The ICJ climate advisory opinion as a new era of climate justice and corporate board accountability
The International Court of Justice's historic July 2025 advisory opinion establishes binding legal obligations for states to limit global warming to 1.5°C, fundamentally reshaping corporate governance requirements and creating new strategic imperatives for boards worldwide.
The landmark ICJ decision
On July 23, 2025, the International Court of Justice delivered what climate advocates are calling "the most significant legal development in international climate law" since the Paris Agreement. The Court found that States have a legal obligation to limit global warming to 1.5°C, marking a landmark moment in international environmental law and climate justice.
This unprecedented advisory opinion emerged from a Vanuatu-led initiative that secured support from all UN member states – the first time in ICJ history that every nation consented to an advisory opinion request. The Court received 91 written statements and 62 written comments on those statements and 96 States and 11 international organisations presented oral statements at public hearings in the Hague in December 2024.
"The consequences of climate change... underscore the urgent and existential threat posed by climate change," said ICJ President Yuji Iwasawa. The Court's opinion spans several hundred pages and addresses two critical questions: states' obligations to protect the climate system from greenhouse gas emissions and the legal consequences for nations that fail to meet these obligations.
Beyond Paris to binding obligations
What makes this decision revolutionary is its comprehensive legal foundation. This legal duty stems not only from the Paris Agreement, but also from human rights law, the law of the sea and the customary duty to prevent transboundary harm. The ICJ has woven together multiple streams of international law to create an unprecedented framework of climate accountability.
The Court's approach builds upon recent decisions from other international tribunals. The International Tribunal for the Law of the Sea (ITLOS) ruled in May 2024 that carbon emissions can be considered a marine pollutant and countries must "take all necessary measures to prevent, reduce and control marine pollution from anthropogenic greenhouse gas emissions". The ICJ's opinion provides the capstone to this emerging international consensus.
Corporate governance implications
Elevated fiduciary duties
The ICJ opinion fundamentally transforms corporate boards' legal and strategic landscape. Boards of directors will play a critical role in this as they have the important duty of ensuring the long-term stewardship of the companies they oversee. With states now legally bound to achieve 1.5°C targets, corporate directors face heightened fiduciary duties that extend beyond traditional shareholder primacy to encompass climate stewardship.
As a foreseeable financial issue within mainstream investment and planning horizons, climate change should enliven directors' governance duties. Directors can no longer claim ignorance of climate risks or treat environmental considerations as optional corporate social responsibility initiatives.
Strategic integration requirements
The ICJ decision demands fundamental changes in how boards approach strategy development. The board's positioning of the company on short-term decisions may have long-term and profound implications for the resilience of the organisation, so it is critical to consider how climate might alter the future business landscape.
Effective climate governance now requires boards to:
• Scenario planning integration: Any corporate strategy put forward by the board should have integrated a range of potential climate scenarios in order to increase the directors' confidence that their strategic decisions are resilient. This is no longer optional strategic planning – it's a legal imperative driven by states' binding 1.5°C obligations.
• Business model transformation: Long-term resilience may require fundamental and bold strategic changes of entire business models. The ICJ opinion accelerates this necessity by creating legal certainty around the direction of climate policy.
Enhanced board composition and expertise
The board should ensure that it has the knowledge, skills, experience and background to effectively debate and take decisions on climate-related threats and opportunities. The ICJ decision makes climate literacy a board competency requirement, not a nice-to-have.
Key ingredients for effective climate governance include board involvement, linking executive pay to climate performance and ensuring the top dogs have the necessary climate know-how. Boards must now actively recruit members with climate expertise and ensure comprehensive climate education for all directors.
Climate justice as a strategic framework
Understanding climate justice imperatives
Climate justice emerges from the ICJ opinion as both a legal principle and a business imperative. A myriad of statements also emphasised the importance of advancing climate justice, the need to acknowledge the historical responsibility of some States for climate change and the disproportionate burden climate change is imposing on those least responsible for it.
For corporate boards, this translates into strategic considerations around:
• Transition planning: Transition plans are fast becoming a key focus of climate reporting; indeed, G7 and G20 leaders have come out in support of them andregulatory frameworks continue to reinforce the expectation for them. Boards must ensure these plans address just transition principles that account for social and economic impacts on vulnerable communities.
• Supply chain responsibility: The ICJ's emphasis on preventing transboundary harm extends corporate responsibility across global supply chains, requiring boards to ensure their operations don't contribute to climate injustice in developing nations.
Stakeholder capitalism and climate justice
Companies that exemplify sustainability priorities tend to have higher market valuations. A WTW research paper on sustainable investment in 2018 showed that higher ESG scoring companies tend to provide better risk-adjusted returns over the long term. The ICJ opinion reinforces this trend by creating legal certainty that incentivises climate-positive business models.
Boards need to engage proactively with these stakeholders, communicating the company's climate strategy and performance. This engagement can build trust and attract long-term investment, particularly from ESG-focused (Environmental, Social, Governance) investors.
Strategic implementation framework for boards
Governance structure recommendations
1. Climate committee establishment: ESG committee are negatively associated with carbon emissions rate, indicating that formal governance structures drive measurable environmental performance improvements.
2. Executive compensation alignment: Boards that integrate climate governance into strategy are vital in setting ambitious carbon emissions reduction goals and checking on progress. They need to set credible net-zero targets and weave transition plans into the business strategy.
3. Risk management integration: The regulatory landscape surrounding climate change is rapidly evolving. Boards must ensure that their companies are compliant with current regulations and prepared for future legal risks.
Policy engagement strategy
Board directors should ensure that their companies' policy positions, as well as those of their membership organisations and external corporate partnerships, are positively aligned with the Paris Agreement's net-zero by 2050 goal, consistent with the IPCC's 1.5°C maximum temperature increase and interim targets.
The ICJ opinion strengthens the case for proactive policy engagement. Boards should ensure their companies advocate for policies that support the 1.5°C target, recognising that unless the policy environment evolves positively to enable and reward significant changes in technology and business practices and conversely to penalise business-as-usual practice, boards and companies' individual efforts will not succeed.
Future-proofing corporate strategy
Regulatory anticipation
A proactive governance framework involves anticipating and responding to climate risks before they materialise. Boards should implement regular assessments of the company's climate strategy, risk management practices and compliance with regulations. The ICJ opinion provides clarity on the direction of future climate regulation, enabling boards to anticipate requirements rather than react to them.
Innovation and technology integration
Emerging technologies, such as blockchain, artificial intelligence (AI) and big data analytics, offer innovative solutions for managing climate risks. Boards should encourage the adoption of these technologies to improve the company's climate performance.
Conclusion
The ICJ's historic advisory opinion marks a watershed moment in international law and corporate governance. By establishing binding legal obligations for states to limit warming to 1.5°C, the Court has created a new operating environment where climate action is not just morally imperative but legally required.
For corporate boards, this decision eliminates the ambiguity that has long complicated climate governance. Directors now operate in a world where climate stewardship is clearly defined as a fiduciary duty, where climate justice principles guide stakeholder expectations and where regulatory certainty enables long-term strategic planning.
We are in a decisive decade to accelerate action against climate change. Choices made over the next decade will impact the world for centuries to come and business leaders must be advocates for taking action to address climate change within their organisation and beyond.
The boards that recognise this moment and act decisively will position their organisations for success in the climate-constrained future the ICJ has legally enshrined. Those that fail to adapt risk not only financial consequences but potential legal liability in a world where climate stewardship has become a binding obligation.
