Litigation Note on Challenging the Financing of Climate-Destructive Conduct

This briefing note analyzes the implications of the International Court of Justice's (ICJ) July 2025 advisory opinion on States' obligations to prevent environmental harm, specifically focusing on the financing of climate-destructive conduct. It outlines how the ICJ's findings can be used in litigation to challenge public and private funding of the fossil fuel sector and to enforce obligations for climate finance in developing nations.

• The ICJ established that States have a legal obligation to protect the climate system from greenhouse gas (GHG) emissions, and failing to take appropriate action—such as continuing fossil fuel production, consumption, granting exploration licenses, or providing subsidies—may be considered an internationally wrongful act attributable to that State.
• The ICJ's findings imply that States must cease providing public finance to the fossil fuel sector. This includes direct subsidies (cash payments, grants, low-interest loans, investments, or insurance) and indirect subsidies (tax breaks, exemptions, regulation waivers, land grants, discounted leasing of public land, and minimum purchase agreements).
• The conduct of State organs, including government-controlled export credit agencies (ECAs) and export-import banks, is attributable to the State. Consequently, the continued provision of finance by ECAs to fossil fuel projects may constitute an internationally wrongful act, and States may be required to revoke the administrative measures enabling such funding.
• States are obligated under international law to use all available means to reduce GHG emissions. This includes the duty of cessation for wrongful acts and the potential redirection of public finance and subsidies toward sustainable energy providers and low-GHG or zero-emitting industries to accelerate the transition to a low-carbon economy.
• States must exercise due diligence by implementing regulatory and legislative measures to limit emissions caused by private actors under their jurisdiction. This suggests that States should regulate private-sector financing of the fossil fuel industry and may utilize central banks and financial supervisors to discourage private investment in carbon-intensive businesses through monetary policy and capital regulation.
• The ICJ confirmed that developed States have legally binding obligations under the UNFCCC and the Paris Agreement to provide financial resources to developing countries for climate change adaptation and mitigation. This includes assisting vulnerable parties with the costs of adaptation and facilitating access to environmentally sound technologies.

APA

Center for International Environmental Law (2026). Litigation Note on Challenging the Financing of Climate-Destructive Conduct. https://www.ciel.org/wp-content/uploads/2026/03/ICJ_AO_Litigation-Note-on-Challenging-the-Financing-of-Climate-Destructive-Conduct_Feb2026.pdf

Chicago

Center for International Environmental Law. Litigation Note on Challenging the Financing of Climate-Destructive Conduct. 2026. https://www.ciel.org/wp-content/uploads/2026/03/ICJ_AO_Litigation-Note-on-Challenging-the-Financing-of-Climate-Destructive-Conduct_Feb2026.pdf.

Wikipedia

{{cite report |author=Center for International Environmental Law |title=Litigation Note on Challenging the Financing of Climate-Destructive Conduct |date=February 2026 |url=https://www.ciel.org/wp-content/uploads/2026/03/ICJ_AO_Litigation-Note-on-Challenging-the-Financing-of-Climate-Destructive-Conduct_Feb2026.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centerforinternationalenvironmentallaw2026litigation, author = {{Center for International Environmental Law}}, title = {{Litigation Note on Challenging the Financing of Climate-Destructive Conduct}}, institution = {Center for International Environmental Law}, year = {2026}, month = feb, url = {https://www.ciel.org/wp-content/uploads/2026/03/ICJ_AO_Litigation-Note-on-Challenging-the-Financing-of-Climate-Destructive-Conduct_Feb2026.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }