From small island to big impact: what Vanuatu's ICJ climate win means for business

A landmark ruling by the world’s highest court has stated that fighting climate change is not just good policy – it’s a legal obligation for nations. In July 2025, the International Court of Justice (ICJ) issued a historic Advisory Opinion on the Obligations of States in Respect of Climate Change (the Opinion), following a campaign spearheaded by Vanuatu and other Pacific Island nations. This first-ever ICJ opinion on climate change, though non-binding, carries significant weight in international law. It confirms that States have binding duties under international law to mitigate climate change and can be held accountable for climate inaction.

The Opinion represents the third instance of an international court providing advisory guidance on climate-related matters, following similar pronouncements by the International Tribunal for the Law of the Sea (ITLOS) in May 2024 and the Inter-American Court of Human Rights in July 2025.

In this article, we examine the Opinion in light of previous jurisprudence on climate change and consider its implications for States and businesses.

Background: Vanuatu’s climate case and the ICJ Opinion

In 2019, a group of Pacific Island law students launched a grassroots movement urging their governments to ask the ICJ for clarity on climate change obligations. Vanuatu took up the cause, assembling a coalition that successfully pressed the United Nations to act. On 29 March 2023, the UN General Assembly adopted Resolution 77/276, posing two questions to the ICJ:

• What are States' international legal obligations to protect the climate system and environment from anthropogenic greenhouse gas emissions?
• What legal consequences arise when States cause significant climate and environmental harm through acts or omissions, regarding affected States (particularly small island developing States) and affected peoples?

After written submissions from over 100 countries and NGOs – the broadest participation in ICJ history – the Court held hearings in late 2024. The result, issued on 23 July 2025, was unanimous: all 15 ICJ judges agreed on the core findings. Such unanimity is rare, underscoring the strong consensus on the issue. Moreover, many judges issued separate opinions expressing that the Court should have adopted an even more robust approach. 

The ICJ’s advisory opinion, while not a binding court judgment, authoritatively interprets international law. It essentially sets the tone for how international and domestic law should evolve on climate matters.

ICJ’s key findings: States must act on climate change

The ICJ opinion delivered several key conclusions about States’ legal duties in the climate crisis. In plain terms, it confirmed that tackling climate change is a duty under international law, not just a political aspiration. Some of the most significant points include:

Broad international law applies

The Court notably rejected arguments that the three main Climate Treaties — the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and the Paris Agreement — are the only obligations that matter. Some major emitters had claimed those treaties were a lex specialis (special law) applicable to the exclusion of other rules of international law. The ICJ disagreed, making clear that other legal frameworks – from the UN Charter to human rights conventions – also impose climate-related obligations. For States not party to the Climate Treaties, two pathways exist: they can either fulfil these obligations by cooperating with treaty parties in equivalent ways, or they must independently demonstrate that their climate policies meet customary law standards – with the burden of proof resting on them.

In essence, countries cannot use the Paris Agreement's voluntary nature as an excuse to ignore their broader climate change obligations. At the same time, Judges Charlesworth, Brant, Cleveland and Aurescu made clear that Climate Treaties and customary international law establish independent obligations that do not necessarily overlap.  The broader customary international law obligations include:  

• a duty to prevent significant harm to the environment by acting with due diligence, requiring States to "use all means at their disposal" to prevent activities within their jurisdiction from harming the climate system and environment, "in accordance with their common but differentiated responsibilities and respective capabilities", and
• a duty to cooperate in good faith to prevent climate and environmental harm, requiring "sustained and continuous forms of cooperation by States" when taking preventive measures.

As Judge Tladi's separate declaration explained, States' compliance with customary international law requires independent assessment, with Climate Treaty provisions serving only as guidance. For instance, if, in the future, the Court interprets the Paris Agreement's temperature goal (limiting warming to 1.5°C above pre-industrial levels) as insufficient to protect the global climate system, then full compliance with the Paris Agreement may not satisfy a State's customary international law obligations.

