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Developments in Climate-Related Litigation, Disclosures and Due Diligence Requirements

This briefing by the Commonwealth Climate and Law Initiative (CCLI) and the Climate Governance Initiative is a resource for board directors to navigate the rapidly-evolving landscape of sustainability-related corporate responsibilities and climate litigation.

It explores key developments in the following areas:

  • Climate-related derivative claims are being tested. On 21 and 24 July 2023, two UK courts handed down judgements refusing to grant permission for climate-related derivative claims (McGaughey v USS and ClientEarth v Shell). Derivative claims are brought by shareholders on behalf of the company against directors personally. These decisions may affect how directors consider climate risks when performing their duties and could also apply to biodiversity risks.

  • Due diligence regulations. On 1 June 2023, the European Parliament voted to provisionally approve the proposed Corporate Sustainability Due Diligence Directive (CSDDD), the latest development in the CSDDD’s progress towards final form and approval. On 29 June 2023, the EU Regulation on deforestation-free supply chains entered into force, requiring companies to investigate the source of a range of commodities sold in or exported from the EU.

  • Establishment of reporting standards. On 26 June 2023, the International Sustainability Standards Board (ISSB) finalised its comprehensive set of sustainability-related (IFRS S1) and climate-related (IFRS S2) financial disclosure requirements. On 25 July 2023, the International Organization of Securities Commissions (IOSCO) endorsed the ISSB standards, calling for securities regulators around the world to consider adopting them. On 31 July 2023, the European Commission submitted EU Sustainability Reporting Standards (ESRS) under the EU Corporate Sustainability Reporting Directive. The ESRS were approved by the Parliament and Council in October marking progress toward the realisation of the EU corporate sustainability reporting framework.

  • International assurance standards. On 2 August 2023 the International Auditing and Assurance Standards Board (IAASB) opened consultation on its proposed International Standard on Sustainability Assurance (ISSA) 5000.


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