Climate litigation in 2026: Is your business ready for greater scrutiny?

Key points

• Climate and ESG litigation continue to evolve, but for many businesses the risk now lies in reporting, disclosures, governance, and supply-chain oversight, as well as traditional claims
• New UK sustainability reporting standards and FCA disclosure requirements are likely to increase scrutiny of climate-related reporting and communications
• Greenwashing remains a key concern, while courts are showing greater willingness to examine varied causes of corporate climate accountability
• Businesses should ensure that sustainability ambitions, reporting, governance processes, and operational practices are aligned

Climate litigation has entered a new phase

Climate-related litigation continues to grow globally. More than 3,600 climate cases have now been recorded across 62 countries, with over three-quarters filed since 2015, the year of the Paris Agreement [1]. For businesses, an important development is not simply the number of claims, but their changing nature.

Historically, climate litigation often focused on environmental impacts, planning decisions, and challenges to governments or major fossil-fuel projects. Those claims remain important, but recent trends also show a shift towards corporate accountability.

Businesses increasingly face scrutiny not only for their environmental impacts, but also for how they govern, monitor, report on, and communicate climate and sustainability issues.

Organisations need to be aware that the next challenge may arise from an environmental incident or from a sustainability statement, net zero commitment, transition plan, marketing campaign, or even from information supplied by, or actions of, a supply chain party.

Climate litigation and the lessons to be learned from recent developments should therefore be on the radar for boards, legal teams, finance functions, procurement professionals, investor relations teams, and marketing departments alike.

Key trends in climate litigation

In December 2025, we highlighted the link between the evolution of the law of nuisance and the willingness of the courts, across the UK and internationally, to find innovative ways to apply or develop the law to facilitate environmental protection.

One of the most significant developments of 2026 has been the continued evolution of the UK’s sustainability reporting framework. Publication of the final UK Sustainability Reporting Standards, UK SRS S1 and UK SRS S2, together with the FCA’s new sustainability disclosure requirements for listed companies,  shows a clear move to implementation of the new framework.

More than ever, UK businesses now need to consider whether:

• climate-related statements can be substantiated
• sustainability commitments align with strategy and investment decisions
• targets are measurable and realistic
• information is consistent across all reports, operations, websites, and marketing materials
• governance, controls, and assurance arrangements are sufficiently robust

What happens when stakeholders start asking questions?

One of the clearest themes emerging from recent climate litigation is the growing focus on transparency and accountability. Climate- or greenwashing claims, which challenge inaccurate corporate or governmental narratives about the transition to a lower-carbon economy, remain a key source of claims against corporate actors, and more than 65% of decided cases have been resolved in the claimants’ favour [2].

And the risk of greenwashing now extends well beyond advertising. Net zero commitments, emissions targets, transition plans, sustainability-linked financing, ESG investment statements, product claims, annual report disclosures, and even employee and pension practices may all attract scrutiny.

The challenge is not whether your business should communicate its sustainability ambitions, but whether it can support them with evidence. A gap between public commitments and operational reality may create regulatory, reputational, and dispute risk.

A recent US class action against Cushman and Wakefield‘s employee pension fund claims that the firm applies climate risk practices for clients, but not for employees’ retirement savings. The claim is based on the ‘consistency gap’ theory, which demonstrates that inconsistency across organisations’ practices can be as much of a risk as inaction.

Silence isn’t necessarily safer (or commercially viable), and it could even lead to allegations of ‘greenhushing’. The better approach is accurate, consistent, and properly qualified communication.

How well do you understand your supply chain?

Businesses are increasingly expected to understand not only their own activities, but also environmental, social, and governance (ESG) risks across wider commercial relationships. The CMA’s 2026 guidance on green claims across supply chains emphasises the importance of understanding how sustainability information is obtained, verified, and communicated.

For many organisations, environmental claims and credentials depend on information and practices from across the supply chain.

Your business should consider supply chain due diligence as an ongoing process, not a one-off onboarding exercise.