The existence of a self-standing human right to clean and healthy environment

On the initial reading, the Court's position on the human right to a clean and healthy environment appears ambiguous. Whilst the ICJ referred to this as a self-standing right, it simultaneously described it as "a precondition for the enjoyment of many human rights" and "inherent in the enjoyment of other human rights." This suggests the Court may be relying on existing substantive human rights rather than recognising an independent environmental right. However, Judge Tladi clarified that "a right can exist as a self-standing right and, at the same time, be essential for the achievement of other rights," affirming that the Court clearly recognises the right to a clean and healthy environment as a self-standing right under customary international law.

The 1.5°C temperature goal

The Court recognised that 1.5°C has since become the scientifically based consensus target. The ICJ found that decisions by the CMA (the governing body of the Paris Agreement), expressing agreement between parties regarding the interpretation of Articles 2 and 4 of the Paris Agreement, constitute subsequent agreements under Article 31(3)(a) of the Vienna Convention on the Law of Treaties, making 1.5°C the parties' agreed primary temperature goal. The Court added that this interpretation aligns with Article 4, paragraph 1, of the Paris Agreement, which requires mitigation measures to be based on the "best available science".

The Court further found that States do not have complete discretion when it comes to determining their nationally determined contributions (NDCs) (as may have been suggested by the 2024 ITLOS Advisory Opinion). The Court found that parties' NDCs must be capable of making an adequate contribution to achieving this 1.5°C target, with parties obliged to exercise due diligence to ensure their NDCs collectively achieve this temperature goal. 

Required standard of due diligence

The ICJ's finding that States must meet a "stringent" standard of due diligence follows logically from the Court's characterisation of climate change as an "existential problem of planetary proportions that imperils all forms of life and the very health of our planet". This stringent standard aligns with previous opinions by ITLOS and the Inter-American Court of Human Rights. The Court also cited Pulp Mills on the River Uruguay (Argentina v. Uruguay), which stated that due diligence “entails not only the adoption of appropriate rules and measures, but also a certain level of vigilance in their enforcement and the exercise of administrative control”.

At the same time, the Court recognised that this stringent standard operates within the principle of common but differentiated responsibilities and respective capabilities (CBDR). In their Joint Declaration, Judges Bhandari and Cleveland explained that whilst "the obligation to transition away from fossil fuel dependence — including fossil fuel production, licensing and subsidies — applies to all States, States with greater resources and technical capabilities are obliged to transition away from fossil fuel production and dependency with deeper and faster targets than States with lesser capabilities." However, the judges emphasised that CBDR "is not a get-out-of-jail card". All States remain bound by climate change treaties and customary international law, with CBDR simply modulating the measures required to be "consistent with their capabilities and national circumstances".

Causation

The Court recognised that climate change presents unique challenges in establishing causation, as the connection between a State's wrongful conduct and resulting climate harm is less direct than, for example, in cases where pollution comes from a clear local source. However, the ICJ found that causal links can still be established on an assessment in concreto i.e. on a case-by-case basis.

Establishing causation involves two distinct elements. First, determining whether a given climatic event or trend can be attributed to anthropogenic climate change; and second, assessing to what extent damage caused by climate change can be attributed to a particular State or group of States. The relevant legal standard for causation is “a sufficiently direct and certain causal nexus” between the alleged wrongful action or omission and the alleged damage.  

Consequences of breach

The ICJ unanimously held that breaching any obligations identified in the Opinion constitutes an internationally wrongful act entailing State responsibility. The responsible State must continue performing the breached obligation. Legal consequences may include:

• duty to cease the harmful conduct
• provide assurances and guarantees of non-repetition, and 
• grant full reparation of the damage caused – in the form of restitution, compensation, and satisfaction.

Broader judicial movement towards climate change protection

The ICJ's advisory opinion represents part of a broader global judicial trend towards recognising States' obligations to protect against climate change. The Court presented a coherent interpretation of international law, describing the three Climate Treaties as "mutually supportive", and its reasoning aligns with emerging jurisprudence from other international and regional courts.

