Report on Global Trends in Climate Change Litigation and Implications for Sustainable Development Goals

A recent report from the Grantham Research Institute indicates that climate-related litigation is now widely recognized by prominent market actors as a financially material risk. This development has profound implications for the achievement of the Sustainable Development Goals (SDGs), particularly SDG 13 (Climate Action), SDG 16 (Peace, Justice and Strong Institutions), and SDG 17 (Partnerships for the Goals).

Climate Litigation as a Financial Risk and its Link to SDG 13

The increasing frequency and scope of climate litigation are reshaping the financial landscape, directly influencing how corporations and states approach their commitments under SDG 13.

Financial Market Recognition and Exposure

• Judicial interventions are compelling banks, investors, and financial advisors to address their exposure to climate-related legal challenges.
• Research indicates that for many equity investors, litigation risk is now perceived as more material than physical climate risk.
• The European Central Bank has noted that a significant majority of European banks could face elevated litigation risk due to a measurable misalignment between their credit portfolios and their public commitments to the Paris Agreement, a cornerstone of global efforts for SDG 13.
• Despite this awareness, many financial institutions are lagging in integrating this risk into their governance and disclosure frameworks, indicating a gap in corporate accountability for climate action.

Impact on Sustainable Investment and Economic Stability

The report highlights a dual effect of litigation on markets. While cases that mandate stronger government climate policy can reduce uncertainty and bolster confidence for green investors, contributing to SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure), the broader trend of litigation can also create a polarized and destabilizing regulatory environment.

The Role of Institutions and Justice in Climate Governance (SDG 16)

The use of legal systems to advance climate objectives underscores the critical role of strong and just institutions, as outlined in SDG 16.

Judicial Systems as Enforcers of Climate Commitments

Courts are increasingly serving as a vital mechanism for holding governments and corporations accountable. Landmark cases are establishing legal precedents that enforce climate commitments and challenge inaction. A key example is a UK Supreme Court decision that deemed an oil well extension unlawful for failing to consider Scope 3 emissions, demonstrating how legal avenues beyond financial disclosure rules are being used to enforce responsible production (SDG 12).

Regulatory and Supervisory Response

Supervisory bodies are beginning to formalize the management of these risks, strengthening institutional capacity. The European Banking Authority, for instance, has issued guidelines mandating that banks identify and mitigate ESG risks, including litigation, thereby embedding climate accountability into the financial system’s institutional framework.

The Challenge of Anti-ESG Pushback

A counter-trend, particularly in the United States, involves legal challenges against regulations that promote ESG factors. This anti-ESG pushback erodes regulatory clarity and undermines the stability and predictability that strong institutions provide, creating a contentious environment that complicates progress on SDG 13.

Divergent Global Approaches and Partnerships for the Goals (SDG 17)

The report reveals distinct patterns in the use of climate litigation between the Global North and Global South, highlighting different models of partnership and state action in pursuit of the SDGs.

Government-Led Litigation in the Global South

In contrast to the Global North, a significant portion of climate cases in the Global South are initiated or supported by government bodies. This trend signifies a proactive use of national legal systems to enforce climate commitments and protect natural resources.

1. In Brazil, federal agencies are pursuing numerous lawsuits related to illegal deforestation in the Amazon, directly addressing SDG 15 (Life on Land).
2. Countries such as India, South Africa, and Indonesia are also seeing a surge in government-supported cases seeking to enforce climate policy and secure compensation for climate-related damages.

China’s State-Guided Judicial Strategy

China presents a unique model where the state actively encourages litigation as a tool to advance national climate policy. The Chinese Supreme People’s Court has issued guidance for courts to support litigation related to green development, industrial restructuring, and the establishment of carbon markets. This represents a powerful state-judiciary partnership (SDG 17) aimed at aligning the entire legal system with national climate targets and fostering innovation in sustainable infrastructure (SDG 9).

Future Outlook

The role of litigation in global climate governance is projected to become more pivotal and contested. Its evolution will be a critical factor in determining whether legal and judicial mechanisms can successfully catalyze the necessary action to meet the targets of the Sustainable Development Goals, particularly in the face of intensifying climate risks and shifting political landscapes.

1. SDGs Addressed in the Article

   The article highlights issues that are directly and indirectly connected to several Sustainable Development Goals. The primary focus on climate litigation, financial risk, and institutional accountability links the text to goals concerning climate action, justice, and economic stability.

   • SDG 13: Climate Action

     This is the most central SDG in the article. The entire discussion revolves around climate litigation, which is a direct mechanism to enforce and accelerate climate action. The article references the Paris Agreement, national climate targets, and the need to mitigate climate-related financial risks, all of which are core components of SDG 13.

   • SDG 16: Peace, Justice and Strong Institutions

     The article extensively discusses the role of the judiciary and legal systems in addressing climate change. It describes how courts (“judicial interventions”) are being used to hold governments and corporations accountable. It also points to the role of supervisory institutions like the European Banking Authority in creating guidelines, which relates to building effective and accountable institutions.

   • SDG 17: Partnerships for the Goals

     The article illustrates the complex interplay between different actors, which is fundamental to SDG 17. It discusses partnerships (and conflicts) between governments, financial institutions (banks, investors), legal experts, and international bodies. The mention of the Paris Agreement and the different approaches between the Global North and Global South highlight the goal’s focus on global partnerships and policy coherence.

   • SDG 15: Life on Land

     This goal is specifically addressed in the section on the Global South. The article mentions that in Brazil, “the federal prosecutor’s office and environmental agency are pursuing more than 30 lawsuits related to illegal deforestation in the Amazon,” which directly relates to protecting terrestrial ecosystems and halting deforestation.

