Introduction

To respond to the climate urgency, NGOs around the world initiated climate litigation, especially after the 2015 Urgenda judgement. Some extended this trend to corporate actors, such as the French NGO Notre Affaire à Tous (NAAT), notably against the oil group TotalEnergies. Akin to climate litigation against States, the goal is to compel the corporate group to limit global warming to 1.5°C, in line with the Paris Agreement.

For this case, the then inexperienced NGO NAAT teamed up with the specialized business and human rights NGO Sherpa and French local public authorities to gain legitimacy and seriousness. Together, they sent an initial letter of non-compliance to the company in 2018 and filed their complaint in 2020. After the launch of the case, and a victory on jurisdiction in 2022, Paris and New York joined the case as intervening parties. The high-profile nature of this case contributed to raising the attention of legal scholars in France and overseas, alongside the general media (see, for instance, here, here, here and here).

While judicial bodies increasingly compel States to reduce emissions in line with the Paris Agreement (see the KlimaSeniorinnen judgement of the European Court of Human Rights, issued in April 2024), only one judgement of this kind was issued on the merits against a corporate actor (see the 2021 Shell decision in the Netherlands; the judgement by the Dutch Court of Appeal is expected for 12 November 2024). Despite this novelty, the European Union adopted in June 2024 the Corporate Sustainable Due Diligence Directive (CSDDD), which imposes human rights and environmental obligations on parent companies of large corporate groups, including a duty to elaborate a Paris compatible transition plan with the 1.5°C goal.

In light of these developments, what can corporate climate due diligence obligations require in the current context of a systemic worldwide governance failure concerning climate mitigation?

This short piece responds to this question by focusing on the experience of the French legal context, which saw in 2017 the adoption of the first ‘mandatory due diligence legislation’ worldwide, namely, the French Law regarding the due diligence of parent companies. This Statute obliges large undertakings to supervise their subsidiaries and supply chains to prevent serious human rights abuses and environmental harms in France and abroad. The French Law inspired the German Supply Chains Act and the CSDDD. Nonetheless, I must insist that the French, German and European legislations do not introduce significant legal evolutions: in fact, they do not pierce the corporate veil by establishing a strict liability regime of multinational corporations; instead, they only impose obligations of means on parent companies. In my view, these obligations could largely unfold from the incremental judicial development of the tort duty of care, like in the UK and The Netherlands (besides the Shell judgement mentioned above, see the following UK authorities: Chandlers, Vedanta, and Shell). I specify this to insist that the developments in France are not special, they could also happen in other jurisdictions, even without a specific law on corporate due diligence.

That being said, this piece – while focusing on the French jurisdiction – firstly clarifies that due diligence norms apply to climate change; secondly, it showcases companies’ failures to tackle climate change; and thirdly, it lays out the expected conduct needed to comply with climate due diligence.

The applicability of the French corporate due diligence law to climate change

On 18 June 2024, the Paris Court of Appeal ruled that NAAT and the other applicant NGOs have standing to challenge the worldwide conduct of TotalEnergies in climate matters, both concerning the Duty of Vigilance Law and Art 1252 of the Civil Code combined with the general obligation of environmental vigilance (i.e., the latter legal base is similar to the general standard of care under tort law, adapted to environmental protection). This ruling came after numerous relevant judicial bodies such as the Grand Chamber of the European Court of Human Rights recognised that climate change harms human rights. These decisions strongly indicate the applicability of corporate due diligence norms to climate change, as most large businesses emit significant GHG emissions and contribute to global warming, thereby aggravating the risks to human rights and the environment.

Additionally, companies in France also attempt to demonstrate that they comply with the Duty of Vigilance Law in climate matters in their vigilance plans. For instance, TotalEnergies integrated climate mitigation into its vigilance plan after the first letter sent by NAAT and others to the company in 2018. This letter, which was not an official formal notice, certainly had ripple effects on other high-emitting companies, as they started to present GHG reduction measures in their vigilance plans as well. More precisely, according to the Climate Vigilance Benchmark of NAAT (i.e., an annual report released for the first time in 2020 to evaluate and compare companies’ performances, exercise pressure on the companies, provide general information on the state of the implementation of the law etc.), 25 out of 26 high-emitting companies integrated climate mitigation into their vigilance plans.