International court convergence

The ICJ Opinion builds upon and reinforces two significant earlier opinions from international tribunals. The Court drew extensively on precedent from ITLOS, acknowledging ITLOS's substantial jurisprudence in this area. Whilst the ICJ recognised that it is not bound to follow ITLOS's interpretation of the United Nations Convention on the Law of the Sea (UNCLOS), it emphasised that such interpretations should carry "great weight".

The ICJ's approach also aligns with the Inter-American Court of Human Rights, which in July 2025 affirmed the right to a stable climate as a human right and called for States to regulate corporate emissions, ensure due diligence, and provide remedies for climate-related harm.

National and regional court developments

This international convergence reflects broader trends in national and regional courts, where judges have increasingly recognised that States have obligations to protect citizens from climate change. These obligations are typically grounded in domestic tort provisions or the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR):

• Netherlands - Urgenda Foundation v. State of the Netherlands (2019): On 20 December 2019, the Supreme Court of the Netherlands upheld two previous lower court decisions in Urgenda Foundation v. State of the Netherlands, requiring the Dutch State to reduce its greenhouse gas emissions by at least 25% compared with 1990 levels by the end of 2020. Significantly, the Supreme Court established that domestic courts possess the authority to enforce compliance with international treaties against national governments and held that the State has a duty of care to protect its citizens from climate change in accordance with its obligations under the ECHR. Notably, like the ICJ, the Supreme Court found that "[t]he Paris Agreement […] expressly states that the [S]tates must strive to limit warming to 1.5°C. That will require an even greater emissions reduction than was previously assumed."
• Belgium - VZW Klimaatzaak v. Kingdom of Belgium (2023): In November 2023, the Brussels Court of Appeal delivered its final decision in VZW Klimaatzaak v. Kingdom of Belgium, ordering the Belgian federal State, Flemish Region, and Brussels-Capital Region to reduce their greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. The Court of Appeal confirmed many of the First Instance Court's findings, identifying violations of Articles 1382 and 1383 of the Belgian Civil Code (which establish the general principle that any person who causes damage to another through their own fault or negligence must compensate for it) and Articles 2 and 8 of the ECHR. Again, like the ICJ, the Court of Appeal identified the 1.5°C goal as the relevant benchmark for assessing the adequacy of government climate targets.
• Switzerland - Verein KlimaSeniorinnen Schweiz v. Switzerland (2024): In April 2024, the European Court of Human Rights (ECtHR) found in Verein KlimaSeniorinnen Schweiz v. Switzerland that Switzerland's approach to tackling climate change violated Article 8 (right to respect for private and family life) and Article 6(1) (access to court) of the ECHR. The ECtHR interpreted Article 8 to encompass a “right for individuals to effective protection by the State authorities from serious adverse effects of climate change on their life, health, well-being and quality of life”. This is in line with the ICJ's conclusion that the right to clean and healthy environment is "inherent in the enjoyment of other human rights." In relation to Article 6, the ECtHR stated that it fell “primarily to national authorities, including the courts, to ensure that Convention obligations are observed”. Whilst not going as far as the ICJ in describing climate change as "an existential problem of planetary proportions ", the ECtHR said it was "one of the most pressing issues of our times”.

Corporate climate liability

Courts have also begun addressing corporate climate responsibility. In May 2025, a German appeal court dismissed a climate litigation claim against the parent company of a multinational energy group, but found that an energy company may in principle be liable for climate-related harms (Lliuya v RWE).

Meanwhile, in November 2024, the Dutch Court of Appeal in Milieudefensie et al. v. Royal Dutch Shell plc overturned the specific reduction target obligation initially imposed on Shell at first instance, but maintained that there was a duty on corporates to mitigate climate change. The Court held that “protection against dangerous climate change” is a global fundamental human right, and while the obligation to protect primarily falls on States, this does not preclude parallel obligations on companies through “indirect horizontal effect of fundamental rights”, attributed to Articles 2 (right to life) and 8 (right to respect for private and family life) of the ECHR.

Judicial Divergence

By contrast, in July 2025, the Federal Court of Australia determined that the Commonwealth Government does not owe a duty of care to take reasonable steps to protect the people of the Torres Strait Islands from the impacts of climate change (Pabai v Commonwealth), demonstrating that judicial approaches to climate obligations can vary. 

