectrum with active scrutiny of emissions and disclosures, in other jurisdictions, accountability is emerging through environmental enforcement and financial regulation. Nevertheless, supply-chain climate risk is becoming a legitimate subject of legal scrutiny across the region.

Greenwashing

Parallel to the expansion of the physical perimeter of risk, there is a growing judicial intolerance for environmental claims lacking credible evidentiary support. Greenwashing now represents one of the most prevalent categories of climate litigation globally, cutting across industries regardless of emissions intensity.

Sustainability communications, including "Net-Zero" commitments and carbon neutrality assertions, are no longer treated as merely aspirational statements. In multiple contexts, these communications are being treated as representations that create formal legal duties. Courts and regulators increasingly scrutinize the underlying assumptions of climate claims, the credibility of offsetting strategies, and the accuracy of environmental certifications. Remedies sought by plaintiffs reflect this severity, ranging from prohibitive injunctions and financial penalties to requirements for public admission of misleading conduct and corrective disclosure of business strategies.

Governance and risk management

The evolution of litigation demonstrates that climate oversight can no longer be managed as a peripheral or voluntary sustainability issue. Legal risk becomes most acute where climate considerations remain segregated from Enterprise Risk Management, capital allocation, and disclosure controls.

For Boards, exposure does not necessarily arise from an absence of ambition, but rather from strategic incoherence: the gap between public commitments and operational reality, or between transition plans and investment decisions. In this scenario, procurement, sourcing, and supplier oversight cease to be mere operational variables and transform into sources of substantial legal liability.

As judicial remedies tend to emphasize structural changes and mandatory due diligence processes over punitive damages, corporate resilience depends on the ability to demonstrate effective control throughout the entire value chain. It is therefore imperative to manage climate communications with the same methodological rigor as financial reporting, integrating climate risk into core governance frameworks to ensure coherence in a rapidly changing market.

van Berings assists its Clients in identifying and managing the legal complexities arising from new sustainability and transparency obligations. Through a multidisciplinary vision, we support companies in structuring governance models and risk mitigation strategies, ensuring the necessary alignment between corporate strategic vision and a constantly evolving regulatory framework.