1. Causes of Action

6. HURDLES AND CHALLENGES

Litigation based on contractual obligations faces several hurdles and challenges, notably:

(a) Uncertainty Regarding the Enforceability of Climate-Related Clauses

There is a trend of integrating climate-related clauses and goals into contracts, yet the enforceability of these clauses remains uncertain. Reasons for uncertainty include:

• Lack of precedent: The absence of clear legal guidelines and precedents for interpreting climate-related clauses generates uncertainty regarding their enforcement.

• Ambiguity in language: The language of the clauses may not mandate strict compliance but instead suggest "soft" obligations, aiming for adherence on a "best efforts" basis.

• Varying standards and definitions: The absence of standardised definitions for terms such as "sustainability," "net zero," and "green modifications" can lead to disputes over the interpretation of contractual obligations. The evolving policy landscape further complicates the process of reaching agreed-upon definitions and standards.

An illustrative case is the ongoing litigation in France against BNP Paribas, examining the legal enforceability of the bank's voluntary commitments to carbon neutrality. In particular, BNP Paris voluntarily joined the Net-Zero Banking Alliance, the Net-Zero Asset Owner Alliance, and the Net-Zero Asset Managers Initiative. Despite the subscriptions and its own commitment to carbon neutrality by 2050, the BNP Paribas Group is allegedly not effectively implementing the required measures. The complainants argue that the BNP Paribas Group is in breach of its obligation to respect its unilateral commitment and should be subject to contractual sanctions. Specifically, they seek an injunction to enforce the commitment, demanding the immediate halt of all new financing in fossil fuels and any new investments. This argument is based on French law, which provides that unilateral commitments can lead to forced execution if disregarded. If successful, this will underscore the potential for voluntary commitments to play a significant role in driving corporate environmental responsibility.

The enforceability of climate-related contractual clauses presents a significant challenge in corporate climate litigation. The future of climate litigation may hinge on whether courts will enforce these contractual obligations.

(b) Technical Nature and Complexity of Contracts for Carbon Crediting and Emissions Reductions

The intricate and technical nature of contracts concerning carbon crediting and emissions reductions adds complexity to corporate climate litigation. This complexity raises questions about the capacity of local courts, in the absence of specialised tribunals, to adjudicate such matters with the requisite technical expertise. Furthermore, it brings into question whether the general provisions of civil code or contract law are adequate for interpreting the validity and terms of these complex contracts.