Consequently, there seems to be no debate about whether or not these corporate actors must implement “climate due diligence” (see Macchi 2020).

Despite this legal formal progress, NAAT and others are still suing TotalEnergies and others for strategic reasons, as in their view the corporations did not fully satisfy the requirements of the law in terms of climate due diligence.

Companies’ substantive failures concerning climate due diligence

Numerous companies such as TotalEnergies adopted a net zero goal by 2050 or 1.5°C strategy, and upscaled investments into renewable energy, partially satisfying some original demands of the NAAT and others (i.e., TotalEnergies is even ranked one of the best companies in this field). However, we believe companies still don’t meet the expected standards of conduct compatible with 1.5°C scenarios. For instance, TotalEnergies still develops new oil and gas projects, which manifestly contravenes the most basic requirements to attain the 1.5°C objective (see, among others, the International Energy Agency’s opinions, UN-HLEG, IPCC etc).

More generally, numerous companies claim to follow a Paris Agreement-aligned strategy despite not being able to demonstrate corresponding concrete credible measures (see the Climate Vigilance Benchmark). Thus, the claimants argue that TotalEnergies (and others) still excessively contribute to global warming and do not comply with corporate due diligence.

The extent of the enforceability of climate due diligence obligations

NAAT and others argue that corporations bear a duty to limit global warming to 1.5°C as overstepping this threshold triggers serious and irreversible risks to human rights and the environment. The 1.5°C goal is enshrined in the Paris Agreement, a worldwide accepted treaty, representing in the NGO’s opinion the relevant standard, including for companies.

While the world is not on track to meet the Paris Agreement’s objectives, scientific bodies such as the IPCC and the IEA consider that the 1.5°C transition remains attainable if everyone takes meaningful measures in a coordinated manner (see here IEA, Net Zero Roadmap, 2023 Update, see among others p. 17 and 147). This global coordination condition means that one single private actor cannot mitigate global warming alone, nor an individual country. Nevertheless, the applicants claim, in essence, that every single actor must do their part, like in the contentious cases against States, and therefore be “proactive”, as the OECD Guidelines for Multinational Enterprises require (see 2011 Edition, § 69).

Given the enforceable corporate duty to adequately identify the climate risk in the Duty of Vigilance Law, and TotalEnergies’s shortcomings, French courts should compel TotalEnergies to implement a Paris-compliant 1.5°C strategy. As to the contentious issue of stopping new oil and gas projects, there is a high degree of scientific and institutional consensus on the need to stop new fossil fuel projects to limit warming to 1.5°C (see IEA, UN-HLEG). Since it is one of the main requirements of a 1.5°C pathway, it demonstrates the adequacy and reasonableness of the measure in this particular context. Consequently, French courts could order the company to cease the development of new fossil fuel projects, keeping in mind that due diligence is an obligation of means. This feature offers companies a “way out” if the implementation is infeasible in practice. But, even with this relatively flexible approach, businesses would still be held to account by having to precisely demonstrate whether they discharged the duty, or, on the contrary, demonstrate that the circumstances legitimised an incapacity to achieve it.

Conclusion

As the French example shows, the strategic use of due diligence in the climate realm may force corporate actors to adequately mitigate climate change. The key ingredients to do so seem to be the following:

• rely on due diligence norms (either tort law or statutory duties) to show that companies have enforceable legal obligations;
• rely on science and comparative climate case law to establish the applicability of due diligence norms to climate change;
• explain the factual evidence to show that individual corporate actors contribute to global warming, and, do not implement the required measures to achieve the Paris agreement, in breach of their duties;
• conversely, explain that corporations can mitigate their contributions, devise Paris-compatible business models, and eventually cease their unlawful contribution to global warming;
• establish extrajudicial strategies to pressure companies outside of courts, through name and shaming, benchmarking etc.

These gradual developments should eventually induce the development of case law and turn general due diligence obligations into enforceable 1.5°C commitments.