EU must make business legally accountable for the climate crisis

The climate crisis is the biggest crisis facing us today. The role of business in worsening this crisis is undeniable. There is an EU law on the table^[1] that could make companies tackle their greenhouse gas emissions, but the proposal is too weak to work in practice.

Every economic sector has a heavy climate footprint. The energy sector is the largest culprit, yet fossil fuel companies are still recklessly planning mega projects – like the East African Crude Oil Pipeline^[2] or the Mozambique LNG projects^[3] – bound to set off disastrous ‘carbon bombs’.^[4] Agribusiness is sourcing products like meat from farms on thousands of hectares of deforested land in the Amazon, and pumping billions of gallons of methane, a potent greenhouse gas emission, into the atmosphere through animal farming. The global fashion industry produces up to 10% of global carbon emissions.^[5] And from aviation, to plastic production to raw materials mining, all sectors are contributing to the crisis.

The resulting global warming is already taking a devastating toll on people and planet. Last summer, Europeans experienced the heaviest floods and most intense heat waves in decades. However, the heaviest toll  is paid by people in the Global South. This year Pakistan was hit by the worst floods in over 100 years, leaving millions in need of humanitarian assistance.^[6]

People across the world have risen up to demand climate action. The global climate movement is made up of hundreds of thousands of groups and millions of people. Young people everywhere are taking to the streets to demand governments stop ignoring the multiple unfolding crises, and for corporations to stop destroying the planet. This groundswell is becoming impossible to ignore.

Companies have responded to these demands by making lofty public commitments to align with the Paris Agreement through transition plans and ‘net zero pledges’. But these are mostly empty promises and greenwashing.^[7] Net-zero pledges are heavily reliant on offsetting emissions through practices such as forest restoration or carbon capture technologies, despite clear evidence that neither of these are reliable.^[8] It is clear that companies are determined to postpone real climate action for as long as possible.

As the harmful impacts caused by climate change mount, we are also seeing an increase in human rights lawsuits. Affected people are mobilising to demand compensation and remedy, for example a landmark lawsuit brought by a Peruvian farmer against German energy company RWE to demand compensation for flood risks caused by glacial melting^[9]. Companies are also being challenged in court for greenwashing and weak climate plans. In 2021, a landmark ruling in the Netherlands recognised the wholesale inadequacy of Shell’s voluntary climate plan and ordered them to reduce their emissions by 45% by 2030^[10]. There are currently two lawsuits against TotalEnergies for weak climate transitions plans^[11] and misleading claims about fossil gas and biofuels^[12].

The failure of voluntary commitments and these legal trends show that the more reliable route to reducing emissions from business is to make companies legally accountable for their climate plans and impacts.

At the EU level, a law is being negotiated that could hold companies accountable for human rights abuses and environmental damage in their global value chains. Making sure it makes companies accountable for their climate impacts and for reducing their emissions is essential if we have any hope of keeping global warming below 1.5 degrees. But right now, the proposal for a law fails to enforce any meaningful climate obligations on companies.

We the undersigned activists and groups dedicated to fighting climate change, demand a strong EU law that is fit to tackle the climate crisis and deliver climate justice. A law that makes companies legally accountable for their:

Climate Impacts

• All companies must be obligated to do due diligence and address their climate impacts: to identify and assess the risks of harmful impacts from their greenhouse gas emissions in their global value chains; take appropriate measures to prevent and cease these impacts; and communicate clearly and transparently about this.
• All companies must be accountable and liable for their impacts: companies must be investigated and sanctioned if they fail their obligations. Local communities, farmers, workers, environmental defenders etc. who are threatened by flooding, drought or other climate impacts must be able to get justice and remedy in court. We must be able to sue companies across the EU for greenwashing and phony climate plans.

Climate Plans

All companies must have a credible plan to align with the Paris Agreement and limit global warming to 1.5 degrees. A plan that:

• Includes targets – corporate climate plans must have short- and medium-term targets for 2030 and 2050 as well as 5-year milestones.
• Covers the entire value chain as well as scope 1, 2 and 3 emissions. The total impact of business emissions is hidden behind complex chains of business relationships, and the biggest emissions from a product, e.g. oil, do not come from how it is produced, but how it is used (Scope 3).
• Does not rely on offsetting: offsetting is not a reliable measure of real emissions reductions – companies must calculate their absolute reductions instead.
• Includes concrete action: companies must explain clearly where and how they can decarbonise their business. The most carbon intensive assets must be closed (companies must be barred from simply selling off emissions to someone else).

The latest climate science warns that unless we have massive emissions cuts in the next decade, the 1.5. degree goal may soon be out of reach. The conclusion is clear – we need to tackle the emissions coming from business today. To ease climate disasters and preserve a liveable future, we demand the EU and member states act now to enforce rules on business.