In November, a US appeals court issued an injunction pending appeal to temporarily halt enforcement of a Californian climate law, known as SB 261 or the Climate-Related Financial Risk Act. The case is illustrative of a rise in what’s termed ‘non-climate aligned’ litigation, in which groups – such as companies and trade associations – push back against legislation designed to enforce climate action.

SB 261 requires companies with more than $500m in annual revenue that are operating in California to disclose their climate-related financial risks, in line with the recommendations of the Task Force on Climate-Related Financial Disclosures. The plaintiffs in the case argue, among other things, that SB 261’s disclosure obligations violate certain First Amendment protections. They further suggest that both SB 261 and a second Californian climate law, SB 253 – the Climate Corporate Data Accountability Act – place an onerous compliance burden on companies and their supply chains. SB 253 requires annual disclosure of Scope 1, 2 and 3 greenhouse gas (GHG) emissions from companies with more than $1bn in annual revenue that operate in the state.

In October, a major US oil company separately filed a suit against California over the two laws, arguing that they infringe upon First Amendment free speech rights by allegedly compelling companies to speak in support of the state’s ‘ideological’ goals. The Californian government didn’t respond to Global Insight’s request for comment, but in October, a spokesperson for the governor’s office said the state had ‘confidence’ in the laws.

Such lawsuits – where plaintiffs challenge the steps taken on climate considerations – are on the rise as climate-focused laws are implemented and subsequently tested in the courts.

The Grantham Research Institute on Climate Change and the Environment’s latest annual assessment indicates that of 226 climate litigation cases filed globally in 2024; 27 per cent included some form of non-climate aligned arguments. This is an increase compared to the 21 per cent of cases in the previous year. The overwhelming majority – 88 per cent – of such cases filed in 2024 came from the US.

‘As [climate] policies start to bite, litigation is shifting to questions on how fast we go, who bears the costs and what trade-offs are acceptable. Policymakers and courts are increasingly being asked to manage and balance competing interests,’ says Tiffanie Chan, a policy analyst for the Grantham Research Institute whose work includes co-managing its Climate Change Laws of the World project.

However, while they are growing in number, the reach of such cases is mostly contained within North America. ‘Cases where companies or interest groups challenge public authorities’ decisions regarding their activities, due to climate-related consequences or compliance with decarbonisation objectives, certainly exist, even in Europe. However, they do not appear to constitute a coordinated effort to multiply anti-climate strategic cases,’ says Don Smith, Editor of the IBA’s Journal of Energy & Natural Resources Law.

Non-climate aligned cases may delay the implementation of regulation in this area, even if the rules being challenged aren’t ultimately rescinded. ‘Even without succeeding on the merits, [such cases] can create regulatory uncertainty and slow implementation, which is often a strategic result in itself,’ says Loes van Dijk, Founder of Climate Court, a database tracking global climate litigation.

Globally, some jurisdictions are reviewing their climate and ESG rules. In the EU for example, the bloc’s transparency framework for financial products integrating environmental or social aims – the Sustainable Finance Disclosures Regulation – is undergoing amendment to simplify the rules and to make them, in the European Commission’s words, ‘better aligned with market realities’.

‘There is perhaps a more critical review of energy and climate policy instruments at the moment, but I would not go so far as to say there is a tide of cases against climate regulation,’ says Matthias Lang, Chair of the IBA Section on Energy, Environment, Natural Resources and Infrastructure Law. He adds that, in his view, we are currently seeing a larger number of important court judgments ‘strengthening climate protection than against it.’

Climate lawsuits are being brought not only against entire companies but also individual directors and officers. In 2024, around 20 per cent of climate cases targeted companies or their directors and officers, according to the Grantham Research Institute. The scope of which companies are targeted is also broadening, the Institute found, with cases relating to facilitated emissions increasingly being brought against professional service providers. Such cases – which are often widely publicised – present a significant reputational threat to corporations.

Even if non-climate aligned cases result in rulings that favour the plaintiffs, the ultimate impact may be an increase in climate-related litigation overall, as other claimants shift their focus from pushing for greater ambition in terms of protecting the climate towards defending existing regulations.

‘Each jurisdiction will have companies that will look at what [successful rulings] could mean. These companies make strategic calculations in terms of whether it’s worth going for such litigation versus more discrete lobbying,’ says Els Reynaers, Co-Chair of the IBA Environment, Health and Safety Law Committee.

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