Reducing greenhouse gases to stay on a pathway to 1.5 degrees as a corporate duty

The legal report points to existing corporate CO2 reduction obligations that are currently not sufficiently taken into account by many companies. It concludes that the increasing density of corporate reporting obligations in the area of so-called ESG risks (Environment, Social, Governance) already results in implicit climate-related duties of conduct for companies, which require preventive and science-based decision-making, including at management level.

This means that companies must demonstrate in a verifiable manner to what extent their decisions are compatible with the 1.5 degree limit of the Paris Agreement. Yet, the some of the details of these legal obligations have not yet been clarified. Against this background, the authors argue in support of a detailed regulation in the currently negotiated Corporate Sustainability Due Diligence Directive (CSDDD).

The report was commissioned by the Dorothea-Laura-Janina Sick Environmental Foundation, Germanwatch, and Protect the Planet, and is based on an analysis of legal developments in the areas of corporate law, directors’ duties, sustainability due diligence duties, as well as tort law.