Net-Zero Narratives and Corporate Liability: Rethinking Environmental Accountability

I. Introduction

The language of net zero has, over the course of barely a decade, become the dominant idiom of corporate climate ambition. Across sectors ranging from fossil fuel extraction to fast fashion, major corporations have issued pledges promising carbon neutrality by 2050, or in some cases even earlier. The apparent convergence of private sector ambition with the imperatives of international climate law appears, at first glance, to be a cause for cautious optimism. The Paris Agreement, adopted in December 2015, commits its parties to pursuing efforts to limit the increase in global average temperature to 1.5 degrees Celsius and to achieving a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century. Science has made clear that achieving that balance requires economy-wide decarbonisation on a scale and at a pace that current trajectories do not support.

Yet the proliferation of net zero pledges has attracted mounting scrutiny from legal scholars, civil society organisations, and regulators alike. The core concern is straightforward: in the absence of binding legal requirements and robust verification mechanisms, a net zero commitment is little more than a public relations instrument. It may be revised, diluted, or quietly abandoned without legal consequence. The architecture of international climate law, from the non-binding nature of nationally determined contributions under the Paris Agreement to the historical reliance on domestic implementation to translate international obligations into enforceable duties, has historically left significant space for corporate actors to make ambitious claims without corresponding legal accountability.

This article proceeds in five parts. Following this introduction, Part II situates net zero commitments within the broader framework of international climate law, tracing the evolution from the Kyoto Protocol to the Paris Agreement and identifying the structural features that have constrained enforceable corporate obligations. Part III examines the domestic regulatory landscape, focusing on disclosure regimes, taxonomy frameworks, and the nascent area of greenwashing liability. Part IV analyses three significant cases in the climate litigation canon that bear directly on corporate net zero accountability. Part V offers a critical assessment and puts forward a set of legal reforms designed to close the accountability gap. The article concludes that net zero, as currently constituted in the corporate world, is a promise in search of a legal structure capable of keeping it.

II. International Climate Law and the Architecture of Corporate Obligation

A. From Kyoto to Paris: A Shift in Regulatory Philosophy

The Kyoto Protocol represented the first serious attempt to impose quantified emissions reduction obligations under international law, though it confined such obligations exclusively to developed states parties, leaving private corporations at one remove from direct international legal duty. The transition to the Paris Agreement model involved a fundamental restructuring of this approach. Rather than top-down, treaty-mandated targets, the Paris Agreement introduced a bottom-up architecture premised on nationally determined contributions, under which each state commits to successive rounds of self-defined climate ambition. While this approach succeeded in securing near-universal participation, it also produced a regime notably permissive of ambiguity and insufficiently equipped to discipline the behaviour of non-state actors.

The Paris Agreement does not directly regulate corporate actors. Its obligations run between states, and the mechanism by which private sector conduct is brought within the orbit of climate law is the domestic implementation of internationally agreed targets. This creates a layered accountability problem: states must translate their nationally determined contributions into domestic policy, and domestic policy must in turn impose obligations on corporations. At each layer, dilution is possible and, in practice, common. The corporate net zero pledge, operating outside this chain, is doubly removed from enforceable international obligation.

B. The Role of Non-State Actors and Voluntary Commitments

The inadequacy of purely state-centric climate governance has prompted growing attention to the role of non-state actors, including corporations, in contributing to the goals of the Paris Agreement. The UNFCCC process has acknowledged this through initiatives such as the Race to Zero campaign and the Glasgow Financial Alliance for Net Zero, which seek to aggregate private sector pledges alongside governmental ones. The legal status of such commitments, however, remains ambiguous. They do not constitute binding legal obligations under international law, and their enforceability at the domestic level depends entirely on whether the relevant jurisdiction has enacted legislation or developed common law principles capable of disciplining their content.

The absence of a binding international framework for corporate net zero commitments does not mean that law is entirely silent on the question. Rather, the legal accountability of corporate climate pledges is being constructed incrementally, through a patchwork of mandatory disclosure regimes, financial regulation, anti-greenwashing rules, and judicial decisions in climate litigation. Each of these instruments addresses a different dimension of the accountability gap, and each has distinct limitations that prevent it, in isolation, from providing comprehensive governance of corporate net zero commitments.

III. Domestic Regulatory Frameworks: Disclosure, Taxonomy, and Greenwashing

A. Mandatory Climate Disclosure

The most significant legal development in the governance of corporate climate claims in recent years has been the move towards mandatory climate-related financial disclosure. In the United Kingdom, the Companies Act 2006 imposes duties on directors to have regard to the long-term consequences of company decisions, a provision that has increasingly been read to encompass climate-related risks. Building on the recommendations of the Task Force on Climate-related Financial Disclosures, the UK Government has mandated climate disclosure for large public and private companies, requiring them to report against a standardised framework addressing governance, strategy, risk management, and target-setting.

