The International Court of Justice (ICJ) has issued a landmark advisory opinion that clarifies the legal responsibilities of nations to address climate change.
The court’s statement, which described the climate crisis as a global threat to all forms of life, outlined that countries are legally required to reduce climate pollution under international law.
This development is expected to have a direct impact on Australia’s policy landscape and the insurance industry’s approach to climate risk.
According to a preliminary analysis by the Climate Council of Australia, the ICJ’s opinion extends Australia’s climate obligations beyond its borders.
The court’s findings indicated that countries must account for the environmental consequences of fossil fuel production, whether the emissions occur domestically or result from exported resources.
Climate Council CEO Amanda McKenzie commented that the ruling reinforces Australia’s duty to address the impacts of its fossil fuel exports.
“The court makes it crystal clear that all countries have significant legal responsibilities to prevent further climate harm by slashing their climate pollution rapidly and deeply,” she said. “The court’s findings makes it clear that Australia has international legal obligations to take responsibility for its fossil fuel production – whether used domestically or exported – due to the significant harm it causes and regardless of where the coal, oil, or gas is ultimately burned.”
The court also noted that failing to reduce emissions could be considered a “wrongful act,” potentially leading to requirements for reparations to countries affected by climate change.
The ICJ’s advisory opinion pointed out that national climate targets – such as Australia’s upcoming 2035 goal – should be consistent with the Paris Agreement’s objective of limiting global warming to 1.5°C.
The court emphasised that each country should pursue the highest possible ambition in setting these targets.
Recent findings from the Climate Council suggested that Australia’s window to meet the 1.5°C target is narrowing, largely due to past delays in climate action.
The council’s report, “Stronger Target, Safer Future: Why Australia’s 2035 Climate Target Matters,” highlighted the importance of ambitious targets for both risk mitigation and economic opportunity in sectors like renewable energy and green manufacturing.
While the federal government has increased its focus on renewable energy, reaching 43% in the main grid, the ICJ’s opinion suggested that further action may be required, particularly regarding emissions from exported fossil fuels.
The ICJ’s findings suggested that the continued production and export of fossil fuels, as well as government support for such activities, could be classified as wrongful acts under international law.
The court clarified that responsibility is not limited to direct emissions, but also includes actions or omissions that result in significant harm to the climate system.
Australia’s position as a leading fossil fuel exporter is highlighted in the analysis, with the court noting that it is possible to quantify each country’s contribution to global emissions.
This may influence upcoming reviews of Australia’s environmental laws, especially regarding the approval of new fossil fuel projects.
The ICJ’s opinion comes as Australian businesses, including insurers, are increasing their focus on climate accountability.
Data from Workiva Inc’s Executive Benchmark Survey showed that 81% of Australian executives who plan to disclose greenhouse gas emissions intend to do so regardless of political changes.
The Insurance Council of Australia (ICA) reported in late 2024 that a majority of insurers have committed to net-zero emissions by 2050, with half targeting operational net-zero by 2030.
Over half of insurers have also linked executive compensation to climate performance.
These steps are part of the ICA’s “Towards a Net-Zero and Resilient Future” roadmap, which noted that many insurers have begun implementing climate disclosures ahead of new Australian regulations set for 2025.
