Climate Change Opinion by ICJ: What it means for the Private Companies and Indian Corporate Law

Introduction

On July 23, 2025, the International Court of Justice (ICJ) issued a landmark advisory opinion on the obligations of states in combating climate change. While not legally binding, the opinion carries significant legal and moral authority, setting clearer expectations under international law for governments to take stronger climate action. Importantly, the ripple effects extend beyond states pressuring governments to regulate private businesses, particularly high-emission industries. For India, this development may shape stricter corporate accountability and redefine the climate responsibilities of the private sector.

ICJ’s Climate Opinion: What It Covers

The ICJ delivered this opinion after the UN General Assembly requested clarity on states’ obligations under international law. It addressed two key questions:

• What must countries do to protect the climate and environment from human-caused greenhouse gas (GHG) emissions?
• What are the consequences if countries cause serious damage to the climate?

The Court emphasized that states have binding duties to reduce emissions, adapt to climate change, and cooperate globally. These obligations stem from international agreements such as the UNFCCC and the Paris Agreement, as well as customary international law. Importantly, the ICJ affirmed that any state can hold another accountable for failing to act on climate change.

The opinion further stressed that governments must adopt robust national climate plans and implement strong regulatory frameworks. While the ruling directly addresses states, it indirectly impacts private businesses especially high-emission industries by pushing governments to tighten climate regulations and enforce corporate responsibility.

Impact On Private Business

Although the ICJ did not impose direct obligations on companies, it highlighted that governments must regulate corporate activities effectively. This includes businesses involved in extracting or burning fossil fuels, as well as those benefiting from licenses or subsidies tied to fossil fuel use.

If governments fail to control emissions from such industries, they could be held internationally accountable. As a result, states will need to exercise greater scrutiny over corporate practices, particularly in high-emission sectors, to avoid legal and environmental liabilities.

Climate Change Cases: Shifting the Burden

Climate litigation often struggles with the challenge of proving that specific companies or actions directly caused climate harm. The ICJ addressed this by clarifying that:

• Even though climate damage arises from multiple sources, states cannot use this as an excuse to avoid responsibility.
• The crucial question is whether a government failed to regulate businesses adequately.

This interpretation strengthens the position of individuals and communities affected by climate change, giving them a stronger legal basis to argue that governments did not do enough to curb harmful private activities.

What This Means for India

The ICJ’s advisory opinion could significantly shape Indian law, particularly in the areas of corporate governance and climate regulation.

Alignment with Indian Legal Principles

The ICJ’s reasoning aligns closely with established Indian legal doctrines such as sustainable development, equity, intergenerational justice, and the “polluter pays” principle. These principles have long been recognized by the Supreme Court of India—for instance, in Vellore Citizens Welfare Forum v. Union of India (1996), where polluting industries were held liable for cleaning up environmental damage.

Climate Rights as Fundamental Rights

More recently, in M.K. Ranjitsinh v. Union of India (2024), the Supreme Court declared that protection against climate change forms part of the fundamental rights guaranteed under Articles 14 and 21 of the Constitution. The Court also emphasized that company directors carry a dual responsibility: safeguarding the interests of the company while ensuring protection of the environment. Under Section 166(2) of the Companies Act, 2013, directors are legally required to act in good faith not only for shareholders but also for the community and environment.

Role of Company Directors

Globally, the ICJ’s opinion is expected to reshape how directors’ duties are understood, creating a higher standard of accountability. It signals that directors must actively consider climate-related risks when making corporate decisions.

In India, Section 166 of the Companies Act already prescribes these duties. The ICJ’s opinion could push Indian courts to interpret this provision more strictly, requiring directors to:

• Avoid investments in fossil fuel projects unless they are demonstrably climate-safe.
• Ensure the company’s operations are consistent with national and international climate goals.

Likely Increase in Regulation

To avoid liability under international law, countries like India may now face greater pressure to tighten environmental regulation. This could involve:

• Stricter controls on coal-based power generation and industrial emissions.
• New requirements for climate risk disclosures.
• Stronger enforcement of Nationally Determined Contributions (NDCs) under the Paris Agreement.
• Existing frameworks such as the Environment Protection Act (1986) and the Air (Prevention and Control of Pollution) Act (1981) may also be revised or more rigorously enforced to meet these obligations.

Climate Litigation on the Rise

The ICJ’s opinion can now serve as a strong legal foundation for climate-related lawsuits—both against governments and corporations. In India, this is particularly significant, as the judiciary has already recognized and advanced the cause of climate justice.

Notable examples include:

• M.K. Ranjitsinh v. Union of India (2024): The Supreme Court affirmed that people have a fundamental right to be protected from climate change.
• Indian Council for Enviro-Legal Action v. Union of India (1996): The Court held companies directly accountable for causing environmental pollution.

The ICJ’s advisory opinion strengthens the legal grounding for such cases by affirming that governments bear responsibility for ensuring companies comply with climate obligations.

Conclusion

The International Court of Justice’s opinion marks a major step in global climate governance by clarifying that states have a duty to regulate private companies in order to combat climate change. This places new pressure on governments to strengthen oversight of corporations and drive meaningful change.

In India, the opinion aligns with existing legal principles and jurisprudence on environmental protection, offering courts, regulators, and activists an additional tool to advance corporate accountability. Company directors and industries must now pay closer attention to the environmental impact of their actions or risk facing serious legal consequences.

As climate change continues to threaten livelihoods, economies, and ecosystems, the ICJ’s opinion reinforces that both governments and businesses have a shared responsibility to act decisively.