ITLOS Advisory Opinion's Impact on Corporate Responsibility

Why the impact of climate change under the Law of the Sea affects companies

21 May 2024 saw a pivotal moment in the legal landscape of climate responsibility as the International Tribunal for the Law of the Sea (ITLOS) issued its advisory opinion on questions raised by the Coalition of Small Island States (COSIS).

The opinion clarifies critical aspects of state obligations under the United Nations Convention on the Law of the Sea (UNCLOS) concerning marine pollution and environmental preservation in the context of climate change. UNCLOS is a 1982 treaty to which 168 countries are party. It establishes a legal framework for the world's oceans and seas. This opinion is one of several international law decisions being handed down in 2024/2025 and is one of the more significant ones. These decisions are likely to have an important regulatory and commercial impact on companies.

What you need to know:

• ITLOS' advisory opinion provides guidance as to states' obligations in relation to climate change under UNCLOS.
• The ITLOS advisory opinion is one of several international decision expected this year and is the forerunner to the International Court of Justice's advisory opinion on states' obligations in relation to climate change.
• ITLOS found that states have a due diligence obligation to protect and preserve the marine environment from the deleterious effects of climate change. States are mandated to anticipate risks and take proactive measures to conserve marine habitats and ecosystems.
• ITLOS also emphasised the importance of international cooperation, technical assistance, and the establishment of scientific criteria for regulations, as well as the obligations of states to assist developing states.
• ITLOS emphasised the importance of harmonising national policies with international climate treaties.
• ITLOS stated that the precautionary approach entails that where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.
• For companies, ITLOS's advisory opinion potentially holds significant implications. The opinion underscores the evolving regulatory landscape concerning climate responsibility, and points to heightened scrutiny and regulatory enforcement concerning greenhouse gas emissions and environmental preservation.
• Companies operating in sectors with significant environmental footprints must anticipate the likelihood of regulatory changes and be prepared to proactively adapt their practices to align with evolving standards. The opinion adds to the growing body of international case law which claimants in domestic court litigation may rely on when seeking to hold companies to account for climate change.

What you need to do

• Organisations and directors must be alive to the risk of climate-related disputes (including class actions) and the impact international decisions are having on that risk.
• Ensure that robust policies and procedures are developed to adequately identify, manage and disclose the risks (and opportunities) presented by global climate change.
• Review operations and environmental policies to ensure compliance with national laws and regulations and consider aligning these with international climate treaties.

What is the case about?

Initiated on 12 December 2022, COSIS's request sought clarification on the extent to which state responsibilities outlined in UNCLOS regarding the prevention of marine pollution apply to anthropogenic greenhouse gas (GHG) emissions and the protection of marine ecosystems from climate change impacts. The advisory opinion, delivered unanimously by ITLOS, underscores the jurisdiction of the tribunal to address these pressing issues and responds comprehensively to the questions posed.

The ITLOS is an independent judicial body established by UNCLOS to adjudicate disputes and give advisory opinions concerning the interpretation and application of UNCLOS. ITLOS has the power to give advisory opinions on legal questions arising within the scope of the activities of international organizations related to UNCLOS, subject to the consent of the parties concerned.

An advisory opinion, as per Article 96 of the UN Charter, serves as a legal clarification provided by an international court to the United Nations or a specialized agency. COSIS's inquiry revolves around whether the failure of states to curb GHG emissions, leading to adverse marine environmental impacts, constitutes a breach of the Law of the Sea, and if nations are mandated to take measures to mitigate such harm.

What did ITLOS decide?

Unsurprisingly, ITLOS said, yes - anthropogenic GHG emissions are definitely damaging the oceans, and states need to do more to stop it. The 153 page opinion went on to identify specific obligations of states, emphasising the need for comprehensive measures to prevent, reduce, and control marine pollution from GHG emissions.

Whilst ITLOS held that measures should be determined objectively, taking into account the best available science and relevant international rules and standards, it noted that the scope and content of necessary measures may vary in accordance with the means available to states and their capabilities. In other words: the wealthier the state, the greater the measures expected of it.
The Tribunal stated that the precautionary approach entails that where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.

Importantly, ITLOS emphasised the importance of harmonising national policies with international climate treaties like the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, highlighting the imperative of limiting temperature rise to 1.5°C above pre-industrial levels.

ITLOS underscored the broad scope of state obligations to protect and preserve the marine environment from climate change impacts. States are mandated to anticipate risks and take proactive measures to conserve marine habitats and ecosystems. For ITLOS, the due diligence standard is high, given the serious and irreversible harm posed by climate change impacts and ocean acidification.

The Tribunal emphasized the importance of international cooperation, technical assistance, and the establishment of scientific criteria for regulations to address marine pollution from anthropogenic GHG emissions. The Tribunal highlighted the obligations of States to assist developing states, particularly those vulnerable to the adverse effects of climate change, in their efforts to address marine pollution from anthropogenic GHG emissions.

It was a resounding victory for COSIS, albeit the advisory opinion has no binding effect on states.

How is this relevant to companies?

The advisory opinion highlights the role of corporate climate responsibility in addressing the global climate crisis. Businesses are increasingly under pressure from consumers and stakeholders to integrate sustainability principles into their operations, invest in clean technologies, and collaborate with the market to advance environmental stewardship initiatives.

ITLOS's advisory opinion represents a new milestone in the global response to climate change. Climate activists increasingly cross-pollinate decisions from different jurisdictions and utilise judicial comments from a wide range of legal disputes in support of novel climate related arguments. The ITLOS advisory opinion will, no doubt, add another string to those arguments and provide further impetus for cases against governments and companies (particularly transnational companies).

Corporate clients should recognise the downstream implications of this opinion on their operations and consider proactive steps. By aligning with international climate commitments and adopting sustainable practices, corporate entities can mitigate regulatory risks and contribute to global climate efforts.

Authors: Angela Pearsall, Partner; Erin Eckhoff, Senior Associate; and Poppy Gammon, Paralegal.