State-Owned Oil Giants Face Legal Reckoning After ICJ Climate Judgment

Judge Yuji Iwasawa, President of the International Court of Justice (ICJ), delivered a landmark advisory opinion on climate change, setting the stage for significant legal and political shifts globally. In a public session at The Hague’s iconic Peace Palace on July 23, 2025, Judge Iwasawa stated clearly that climate change represents an existential threat to humanity.

He emphasized that countries have specific responsibilities under international law to prevent significant harm to the global environment and affirmed that every human has a right to a clean and sustainable environment. While the ruling is non-binding, meaning countries are not forced to comply, its implications are profound for international law, climate litigation, and global climate diplomacy.

Despite lacking enforceable authority, the ICJ’s opinion holds substantial symbolic and persuasive power. It clarifies and reinforces existing obligations derived from agreements like the Paris Agreement and the United Nations Framework Convention on Climate Change. The ruling asserts that countries failing to reduce emissions or continuing to subsidize fossil fuels are committing acts potentially deemed internationally wrongful. Such acts might create liability, including obligations to stop harmful behaviors, prevent repetition, and even provide reparations if clear causation can be established.

The judgment is not without its limitations. Its advisory nature means no international institution can compel compliance directly. Nations remain free to reject or ignore it without explicit legal repercussions. This lack of binding force limits immediate impact, especially in countries resistant to international climate cooperation. Moreover, despite clearly affirming general obligations, the opinion stops short of prescribing precise measures countries must adopt. Specificity about how ambitious or detailed state actions should be remains unclear, leaving considerable interpretative flexibility.

The ruling will nevertheless significantly bolster ongoing and future climate litigation. Recent years have seen a surge in climate lawsuits worldwide. These cases, ranging from actions against national governments to lawsuits targeting major fossil fuel corporations, have already started reshaping global energy policies. Courts in countries such as Germany, Australia, and the Netherlands have increasingly cited international legal standards in their decisions. With the ICJ’s recent opinion, domestic courts can now directly reference an authoritative interpretation from the world’s highest judicial body. This will likely accelerate judicial rulings that demand governments increase their climate ambition or face clear legal consequences.

An especially impactful aspect of this opinion involves state-owned petroleum companies. Firms such as Saudi Aramco, Gazprom, Petrobras, Equinor, and ADNOC are directly linked to their home countries under international law. According to widely accepted international legal principles, actions of state-controlled enterprises can be treated as acts of the state itself. The ICJ’s clarification on state responsibilities therefore places these government-owned fossil fuel giants under intensified scrutiny. States heavily reliant on petroleum extraction through state-owned enterprises now face elevated risks of international liability for climate harm, potentially reshaping their economic and climate policies.

Major petroleum state-owned enterprises play a major role in global greenhouse gas emissions and carry heavy responsibility for climate change. Reports from the Climate Accountability Institute indicate that state-owned oil and gas firms have collectively contributed around 288 gigatons of CO₂ equivalent since 1751, nearly matching the total emissions attributed to investor-owned companies. By 2023, state-owned enterprises accounted for more than half of global fossil fuel and cement emissions, releasing approximately 22.5 gigatons of CO₂ equivalent from just 68 firms. Among the top 20 highest-emitting corporations worldwide, 16 are state-owned, including well-known entities such as Saudi Aramco, Coal India, CHN Energy, the National Iranian Oil Company, Jinneng Group, Gazprom, Rosneft, and CNPC. These firms alone are responsible for nearly one-fifth of all annual global emissions.

Saudi Aramco, for instance, represents more than 4% of global greenhouse gas emissions produced since 1965, primarily through emissions generated when customers burn its oil and gas products. Other major firms such as Gazprom and Coal India each contribute approximately 3% of annual global emissions. Recent climate attribution research has linked emissions from these state-owned enterprises to specific climate impacts and related economic damages. One study published in Nature calculated that emissions from 111 fossil fuel producers, including key state-owned entities, caused roughly $28 trillion in heat-related damages between 1991 and 2020. Additional research has associated emissions from state-owned petroleum companies directly with severe climate-driven events such as extreme heatwaves, wildfires, flooding, and agricultural disruptions.

Given the magnitude of these contributions, attribution of climate responsibility to petroleum state-owned enterprises is increasingly robust. Under international law principles, the emissions produced by these state-controlled firms can be directly attributed to their respective governments. The recent ICJ opinion emphasizes this state-level accountability, effectively placing state-owned petroleum firms at the center of national climate responsibilities. Highlighting this aspect underscores that major state-owned petroleum enterprises, alongside investor-owned fossil fuel corporations, are pivotal players in both causing and solving the climate crisis.

Private corporations, in contrast, remain somewhat insulated from direct consequences under this opinion. International law applies explicitly to countries, not companies. Corporations cannot be held directly liable in international courts based on the ICJ’s advisory opinion. However, indirectly, companies face greater pressure. Governments now have clearer international obligations to regulate corporate emissions. This could result in more stringent national legislation, greater transparency requirements, and tighter emissions regulations, increasing corporate accountability through domestic enforcement mechanisms.

The ICJ ruling will also influence international climate negotiations. Countries committed to ambitious climate action will reference this ruling in diplomatic forums, such as the upcoming COP30 negotiations, to demand increased accountability from less ambitious nations. Climate-vulnerable states, particularly Pacific Island nations like Vanuatu, have welcomed the ruling as a powerful tool for climate justice. For these countries, the opinion strengthens their negotiating position, reinforcing demands for reparations and financing for climate-related damages.

However, a practical challenge remains proving direct causation and attribution. Establishing precise responsibility for climate damages — linking specific harms such as floods, droughts, or rising sea levels directly to a particular country’s emissions — remains technically difficult. The ICJ opinion acknowledges that liability depends on proving clear causation, a complex and often controversial process. National courts and litigants will need robust scientific evidence linking harms to actions of specific nations. This requirement may limit how quickly and extensively reparations or legal remedies can be pursued.

Despite these challenges, the ICJ’s advisory opinion represents an important turning point in the global climate movement. It defines a clear moral and legal baseline for international climate accountability. Countries now face increased reputational risk if they ignore international norms established by the world’s top judicial body. Market pressures, investor demands, and domestic political considerations will increasingly reflect the influence of this ruling. Ultimately, it shifts the global conversation around climate responsibility, reinforcing that inaction is no longer merely irresponsible—it is internationally wrongful.

While the ICJ opinion alone will not solve the climate crisis, its greatest impact lies in reinforcing the global momentum toward more ambitious action. Countries are more clearly than ever accountable for protecting the climate system. The judgment’s legacy will depend on whether nations treat this opinion merely as symbolic or as a genuine call for transformation.