Introduction

Climate change represents the greatest market failure ever seen, rooted in unpriced greenhouse gas (GHG) emissions. While traditional regulatory approaches are often hindered by political factors, strategic climate litigation has emerged as a critical vanguard to pressure extractive capitalism. Financial institutions are pivotal in this context, as high-emitting projects cannot proceed without finance. Since the Paris Agreement, the world’s 65 largest banks have committed almost US$8tn to fossil fuel companies. Banks occupy a uniquely systemic position, acting as the financial engine that entrenches ‘fossilised capital’.

Strand A research question

The first part of the research evaluates the approaches used to establish causal links between corporate emissions and climate-related harms in successful litigation. It utilises a three-tiered taxonomy: backward-looking cases seeking damages, forward-looking cases seeking injunctive relief, and mixed approaches.

The legal parameters and tests in relation to causation and attribution

Courts are increasingly moving away from the traditional ‘but-for’ causation test toward a ‘material contribution’ framework. In backward-looking cases like Lliuya v RWE, the court accepted in principle that major emitters can be held liable for their proportional contribution to global warming. In that case, RWE was attributed a 0.38% share of cumulative anthropogenic emissions. Forward-looking human rights litigation, such as KlimaSeniorinnen v Switzerland, focuses on protecting individuals from serious adverse effects on life and health, requiring states to adopt regulations capable of mitigating future harm.

The key legal and methodological challenges facing climate litigants

Litigants face significant hurdles including cumulative causation, scientific uncertainty, and the extraterritorial nature of climate change. Courts have historically demonstrated a reluctance to assume regulatory roles or impose specific emission reduction targets. However, progress is seen in cases like Greenpeace v ENI, where the Italian Supreme Court refused to dismiss a case simply because it concerned climate policy. Data gaps in vulnerable regions also pose a challenge, though the Inter-American Court of Human Rights recommends utilising satellite evidence to overcome these asymmetries.

Quantitative emissions attribution evidence submitted to courts

Claimants rely on authoritative sources like IPCC reports and the Carbon Majors database to quantify corporate responsibility. The Carbon Majors database attributes cumulative historical CO2 emissions from 178 of the world’s largest producers. While courts consistently treat IPCC reports as the ‘best available science’, the reception of more granular sectoral pathway modelling remains inconsistent. In Milieudefensie v Shell, the court treated a range of required reductions as indicative of scientific uncertainty rather than a binding standard.

The nature of relief sought by climate litigants

The type of relief sought determines the evidentiary threshold. Damages claims require a tighter, more granular chain of causation and high-precision attribution data. Conversely, injunctive and restorative relief often permits more flexible, probabilistic reasoning. Symbolic relief, such as the €1 damages sought in Falys v TotalEnergies, can mitigate the need for exact quantification of past harm.

The temporal aspects of attribution evidence and arguments

Temporal boundaries for liability are increasingly anchored to the point at which companies acquired knowledge of climate harms. Backward-looking cases often identify 1965 as a discrete ‘starting point’ for responsibility, as the fossil fuel industry’s awareness of carbon-related risks became undeniable during this era. In forward-looking contexts, this knowledge threshold functions as a trigger for a positive duty of care to mitigate foreseeable risks.

Strand B research question

The second part of the research examines how special responsibility for climate harms is attributed to banks and how ‘financed emissions’ are quantified.

How the special responsibility of banks has been presented

Banks’ responsibility is framed by the immense volume of capital they direct toward fossil fuels. In 2024 alone, the 65 largest banks committed US$869bn to fossil fuel companies. Analysis shows that 94.7% of this support was provided at the corporate level, rendering project-specific exclusion policies functionally irrelevant. Banks are increasingly recast as active agents rather than passive intermediaries, with a positive obligation to prevent the social costs of activities they structurally enable.

The accountability methodologies currently available

Key methodologies include the Partnership for Carbon Accounting Financials (PCAF) and the Paris Agreement Capital Transition Assessment (PACTA). These are supported by two primary theories: the ‘Enabler Theory’, which views finance as a necessary condition for fossil fuel continuation, and the ‘Facilitation Theory’, which acknowledges capital fungibility but argues for joint, proportional responsibility based on contribution.

How these assessments have been relied upon in litigation

Methodologies have been deployed in high-profile cases such as Milieudefensie v ING, where the claimants demanded a 50% absolute reduction in total emissions by 2030. These tools help dismantle the ‘de minimis’ defence by establishing a quantifiable nexus between bank balance sheets and systemic climate endangerment.

The strengths and weaknesses of available methodologies

Strengths include the use of independent data from sources like Bloomberg and Global Energy Monitor, which ensures impartiality. However, significant weaknesses persist, including the ‘substitution defence’—the argument that another lender will fill the gap if one bank divests. Methodologies are also vulnerable due to their dependency on bank self-reporting and the potential for technical distortions in complex accounting formulas, such as the Enterprise Value Including Cash (EVIC) denominator.

Conclusion

Strategic climate litigation against financial institutions is a growing field. Future strategies should prioritise pivoting toward procedural due diligence and the enforcement of science-aligned transition plans. Success depends on neutralising the substitution defence by shifting the focus to the financial system as a whole and integrating international soft law, such as the UNGPs and OECD Guidelines, with rigorous scientific benchmarks.