Consequences for States and businesses

While the Opinion is focused exclusively on State obligations, it has broader implications for corporate accountability. The Court held that States' compliance with domestic mitigation obligations is to be assessed based on whether they exercised due diligence in deploying appropriate means for such measures, including regarding private actor activities. The ICJ endorsed the ITLOS advisory opinion, observing that "[the] obligation of due diligence is particularly relevant in a situation in which the activities in question are mostly carried out by private persons or entities".

 As such, we can expect the following consequences to flow from the Opinion:

• Stronger climate regulations: The Opinion states that there is a duty on States to ensure corporations within their jurisdiction do not cause harm, compelling governments to strengthen regulatory oversight and enforcement mechanisms to fulfil their international obligations. We should therefore expect an increase in domestic climate regulations.
• Heightened disclosure and transparency obligations: There is potential for new domestic laws mandating corporate climate due diligence, for instance requiring large firms to assess and disclose their climate risks and carbon emissions, and to have plans to manage them.
• Climate litigation risks: Activists and affected communities may cite the ICJ Opinion in lawsuits against both governments and companies in domestic courts. Whilst the Opinion is not binding, it sets the tone for how international and domestic courts (and arbitral tribunals) will approach environmental causes of action.
• End of fossil fuel subsidies? The Opinion effectively raises the bar for climate governance, and businesses in high-emitting sectors are likely to feel the impact. The ICJ specifically stated that fossil fuel activities — including "production, consumption, the granting of exploration licences or the provision of subsidies" — may constitute internationally wrongful acts attributable to States. Judges Bhandari and Cleveland went further and stated that it was "unimaginable" that States could achieve their obligations under climate change treaties and customary international law without rapidly phasing out fossil fuel dependency.
• Carbon capture and storage (CCS): The interpretation of "fossil fuel subsidies" remains uncertain, particularly regarding CCS projects that receive substantial government support across oil, gas, and coal industries. CCS technology traps carbon dioxide, compresses it, and stores it underground in rock formations or depleted reservoirs to prevent atmospheric release — a process considered essential to the UK's legally binding net-zero target by 2050. The Labour government has committed up to £21.7bn over 25 years to launch the country's first CCS projects, with additional funding allocated in June's spending review.However, the technology remains contentious: whilst some scientists and environmentalists argue that CCS merely prolongs reliance on fossil fuels, others contend it is essential for achieving climate goals. It remains to be seen whether CCS subsidies will be classed as "fossil fuel" or "green energy" support.
• Impact on other industries: While carbon industries are the first that come to mind as bearing the brunt of the Advisory Opinion, the impact could be felt more broadly. Crypto mining and AI both have a significant environmental impact, as does the food industry where it could be argued that livestock farming contributes substantially to emissions. Consequently, all businesses are now expected to incorporate environmental protection considerations into their strategic planning and operational frameworks.
• Positives for environmentally friendly industries: Conversely, the Opinion could provide justification for more favourable treatment of environmentally friendly industries. This shift in the legal landscape may accelerate investment in green technologies and sustainable business models, as governments seek to align their regulatory frameworks with their enhanced international climate obligations.

Conclusion

The ICJ's advisory opinion marks a significant development in international climate law.

The Court's rejection of lex specialis arguments means that States' climate obligations extend beyond their Paris Agreement commitments, potentially affecting how domestic and international courts assess State conduct. For the business community, the opinion's emphasis on State due diligence obligations suggests that regulatory frameworks may evolve to reflect these enhanced legal standards.

The timing of this opinion, ahead of COP 30, may affect how negotiators approach future climate commitments, given the Court's indication that COP decisions can create binding obligations. The convergence of international judicial bodies on climate-related issues suggests an emerging consensus on the legal dimensions of climate governance.

The opinion thus represents a notable evolution in how international law addresses climate change, with implications that will likely unfold across various legal contexts in the coming years.

Please contact our Disputes and Investigations team if you would like advice on how the Vanuatu opinion or any of the recent climate change decisions may affect your investments or ESG strategy.