“As sustainability claims become more sophisticated, the systems supporting them must do the same.”

Does your governance framework stand up to scrutiny?

Stakeholders are increasingly examining how organisations identify, assess, and manage climate-related risk. At the same time, courts are increasingly willing to engage with a variety of corporate accountability actions.

A prominent example is Greenpeace France v TotalEnergies. In October 2025, the Paris Judicial Court ruled that parts of TotalEnergies’ communications about its carbon-neutrality ambitions and role in the energy transition amounted to misleading commercial practices.

As well as illustrating the scrutiny applied to sustainability claims and the importance of making sure that statements are supported by clear, objective, and verifiable evidence, the case demonstrates that climate-related litigation risk can arise from the presentation of a business’s future ambitions, not only from statements about its current performance.

Good governance doesn’t require businesses to prioritise climate considerations above every commercial objective, but it does require organisations to understand material risks, consider them through established decision-making processes, and keep hold of appropriate records. In this context, scrutiny focuses not only on decisions made but also on how those decisions were reached.

Organisations that treat sustainability as a governance issue, rather than just a reporting exercise, will be better positioned to respond to challenge.

Climate litigation is now a business risk and horizon issue

Climate litigation should therefore increasingly be viewed as a mainstream corporate and financial risk, rather than solely an environmental issue. And the consequences may extend beyond court proceedings to include regulatory investigations, increased compliance costs, reputational damage, investor scrutiny, and issues relating to finance or insurance.

Analysis of recent cases highlights exposure arising from corporate commitments, disclosures, financed emissions, investment and operational decisions, and the management of physical and transition risks.

Emergent claim types are also likely to include allegations relating to carbon dioxide removal and storage infrastructure, data centre impacts, plastics and PFAs impacts, water scarcity, extreme weather, and so-called ‘just transition’ cases (involving complex arguments around where climate mitigation measures cause tension with indigenous/frontline communities and/or mitigation trade-offs).

Practical advice

As climate litigation continues to grow in scope and sophistication, businesses should take a proactive approach to reducing their exposure:

• Environmental claims, sustainability commitments, and climate-related disclosures should be capable of substantiation, supported by reliable data, and subject to appropriate internal verification and approval processes
• Organisations should ensure that climate targets and actions are measurable, realistic, and aligned with wider business strategy, investment decisions, and operational delivery, while maintaining consistency across internal and external communications, websites, marketing materials, policies, and processes
• Strong governance, assurance, and record-keeping arrangements are essential, as is ongoing due diligence into the origin, accuracy, and verification of climate-related information throughout the supply chain
• Climate litigation risk should be considered alongside physical climate, transition, regulatory, and reputational risks within the organisation’s wider risk-management framework
• Businesses should keep legal and regulatory developments under regular review and ensure that ESG commitments are embedded throughout the organisation. From board-level decision-making to day-to-day operational practices, the goal should be to identify and address potential issues before they become legal disputes

 How we can help you

Climate litigation is reshaping legal frameworks and creating new challenges, and businesses and investors across all sectors are likely to feel the impact. You’ll face growing pressure to report clearly on your green credentials and transition planning. Climate compliance and transparency are no longer optional – they’re a must-have for long-term resilience.

Our specialist lawyers are experienced in environmental issues, infrastructure and energy, commercial contracts, corporate and climate reporting, and all aspects of the sustainability agenda.

We advise on compliance, transactional matters, and regulatory/dispute resolution. We can:

• Undertake audits and contract reviews and draft/update policies, procedures, and contracts from a sustainability perspective
• Keep you up to date on legal and regulatory developments
• Help you to secure ‘green finance’ or other responsible investments
• Provide cross-disciplinary advice and transactional assistance
• Provide risk management and effective dispute resolution strategies if/when any climate-related issues do arise, including bringing or defending claims or complaints, or in connection with regulatory investigations

If you have any questions, need tailored advice, or would like more information on staff training, please contact Rachel Turnbull or Nick McQueen.