Experts release first-of-its-kind Principles on Climate Obligations of Enterprises

22 January 2018

Despite widespread agreement about the need to reduce greenhouse gas emissions and limit the effects of global warming, no legal instruments exist that provide a clear picture of the obligations of enterprises to curb their carbon output. Rather, the debate stays stuck in pledges on what all players must do. A group of leading legal experts now hope to change this with a new set of principles that map the concrete obligations of enterprises and investors in the fight against climate change. Known as the Principles on Climate Obligations of Enterprises, the document provides a legal framework for the obligations of enterprises.

The Principles were officially launched at the University of Amsterdam (UvA) on Thursday, 18 January.

Follow-up to Oslo Principles

The Principles on Climate Obligations of Enterprises are the follow-up to the 2015 Oslo Principles, which discern the legal duties of states to prevent the most harmful effects of climate change. They are the product of several years’ work by a group of experts in international, environmental, tort and human rights law, and are based on the authors’ interpretation of the law as it stands or will likely develop. The Principles outline enterprises’ legal responsibilities to help curb runaway climate change and focus exclusively on prevention. In the coming months, the authors plan to promote the Principles through discussions with, among others, NGOs, enterprises, investors, prudential authorities and governments in as many countries as possible. To date, the group has received endorsements by 53 distinguished experts, among them top judges from all continents.

Credits: Jochem Jordaan

A legal basis for addressing climate change

‘Governments and enterprises across the world agree that global warming must be limited to at most 2°C compared to pre-industrial temperatures and that current efforts must be accelerated. However, it will be extremely difficult to meet that target without a serious discussion on the legal duties individual entities have in this regard’, says Jaap Spier, professor of Global Challenges at the UvA’s PPLE College, co-founding member of the Expert Group and author of the commentary accompanying the Principles. ‘The Principles seek to fill this gap by providing a legal basis for compliance with global climate goals and by creating a level playing field for enterprises while at the same time taking into account their respective differences and characteristics.’

The document outlines a number of legal obligations enterprises have to fulfil. These include primary obligations on enterprises, particularly those in developed countries, to cut Greenhouse Gas (GHG) emissions resulting from their activities. Enterprises around the globe also have the responsibility to cease products or services that cause excessive GHG emissions unless they take countervailing measures. In addition, enterprises are expected to fully disclose the impact of climate change on their business.

The Principles also put an obligation on investors to take into account whether states or enterprises comply with their legal obligations in the face of climate change. Investment in non-complying entities requires justification.

UvA Professor Jaap Spier discusses the Principles (Credits: Jochem Jordaan)

Coordinated response  

The Principles represent a legal basis for calling on companies and enterprises to do their part in reducing greenhouse gas emissions, says Spier. But, just as importantly, they serve as an agenda for a coordinated response and help companies and enterprises to identify their individual roles in curbing the calamitous effects of climate change.

Spier: ‘Limiting global warming to 2°C will be a Herculean task. It can only be achieved if enterprises around the globe contribute their fair share. The Principles attempt to quantify that “fair share” and the role the financiers and investors of those enterprises should play in stemming the tide and safeguarding our planet for future generations. By painting a clear picture of the obligations of enterprises and investors, the Principles enable them to meet their obligations.’

Published by  University of Amsterdam