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On 23 July 2025, the International Court of Justice (ICJ) delivered a critical advisory opinion on what countries are legally required to do about climate change. This wasn’t just another climate announcement, it was the world’s highest court stating that States must protect the climate system from the damage caused by greenhouse gas emissions. And that duty is not just limited to the government, it extends to regulating the climate impacts of businesses too.
More importantly, the Court confirmed that when countries fail to meet these obligations, there can be real legal consequences. That could mean stopping harmful activities altogether, or even paying compensation or restitution for the damage done. This means that climate inaction is no longer just a political failure, it’s a potential breach of international law.
How did this case come about?
It all began back in 2019, when a youth-led group, Pacific Island Students Fighting Climate Change, launched a campaign that caught global attention and inspired the government of Vanuatu to push for clarity on what international law actually requires countries to do about climate change.
What did the ICJ Recognise?
The Court confirmed that legal obligations on climate action not only come from treaties (like the Kyoto Protocol or Paris Agreement) but also from customary international law, other environmental treaties, maritime law, and human rights law. In effect, obligations apply universally, even to States not party to specific climate treaties.
The ICJ stated that a clean, healthy, and sustainable environment is a fundamental human right and protected under customary law. The Court also recognised that the climate crisis is an “urgent and existential threat” that States are legally bound to address.
While this Advisory Opinion in itself is not legally binding, it was adopted unanimously by all 15 ICJ judges, making it an authoritative interpretation of international law with huge influence. It is expected that over the next few years, this will shape the way governments, courts, and policymakers approach climate obligations, including the regulation of private companies and industries.
Why is this relevant for businesses?
Governments, regulators, and judges can use it as a legal foundation to justify stricter climate measures, and many are likely to do so. If countries are bound to reduce greenhouse gas emissions, then they must also regulate the climate impacts of private organisations operating within their borders. That means stricter laws, tighter reporting requirements, and tougher enforcement are likely to happen soon. Supply chains will come under more scrutiny and high-emission activities will carry a higher regulatory risk. For business leaders, this is a powerful indicator that climate action is becoming a matter of legal compliance, financial risk, and long-term resilience.
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