Corporations have been promising to address the world’s climate needs for years. At least 417 of the world’s 2000 largest companies have committed to some form of “net-zero” carbon emissions target to help tackle the negative effects of climate change.[i] Yet, household names such as Amazon, Ikea, Nestlé, and Unilever, along with many others, fail to live up to their promises. Despite these companies’ pledges to achieve carbon neutrality within the next thirty years, research suggests that they will fall short of their targets and cut emissions by an aggregate of only 40% by 2050.[ii] This failure to meet emissions goals has spurred a new wave of international climate litigation by activist groups who seek to hold these companies accountable for their promises.

The world’s first lawsuit over the veracity of a company’s net-zero emissions claims began in Australia on August 25, 2021.[iii] The Australian Environmental Defenders Office, on behalf of the Australasian Centre for Corporate Responsibility (“ACCR”), filed a consumer protection lawsuit with the Federal Court of Australia challenging certain net-zero emissions statements made by Santos, an Australian gas company, in its 2020 Annual Report.[iv] ACCR alleges that Santos misled investors when it claimed to have a plan to achieve net-zero emissions by 2040 but did not have one. According to ACCR, Santos committed a practice known as “greenwashing,” which occurs when a company purports to be environmentally conscious but does not actually make any significant sustainability efforts—unintentionally or not. [v] ACCR’s greenwashing case is currently ongoing, with ACCR most recently filing to expand the case on September 5, 2022, to include additional greenwashing allegations.

The ACCR case prompted a series of climate litigation targeting companies’ net-zero claims. In March 2022, in what is considered a first-of-its-kind action, environmental law organization ClientEarth, comprised of activist shareholders from the U.K., initiated a lawsuit against the directors of multinational oil company Shell plc for allegedly failing to properly prepare a net-zero compliance plan.[vi] ClientEarth claims that Shell’s board of directors should be personally liable for failing to devise a strategy in line with the Paris Agreement—a legally binding international treaty on climate change that aims to limit global heating to below 2 degrees Celsius by 2050.[vii] The shareholders argue that the company’s plan to increase dividends and buy back shares after reporting profits of $19 billion is not an effective use of capital and undermines the climate goals the company outlined in its 2021 Energy Transition Strategy.[viii] If the investors are successful, the U.K. courts could, for the first time, force a company’s board members to adopt a climate strategy in line with the Paris Agreement.

In another piece of emerging climate litigation, French environmental groups Greenpeace France, Friends of the Earth France, and Notre Affaire à Tous brought suit against TotalEnergies SE (“Total”), the third-largest oil company in the world by revenue, for falsely portraying the company as being on track to address the climate crisis.[ix] The environment groups argue that Total ran a misleading billboard and social media campaign that emphasized the company’s renewable energy projects and goal of reaching “carbon neutrality” by 2050 while omitting key information about the company’s plans to increase fossil fuel investments over the next ten years. The groups claim that consumers are likely to take the company’s message at face value even though Total has no plans to reduce its emissions. Their ultimate goal is to call for an EU-wide ban on fossil fuel advertising to put an end to greenwashing campaigns.[x]

These lawsuits are a clear signal of the types of cases that may soon affect U.S. companies, and some are already taking notice. U.S. members of the Glasgow Financial Alliance for Net Zero (“GFANZ”), including JPMorgan Chase & Co., Bank of America Corp., and Morgan Stanley, have expressed concerns over the risk of litigation after declaring their commitment to net-zero goals.[xi] These concerns arose after GFANZ, an investment coalition of the world’s largest banks, financial firms, and investment professionals declared new global green commitment targets for members—mainly in response to increased concerns surrounding companies’ failure to meet their own emissions targets. GFANTZ pledged to phase out coal, oil, and gas by stopping new financing for these industries over the next 30 years. In response, the U.S. banks, which collectively underwrote over $160 billion in fossil fuel debt in 2021, considered leaving GFANTZ because they did not want to expose themselves to the risk of liability should they fail to meet the new targets. JPMorgan Chase & Co., in particular, threatened to leave over a requirement to “phase down and out unabated fossil fuels, including coal,” in stark contrast to the bank’s Paris-Aligned Financing Commitment and the announcement that it achieved carbon neutrality in 2020.[xii]

While no U.S. company has as of yet faced a lawsuit for failing to live up to its climate pledges, this is likely to change in the near future. The SEC will soon require that public corporations issue formal disclosures about governance, risk management, and strategy with respect to climate change in their annual reports.[xiii] Businesses will be required to outline the risks a warming planet poses to their operations, and some large companies will be required to provide information on emissions from other firms in their supply chain. Failure to comply with these new reporting requirements exposes these companies to enforcement lawsuits by the regulatory agency, while compliance with the reporting requirements will disclose how off-track from achieving their energy goals they actually are—opening the door to accusations that they misled the public. Furthermore, Congress has also begun investigating the potential impact of greenwashing: On September 14, 2022, the House Subcommittee on Environment released a memo detailing initial findings into the Committee’s year-long investigation into the fossil fuel industry’s greenwashing campaigns. In a letter to subcommittee members, the chairpersons concluded that there is “no doubt” that “Big Oil is ‘gaslighting’ the public” and suggested that new legislation to address greenwashing may be forthcoming.[xiv]

