The Climate Principles for Enterprises are a follow-up project to the Oslo Principles, launched at King’s College London in 2015. Whereas the Oslo Principles chiefly formulated the obligations of States in the face of climate change, the Climate Principles for Enterprises focus on enterprises and investors. Both projects aim to further the discussion on what specific entities must concretely do in the face of climate change from a legal perspective.

Comprised of experts in international, environmental, tort, human rights and company law, the Expert Group on Climate Obligations of Enterprises has worked over several years to formulate the Principles based on its interpretation of the law as it stands or will likely develop. In doing so, it hopes to spur a concrete debate on the responsibilities of individual entities and therewith contribute to addressing the threat climate change poses to life, the environment and the economy.

Typhoon Ondoy AftermathAccording to the Expert Group, enterprises are under four kinds of obligations:

  1. Reduction of greenhouse gas (GHG) emissions from enterprises’ own activities;
  2. Reduction of GHG emissions from enterprises’ products and services;
  3. Consideration of suppliers; GHG emissions; and
  4. Procedural obligations on disclosure and impact assessment

In general, enterprises should reduce the GHG emissions of their own activities to the same extent as the country or countries in which those activities take place. That means that the burden will primarily be carried by enterprises in developed countries.

Investors can and many already do play an important role to stem the tide of climate change. The Climate Principles for Enterprises also aim to provide a legal basis for active investment management and investor engagement with enterprises on climate. The Principles aim to strike a balance between the need for investors to operate from a long-term perspective, which includes taking responsibility in addressing climate change, and achieving an adequate return for current beneficiaries.

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Reactions:

“The Climate Principles for Enterprises are a valuable initiative which can help in achieving the Paris Agreement’s objectives and ultimately tackling climate change. I sincerely hope that this project will enjoy broad support.”
Laurent Fabius, President of the Constitutional Council of France, Former Prime-Minister of France, Former Minister of Foreign Affairs and International Development of France during COP-21

“Climate change may be the greatest challenge that currently faces mankind. If it is to be solved it requires collective action. That creates a problem, because if collective action is to be successful, each individual needs to understand what his or her contribution is to be. And if that contribution is to be made, it needs to be, and to be seen to be fair amongst all participants. Scientists agree that we need to keep the temperature rise to two degrees. But what does that mean for way we run those enterprises that are the engine of the global economy? If we leave it for every company to invent their own rules, it will take enormous effort, and it is unlikely that all will agree that each has contributed their fair share. That is why this document is of such importance. Here in less than 3,000 words, some of the world’s most eminent lawyers have laid out a simple set of rules.”
David Pitt-Watson, Former Chair UN Environment Program Finance Initiative

“The Climate Principles for Enterprises provide a very explicit and easy to follow mandate for corporates to incorporate the imperatives of reducing carbon emissions into their planning, management and reporting. The simplicity of the document serves only to highlight the sophistication of its drafting and the power of its message.”
Ashok Khosla, Chairman, Development Alternatives; Past Chairman, UN’s International Resource Panel; Past President, IUCN and the Club of Rome

The Climate Principles for Enterprises “provide a solid framework for identifying the obligations of all businesses to reduce their greenhouse emissions in line with national targets that are sufficient to meet the two degree goal. Businesses that reduce their total emissions in line with these principles are likely to avoid the risk of future litigation and liability for contributing to the loss and damage from climate change.”
James Thornton, CEO of Client Earth

“The Principles on Climate Obligations of Enterprises are impressive, well-conceived, and well-constructed. I am glad to endorse them.”
Parvez Hassan, Senior Advocate of the Supreme Court of Pakistan; President of the Pakistan Environmental Law Association; former Chairman, IUCN World Commission on Environmental Law

“Finally, the Oslo Principles, although not endorsed by the UN or binding on any states, contain a useful framework for conceptualizing state obligations in this context [domestic mitigation obligations]. The principles explicitly reference the need to protect human rights and clarify the obligations that states have to reduce GHG emissions, taking into account cost and other factors”
“[I]t is worth noting that non-state obligations with respect to human rights are also outlined in the Oslo Principles (which deal specifically with climate change)”
UN Environment in cooperation with the Sabin Center for Climate Change Law at Columbia University, Climate Change and Human Rights, 2015, p.24-29