In the United States, the Securities and Exchange Commission finalised a landmark rule in 2024 requiring registrants to disclose material climate-related risks and, where applicable, the nature and reliability of their greenhouse gas reduction targets. The European Union has gone further still, with the Corporate Sustainability Reporting Directive extending mandatory sustainability reporting to a broad range of companies and requiring disclosure of transition plans, including the consistency of net zero commitments with a 1.5 degree pathway. These developments represent a meaningful shift from voluntary to mandated transparency, though disclosure alone does not guarantee the substantive credibility of the commitments being disclosed.

B. Taxonomy Regulation and Substantive Standards

Beyond disclosure, the EU Taxonomy Regulation introduces a classification system for environmentally sustainable economic activities, establishing technical screening criteria that must be satisfied before an activity can be labelled as contributing to climate change mitigation. This represents a more interventionist approach to corporate environmental claims, effectively setting minimum substantive standards that must be met before a net zero or sustainability label can be applied to investment products. While the Taxonomy Regulation operates primarily in the financial services context, its broader significance lies in the precedent it sets for the legal standardisation of climate-related claims.

C. Greenwashing Liability and Anti-Deception Frameworks

The potential civil and regulatory liability of corporations for misleading net zero commitments is an area of law developing with notable speed. Consumer protection law in multiple jurisdictions prohibits misleading commercial communications, and competition and markets authorities in the UK, EU, and elsewhere have begun investigating corporate climate claims for potential greenwashing violations. The EU Green Claims Directive, once adopted, will require companies making environmental claims to substantiate those claims against independently verified standards before making them publicly. The proposal specifically targets net zero claims premised on carbon offsetting without adequate disclosure of offsetting methodology and additionality.

These domestic developments indicate an emerging consensus that net zero pledges cannot remain legally inert. However, the current frameworks remain fragmented, with significant divergence between jurisdictions in the scope of obligations, the standards applied, and the enforcement mechanisms available. This fragmentation creates opportunities for regulatory arbitrage and limits the effectiveness of legal accountability as a driver of genuine corporate decarbonisation.

IV. Climate Litigation and Corporate Net Zero Accountability

A. Urgenda Foundation v State of the Netherlands: Establishing the Duty to Act

The decision of the Dutch Supreme Court in Urgenda Foundation v State of the Netherlands stands as one of the most consequential pronouncements in the history of climate litigation. The court held that the Dutch state had a legally enforceable duty under Articles 2 and 8 of the European Convention on Human Rights to reduce its greenhouse gas emissions by at least 25 percent below 1990 levels by the end of 2020. While the case was directed against the state rather than a corporation, its significance for corporate net zero accountability is considerable.

Urgenda established that obligations grounded in human rights law could be used to enforce specific, quantified emissions reduction targets rather than merely procedural duties of consideration. This reasoning, applied analogically to the corporate context, suggests that where a corporation’s emissions are sufficiently large and attributable, human rights frameworks may be capable of generating actionable duties. The case also demonstrated that courts are willing to engage with the empirical findings of the Intergovernmental Panel on Climate Change as a basis for legal conclusions, a methodological precedent with potentially wide application in corporate climate cases.

B. Milieudefensie et al v Royal Dutch Shell plc: The Duty to Decarbonise

The judgment of the District Court of The Hague in Milieudefensie et al v Royal Dutch Shell plc in May 2021 broke new ground by directing a specific, named corporation to align its emissions reduction targets with the goals of the Paris Agreement. The court held, on the basis of the unwritten standard of care in Dutch civil law as interpreted in light of international climate science and human rights norms, that Shell was required to reduce its CO2 emissions by 45 percent relative to 2019 levels by 2030, encompassing not only the company’s operational and energy-related emissions but also the Scope 3 emissions attributable to the use of the products it sells.

The Shell judgment is remarkable for several reasons. First, it extended the duty of care to cover a corporation’s entire value chain emissions, rejecting the argument that Scope 3 emissions were too remote or too difficult to attribute. Second, it treated the company’s existing net zero ambition as legally insufficient, finding that Shell’s stated target did not meet the standard required by international climate science and was formulated with insufficient specificity and interim milestones to be credible. Third, the decision was grounded in general private law principles rather than any specific statutory provision, indicating that the common law of negligence and analogous civil law doctrines may be capable of imposing emissions reduction duties on corporations even in the absence of dedicated climate legislation. Shell has appealed the decision, and the ultimate outcome remains to be seen, but the judgment’s influence on the trajectory of climate litigation is already manifest.