   • SDG 12: Responsible Consumption and Production

     The article touches upon this goal by referencing corporate accountability for their entire value chain. The UK Supreme Court’s decision that an oil well extension was unlawful for “failing to consider scope 3 emissions from supply chains” is a direct link to promoting sustainable production patterns and corporate reporting.

2. Specific SDG Targets Identified

   Based on the article’s content, several specific targets under the identified SDGs can be pinpointed.

   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.

     The article shows this target in action through litigation. Cases that “mandate stronger government action” and legal battles over “the legitimacy of ESG-focused investment strategies” are attempts to force the integration of climate measures into policy. Furthermore, China’s use of its judicial system to “advance climate policy” and align with “national climate targets” is a direct example of this integration.

   • Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.

     The article is a testament to this target, as it describes the use of litigation—a key component of the rule of law—to address climate issues. The surge in cases in both the Global North and South, including those “initiated or supported by governments” in countries like Brazil and India, demonstrates an effort to use legal systems to enforce climate commitments and achieve justice.

   • Target 16.6: Develop effective, accountable and transparent institutions at all levels.

     The article highlights the push for accountability in financial institutions. The warning that banks face “direct legal exposure” for misalignment with climate goals and the development of the European Banking Authority’s “ESG risk management guidelines” are efforts to make these institutions more accountable and transparent regarding their climate-related risks.

   • Target 15.2: Promote the implementation of sustainable management of all types of forests, halt deforestation…

     This target is clearly identified through the specific example from Brazil, where authorities are pursuing “more than 30 lawsuits related to illegal deforestation in the Amazon.” This legal action is a direct attempt to enforce laws aimed at halting deforestation.

   • Target 12.6: Encourage companies…to adopt sustainable practices and to integrate sustainability information into their reporting cycle.

     The article points to this target with the example of the “decision by the UK supreme court” regarding an oil well extension. The ruling’s focus on the failure “to consider scope 3 emissions from supply chains” pushes companies to integrate a wider scope of sustainability information into their planning and legal obligations, thereby encouraging more sustainable practices.

3. Indicators for Measuring Progress

   The article mentions or implies several quantitative and qualitative indicators that can be used to measure progress towards the identified targets.

   • Indicator for Target 13.2: Number and nature of climate-related lawsuits.

     The article provides specific data that can serve as an indicator. It states that “approximately 27% of newly filed cases in 2024 sought to challenge regulations promoting climate considerations” and that “Chinese courts saw 518 climate-relevant cases.” Tracking these numbers would measure the extent to which climate change is being integrated into legal and policy frameworks.

   • Indicator for Target 16.3: Percentage of climate cases initiated by government bodies.

     The article provides a clear metric: “In 2024, 56% of global south cases were initiated by government bodies, compared to just 5% in the north.” This indicator helps measure the role of the state in using the justice system to enforce climate policy, reflecting access to and use of justice mechanisms.

   • Indicator for Target 17.14 (Policy Coherence): Percentage of banks with portfolios misaligned with Paris Agreement commitments.

     An indicator of policy incoherence (and thus progress towards coherence) is mentioned when the article cites that “70% of European banks analysed could face elevated litigation exposure due to misalignment between their credit portfolios and public Paris Agreement commitments.” A reduction in this percentage would indicate greater policy coherence.

   • Indicator for Target 15.2: Number of legal actions against deforestation.

     The article provides a direct number that can be used as an indicator: “more than 30 lawsuits related to illegal deforestation in the Amazon.” This metric tracks enforcement actions aimed at halting deforestation.

   • Indicator for Target 12.6: Number of legal rulings addressing corporate supply chain (Scope 3) emissions.

     The article implies this indicator by highlighting the landmark “decision by the UK supreme court” concerning Scope 3 emissions. Tracking the frequency of such rulings would measure the extent to which companies are being legally held accountable for their full production and consumption footprints.

4. SDGs, Targets, and Indicators Analysis

   SDGs	Targets	Indicators Identified in the Article
   SDG 13: Climate Action	Target 13.2: Integrate climate change measures into national policies, strategies and planning.	Number and type of climate-relevant court cases (e.g., “518 climate-relevant cases” in China; “27% of newly filed cases in 2024 sought to challenge regulations”).
   SDG 16: Peace, Justice and Strong Institutions	Target 16.3: Promote the rule of law…and ensure equal access to justice for all. Target 16.6: Develop effective, accountable and transparent institutions at all levels.	Percentage of climate cases initiated by government bodies (“56% of global south cases were initiated by government bodies”). Adoption of risk management guidelines by supervisory institutions (e.g., “European Banking Authority’s ESG risk management guidelines”).
   SDG 17: Partnerships for the Goals	Target 17.14: Enhance policy coherence for sustainable development.	Percentage of banks with credit portfolios misaligned with Paris Agreement commitments (“70% of European banks analysed could face elevated litigation exposure” due to misalignment).
   SDG 15: Life on Land	Target 15.2: …halt deforestation…	Number of lawsuits filed to combat illegal deforestation (“more than 30 lawsuits related to illegal deforestation in the Amazon”).
   SDG 12: Responsible Consumption and Production	Target 12.6: Encourage companies…to adopt sustainable practices and to integrate sustainability information into their reporting cycle.	Number of legal rulings holding companies accountable for supply chain (Scope 3) emissions (e.g., “A decision by the UK supreme court deemed an oil well extension unlawful for failing to consider scope 3 emissions”).

Source: greencentralbanking.com