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Climate litigation against banks could drive systemic change
ING is defending itself against charges that the bank is not doing enough to reduce financed emissions. Photo: emka74 / Shutterstock
Climate litigation is a growing material risk for companies and financial institutions, as an increasing number of cases are brought which challenge their role in the climate crisis or lack of action in addressing it.
The recent advisory opinion of the International Court of Justice will likely give further impetus to climate litigation against corporations: it confirmed amongst other things that climate change leads to infringements of human rights and that the law has an important role to play to address these, for example by applying the precautionary and “polluter pays” principles. This puts the climate due diligence and duty of care of banks increasingly in the crosshairs of litigation. This comes as no surprise: behind every fossil fuel giant, stands a bank ready to finance high-emission activities.
A number of cases against financial institutions around the world raise a new question: what is the extent of the responsibility of banks for reducing emissions of their financial services? And lawsuits like these have the potential to alter the financial sector’s focus from merely developing green portfolios to actively phasing out high-carbon activities.
Financing pollution
The scientific urgency to reduce greenhouse gas emissions is undeniable. The window to keep climate change below 1.5ºC, as agreed in the Paris climate accord in 2015, is rapidly closing. Every year of delay makes it more difficult and costly to avoid irreversible damage.
At the same time, financial flows into high-carbon projects remain high, locking in decades of future emissions. Commercial banks, investment firms and insurers continue to fund and underwrite projects tied to oil, gas, and coal extraction and use, even as climate science calls for an immediate phase-out of new fossil fuel infrastructure. Since the Paris Agreement, the world’s 65 largest banks financed fossil fuels by a staggering US$7.9tn.
Legal pressure has already begun to reframe the responsibility of corporations for climate impacts. In 2024, a Dutch court of appeal ordered Shell to reduce its emissions, affirming that companies can be held legally accountable for their contribution to global warming.
Now climate advocates are applying that same logic to banks: if fossil fuel companies must reduce their emissions, then so too must the financial institutions bankrolling them.
ING and BNP Paribas in court
Two climate cases currently going through European courts could reshape the flow of finance towards the fossil fuel industry.
In the Netherlands, ING has been summoned to appear in court to be held accountable for its role in financing the fossil fuel companies driving climate change as well as for the total emissions of its portfolio. The case has been brought by Milieudefensie, the Dutch environmental organisation also behind the climate case against Shell. The group argues that ING’s climate policy fails to comply with international climate agreements and that the bank is not doing enough to reduce its financed emissions, those caused by the companies it lends to or invests in.
The lawsuit demands that ING aligns its portfolio with a 1.5°C warming limit, following guidance from the Intergovernmental Panel on Climate Change and the International Energy Agency and that it stops financing businesses that continue to expand fossil fuel projects.
In France, a coalition of NGOs is pursuing a similar case against BNP Paribas under the French corporate duty of vigilance law. They allege that the bank’s continued support for fossil fuel expansion violates its obligation to prevent human rights and environmental harms linked to its business activities.
These cases reflect a broader strategic shift: while voluntary sector initiatives and individual banks tend to emphasise the need to grow green investments, litigators now seek to turn attention towards exiting fossil fuel assets. The potential implications for the climate, multinational corporations and financial regulators are profound. If courts impose binding climate obligations on banks, it will not only influence global investment flows but also warrant the close attention of financial supervisors.
The legal basis behind climate finance litigation
These lawsuits rest on an evolving legal foundation. National tort laws, corporate responsibility statutes and human rights frameworks are being used to argue that banks have a duty of care towards their clients, towards society and towards the environment.
Under Dutch civil law, companies can be held liable for failing to act with due diligence to prevent foreseeable harms. The Shell ruling was groundbreaking in part because the court found that the company’s inaction on emissions violated this duty. Although on appeal the court could not establish the precise percentage with which Shell should reduce its emissions, the corporate responsibility to act on climate change was confirmed.
A Dutch court found that Shell had a duty of care to protect against ‘dangerous climate change’. Photo: Jakob Rosen / Unsplash
Climate lawsuits against banks are testing whether financial institutions are acting negligently by continuing to fund industries that drive climate change. The cases invoke international climate norms – such as common-but-differentiated responsibilities, intergenerational justice and the precautionary principle – to argue for significant emission reduction obligations for large banks based in industrial countries.
What’s at stake for the financial sector
If courts uphold these claims, the consequences for the financial industry are significant. A ruling that mandates banks to reduce their financed emissions would create a legal duty to prevent and phase-out high-carbon investments. It also exposes banks and other financial institutions to increased litigation risk, regulatory scrutiny, and reputational damage.
For now, many banks emphasise their support for climate action through ESG frameworks and sustainability reporting. Yet these are predominantly voluntary initiatives like the Net-Zero Banking Alliance which allow banks to make vague or partial commitments without implementing the necessary binding phase-out plans.
Increasingly, individual banks and sector initiatives are watering down earlier commitments but litigation brings a new level of accountability. It not only forces banks to clarify their climate targets but may also impose judicially enforced timelines for reaching them.
Implications for business, regulation and policy
The ripple effects of these cases extend beyond the banking sector.
Most high-carbon projects are capital intensive and thus rely heavily on external funding and other financial services. If banks are legally responsible for the emissions they finance, the companies seeking financing will face stronger demands for emissions transparency and credible climate transition plans. This would accelerate climate alignment across sectors, especially in carbon-intensive industries like energy, transportation and heavy manufacturing.
Moreover, successful litigation could influence financial regulators and central banks. In Europe, institutions like the European Central Bank and national regulators are already moving toward climate-related stress testing and disclosure mandates. A binding court decision could reinforce the need for tougher oversight of climate risks in the financial system.
Globally, such rulings could inform emerging policy frameworks on sustainable finance, providing legal justification for measures that steer capital away from high-emission sectors.
A defining moment for banks’ climate accountability?
The increase in climate litigation against financial institutions signals a broader shift in how responsibility for climate change is assigned. Historically, the focus was on governments and fossil fuel companies, but the legal landscape is now expanding to include the institutions that finance and service carbon-intensive industries. As climate lawsuits against major banks move forward, a new legal terrain is being charted, one in which financial actors may be held to account for their role in the climate crisis.
If the ING and BNP Paribas cases are successful, they will set a global precedent. The cases aim not just to enforce existing climate goals but to reorient how finance interacts with the future of the planet.
If successful, they could shift the ground rules of global investment and place the financial sector squarely in the frame of climate accountability. As cases against financial institutions multiply, courts will play a crucial role in defining the scope of banks’ legal obligations. The outcomes of these cases will determine how climate risks are recognised as a financial liability and whether financial institutions will be legally required to phase out high-emission investments.
Already, legal scholars and advocacy networks are closely watching the cases for their potential to define how financial institutions must operate in a warming world. Even if litigants don’t win outright, court proceedings often generate public scrutiny, influence corporate behavior and contribute to a growing body of legal reasoning around climate responsibility.
Whether through legal mandates or mounting pressure from the court of public opinion, one message is becoming clear: banks, insurers and asset managers can no longer claim to be supportive bystanders in a necessary transition of real-world corporations.
The age of consequence-free financing of high-emitting activities is coming to an end.
This page was last updated August 26, 2025
