Unpacking Corporate Due Diligence in Transnational Climate Litigation: A Planetary Perspective

Abstract

Straddling national and transnational law, corporate due diligence presents a legal quandary. How should business entities address climate change matters? Due diligence generally implies the duty to assess and disclose potential risks and uncertainties in addition to the duty to prevent and manage risks and uncertainties based upon global standards of expected conduct. In this context, has a duty of climate due diligence emerged to protect both society and shareholders? Further, what legal sources are currently shaping climate due diligence? This article explores the implications of due diligence derived from transnational climate change litigation against business entities. The research field is still nascent — with only one decision clearly addressing the benchmark against which business entities shall conduct climate due diligence. In this landmark case, Milieudefensie v Shell (2021), the District Court of The Hague mandated climate due diligence obligations upon Royal Dutch Shell, as aligned with Dutch tort law, international law, the European Convention on Human Rights case law, and transnational soft law instruments, notably the United Nations’ Guiding Principles on Business and Human Rights (UNGPs) and the reports of the Intergovernmental Panel on Climate Change (IPCC). Focusing on the underexplored topic of due diligence in transnational law, this article sheds light on the ground-breaking, albeit methodologically problematic, treatment of legal sources in the due diligence benchmark elucidated in Milieudefensie v Shell. Moreover, the paper explores how the planetary boundaries theory can provide courts with a toolbox to operationalise IPCC reports and the UNGPs and anchor them in the doctrine of legal sources for corporate accountability over climate issues. Because no general principle of due diligence exists, transnational climate litigation proves key to articulating science-based business duties in mandatory due diligence over climate matters. Focusing on the underexplored topic of due diligence in transnational law, this article sheds light on the ground-breaking, albeit methodologically problematic, treatment of legal sources in the due diligence benchmark elucidated in Milieudefensie v Shell. Moreover, the paper explores how the planetary boundaries theory can provide courts with a toolbox to operationalise IPCC reports and the UNGPs and anchor them in the doctrine of legal sources for corporate accountability over climate issues. Because no general principle of due diligence exists, transnational climate litigation proves key to articulating sciencebased business duties in mandatory due diligence over climate matters.