C. ClientEarth v Shell plc: Directors’ Duties and Net Zero Strategy

The English case of ClientEarth v Shell plc, decided by the High Court of Justice in 2023, explored a different dimension of the corporate accountability question by framing the inadequacy of Shell’s climate strategy as a breach of directors’ duties. ClientEarth, a shareholding environmental law organisation, brought a derivative action against Shell’s board of directors under section 172 and section 174 of the Companies Act 2006, alleging that the directors had failed to adopt and implement a climate transition strategy consistent with the requirements of the Paris Agreement and thereby exposed the company to material legal and financial risk.

The High Court dismissed the claim on the merits, finding that the claimant had not demonstrated a prima facie case sufficient to permit the derivative action to proceed. Trower J held that the board of directors had exercised its judgment on the appropriate climate strategy and that courts were not the appropriate forum to second-guess the strategic decisions of a company board on matters involving complex competing considerations. While the substantive outcome was unfavourable to the claimant, the case is significant for what it reveals about the current limits of shareholder litigation as a vehicle for climate accountability. It also indicates that the legal conversation about directors’ duties and climate risk is maturing, even if the courts have not yet been persuaded to intervene in the manner sought by climate advocates.

V. Critical Assessment and Proposals for Reform

A. The Accountability Gap: Between Promise and Legal Obligation

The cases and regulatory developments examined in the preceding sections illuminate a persistent accountability gap at the heart of corporate net zero governance. The international climate regime is structurally ill-suited to the direct regulation of corporate actors. Domestic frameworks are evolving but remain fragmented and inconsistent. Climate litigation has produced some remarkable results but is inherently episodic, resource-intensive, and dependent on the particular facts of individual cases and the receptiveness of particular jurisdictions. The result is that the net zero pledge, for most corporations in most jurisdictions, remains a voluntary, self-defined, and largely unverified commitment.

Three structural deficiencies are particularly striking.

1. First, there is no universal, legally binding standard governing what a credible net zero commitment requires in terms of scope, interim targets, reliance on offsets, and verification methodology. 

2. Second, even where mandatory disclosure regimes have been enacted, the consequences of disclosure of an inadequate or misleading net zero commitment are unclear. Disclosure obligations do not, in themselves, impose liability for the content of what is disclosed, and the link between disclosure and substantive accountability remains underdeveloped. 

3. Third, the attribution of legal responsibility for climate harm to specific corporate actors faces persistent doctrinal challenges, including questions of causation, remoteness, and the comparative weight of individual actors’ contributions to a global cumulative problem.

B. Proposals for a More Coherent Legal Architecture

The accountability gap identified above is not inevitable. A more coherent legal architecture for net zero governance would rest on three pillars. The first is the mandatory legal standardisation of net zero commitments, requiring corporations above a defined emissions threshold to adopt transition plans that conform to independently developed scientific standards, including specified base years, interim targets, accounting methodologies, and limits on the use of carbon offsets. Several jurisdictions have moved in this direction, and the EU Taxonomy Regulation and the Corporate Sustainability Reporting Directive provide partial models, but a truly effective regime would require international coordination to prevent regulatory arbitrage.

The second pillar is the development of substantive legal liability for misleading net zero commitments. Consumer protection and competition law provide a starting point, but their scope is limited and their enforcement is reactive. A dedicated legal standard, modelled on existing frameworks for misleading financial reporting, would enable both regulatory enforcement and private litigation against corporations that make net zero pledges that are not substantiated by credible plans. This would require courts and regulators to engage with scientific evidence about the adequacy of corporate targets, a task that Urgenda and the Shell litigation suggest they are in principle capable of undertaking.

The third pillar is the reform of directors’ duties to explicitly incorporate climate-related obligations. While ClientEarth v Shell demonstrated the current limits of directors’ duty litigation, the case also highlighted a significant lacuna: English company law does not expressly require directors to adopt emissions reduction plans consistent with international climate science. Statutory reform in this area, building on the precedent of the UK’s existing climate compatibility duty for major policy decisions under the Climate Change Act 2008, would close this lacuna and provide a more secure legal foundation for shareholder-led accountability.

VI. Conclusion

Net zero commitments have become one of the defining features of corporate environmental communication in the contemporary period. Their proliferation is, in one sense, a response to mounting social, regulatory, and investor pressure for corporate accountability on climate change. In another sense, however, it reflects the availability of a form of voluntary promise that permits companies to project climate ambition without assuming commensurate legal obligation. The environmental law challenge of the current moment is to transform net zero from a reputational instrument into a legally disciplined commitment.

Ultimately, the credibility of corporate climate governance depends on whether legal systems are equipped to hold those promises to account. The law is catching up, but not yet fast enough. In a domain where the consequences of delay are measured in degrees and decades, the pace of legal development is itself a matter of urgency.