In short, companies may very well be liable for failing to meet their emissions targets in the near future. As the planet continues to deal with the relentless effects of climate change and businesses continue to make empty promises about their efforts to combat said effects, the field of climate litigation will only continue to grow. Litigant activists will use the justice system to force decisions on climate issues and push corporate entities to honor their commitments to net-zero emissions. Companies that have pledged and failed to achieve their net-zero emissions targets need to prepare for the eventuality that they will be held accountable for failing to effect meaningful environmental change. Ultimately, rather than being responsible for the inevitable costs associated with litigation, it will be cheaper in the long run, and better for the planet, for companies to start honoring the commitments they have already made.

[i] See The Energy & Climate Intelligence Unit and Oxford Net Zero, Taking Stock: A global assessment of net zero targets 19 (2021).

[ii] See Fiona Harvey, World’s biggest firms failing over net-zero claims, research suggests, The Guardian (Feb. 6, 2022, 6:01 PM), https://www.theguardian.com/environment/2022/feb/06/amazon-ikea-nestle-biggest-carbon-net-zero-claims.

[iii] See Susanne J. Harris, et al., World-first Lawsuit Over Clean Energy and Zero Emissions Claims, Mayer|Brown (Sept. 3, 2021), https://www.eyeonesg.com/2021/09/world-first-lawsuit-over-clean-energy-and-zero-emissions-claims/.

[iv] See Australasian Centre for Corporate Responsibility v. Santos Ltd. [2021] FCR NSD858/2021 (25 Aug. 2021) (Austl.).

[v] See Carlyann Edwards, What is Greenwashing?, Business News Daily (Aug. 5, 2022), https://www.businessnewsdaily.com/10946-greenwashing.html.

[vi] See ClientEarth starts legal action against Shell’s Board over mismanagement of climate risk, ClientEarth (Mar. 15, 2022), https://www.clientearth.org/latest/press-office/press/clientearth-starts-legal-action-against-shell-s-board-over-mismanagement-of-climate-risk/.

[vii] See The Paris Agreement, UNFCC, https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement (last visited Sept. 29, 2022,).

[viii] See Shell Energy Transition Strategy, Shell, https://www.shell.com/energy-and-innovation/the-energy-future/shell-energy-transition-strategy.html (last visited Sept. 29, 2022).

[ix] See Tribuneaux de Grand Instance [TGI] [ordinary court of original jurisdiction] Paris, Greenpeace France et al., v. TotalEnergies SE and TotalEnergies Electricité et Gaz France, Summons Before the Judicial Court of Paris (Mar. 2, 2022) (Fr.) http://climatecasechart.com/climate-change-litigation/wp-content/uploads/sites/16/non-us-case-documents/2022/20220302_15967_petition-2.pdf trans. http://climatecasechart.com/climate-change-litigation/wp-content/uploads/sites/16/non-us-case-documents/2022/20220302_15967_petition.pdf; see also Simon Jessop et al., Environmental groups sue TotalEnergies over climate marketing claims, Reuters (March 2, 2022, 7:35 PM), https://www.reuters.com/business/sustainable-business/environmental-groups-sue-totalenergies-over-climate-marketing-claims-2022-03-03/.

[x] See Ban fossil fuel advertising and sponsorships in the EU!,  Ban Fossil Fuel Ads, https://banfossilfuelads.org/ (last visited Sept. 29, 2022).

[xi] See Frances Schwartzkopff & Alastair Marsh, Bankers ‘Are Right’ to Fear Legal Risk of Their CO2 Claims, Bloomberg Law (Sept. 28, 2022, 3:22 PM), https://news.bloomberglaw.com/banking-law/bankers-are-right-to-fear-legal-risk-of-net-zero-membership.

[xii] See JPMorgan Chase Releases Carbon Reduction Targets for Paris-Aligned Financing Commitment, JPMorgan Chase & Co. (May 13, 2021), https://www.jpmorganchase.com/news-stories/jpmorgan-chase-releases-carbon-reduction-targets-for-paris-aligned-financing-commitment.

[xiii] See The Enhancement and Standardization of Climate-Related Disclosures for Investors, 87 Fed. Reg. 21334 (Mar. 21, 2022) (to be codified at 17 C.F.R. pts. 210, 229, 232, 239, 249).

[xiv] See Memorandum from Chairwoman Carolyn B. Maloney and Chairman Ro Khanna to Members of the Comm. on Oversight and Reform (Sept. 14, 2022) (on file with House Committee on Oversight and Reform); see also Press Release, Carolyne B. Maloney, Chairwoman of the Committee on Oversight and Reform, and Ro Khanna, Chairman of the Subcommittee on Environment, Memorandum on Investigation of Fossil Fuel Industry Disinformation (Sept. 14, 2021), https://oversight.house.gov/news/press-releases/ahead-of-hearing-committee-releases-memo-showing-fossil-fuel-industry-is