The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

This blog is a collaboration between Lorraine Johnston, Partner, Tom Cummins, Senior Counsel – Dispute Resolution and Miran Bahra, Associate – Dispute Resolution at Ashurst LLP.

 While the opinion is non-binding, it carries significant weight and signals a trend towards greater scrutiny of both state and corporate climate conduct, with a flow on effect for business activities. 

What was the ICJ asked to decide?

The ICJ opinion followed a request by the United Nations General Assembly, after a campaign led by Vanuatu and other small island States. The request raised fundamental questions about the intersection of international environmental and human rights law, and state responsibility. The ICJ was asked to address:

• What are the obligations of states under international law to protect the climate system and environment from anthropogenic greenhouse gas emissions (GHG) for present and future generations?

• What are the legal consequences for states that have caused significant harm to the climate system, particularly for vulnerable countries and present or future communities affected by the adverse effects of climate change?

What did the ICJ conclude on states' obligations regarding climate change?

The key conclusions of the ICJ included that: 

• There are a number of directly relevant sources of applicable law. The United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and Paris Agreement (together the "Climate Change Treaties") are the principal legal instruments regulating the international response to global climate change. However, these do not have the effect of excluding other sources of climate change obligations.

• The Climate Change Treaties impose binding obligations on state parties to ensure the protection of the climate system and other parts of the environment from GHG emissions. 

• The duty under customary international law to prevent harm to the environment applied in the context of climate change and the link between climate change and international human rights was clear. In respect of the latter, the court considered that protection of the environment was a precondition for the enjoyment of a number of human rights, including the right to life, health, and an adequate standard of living. The court found that the adverse effects of climate change may impair the effective enjoyment of human rights.

What is the legal effect of the opinion? 

The ICJ’s opinion is not legally binding, however, it carries significant weight. Advisory opinions are often highly persuasive and can influence the development of international law, shape national policies, and guide future litigation. They are frequently cited by domestic courts and international tribunals, and can set new standards for state and corporate conduct. In some jurisdictions (particularly civil law jurisdictions), ICJ opinions can have a significant impact on decision making by national courts.

Looking Forward – potential impacts for financial services

The ICJ's opinion has been issued against the backdrop of  growing ESG and climate related  regulation and litigation across the globe. While the financial services sector is already heavily regulated, the ICJ's opinion could indirectly shape the sector going forward:  

• Fossil fuel projects are likely to be particularly susceptible to challenges, given the ICJ's view that an internationally wrongful act may arise where fossil fuel production, consumption, exploration and subsidisation is involved. This could see increased regulatory pressure on banks not to finance fossil fuel activities, and to scale up transition-focused financing and green lending. 

• The ICJ opinion confirms in particular that: "a state may be responsible where, for example, it has failed to exercise due diligence by not taking the necessary regulatory and legislative measures to limit the quantity of emissions caused by private actors under its jurisdiction". Banks and financial services firms need to be prepared for heightened expectations of flow down due diligence, robust disclosure and credible transition planning as a result of increasing international pressure on states and businesses to manage climate change risks.

• Climate litigation risk is likely to increase for financial services companies.  In March 2025, the Dutch environmental organisation, Milleudefensive, brought a claim against ING Group and ING Bank in the Amsterdam Court. As part of its claim, Milieudefensie has requested that ING stop providing funding to companies involved in new oil and gas projects and that ING's major corporate clients present credible climate plans. The ICJ's finding that climate change duties arise across a variety of international legal contexts is likely to encourage further domestic litigation such as this against companies, including banks and financial services firms. 

• The ICJ opinion emphasises that climate change requires states to take individual measures in co-operation with other states. In contrast, several US states have recently pursued anti-ESG laws and litigation which diverges from the position taken by the ICJ. This highlights a growing tension in how states are approaching climate responsibilities - financial services companies have to navigate these competing interests.

Ashurst's team of climate litigation experts are happy to discuss the impact of the ICJ opinion and climate litigation risk for financial services companies.