Private companies and government actors have contributed to and been charged with responsibility for the climate crisis. As climate change increasingly threatens human rights, state-owned enterprises (SOEs)—companies owned wholly or in part by governments—are also likely to face increased scrutiny for their contribution to climate change. Each year, SOEs are collectively responsible for more direct emissions than every country except China. Playing a significant role in the most polluting industries, SOEs are responsible for 33% of cumulative global emissions—more than the 31% attributed to private companies.
Yet despite their contributions, SOEs feature far less prominently in litigation related to the climate crisis than private actors or government entities. The growing field of loss and damage litigation presents an opportunity to hold SOEs—and their state sponsors—accountable for their massive contribution to the climate crisis and the myriad human rights violations they have caused.
Greater inclusion of SOEs in climate litigation is imperative for human rights
SOEs rank among the world’s largest companies and possess assets valued at about half of global GDP. Given their size, it is unsurprising that SOEs represent some of the most significant sources of climate-altering pollution. Despite clear knowledge of the climate crisis and its consequences, SOEs have increased their share of cumulative emissions to a staggering 37% since the Paris Climate Agreement. By continuing and expanding fossil fuel exploitation, SOEs can cause and contribute to human rights violations. As UN working groups and special rapporteurs have noted, SOEs’ direct link to the state confers heightened human rights responsibilities on them. This liability should be reflected not only in their actions but also in legal efforts to hold them accountable.
A holistic approach to protecting the human rights of present and future generations will require including SOEs in efforts to proactively limit emissions and adapt to climate change. NGOs like Greenpeace and ClientEarth have contributed to this effort through their cases against Polska Grupa Energetyczna. A strategy of seeking mitigation and adaptation remedies alone, however, is insufficient. Even if net-zero emissions were achieved today, disastrous impacts from climate change and related rights violations would still ensue. Because climate change is already occurring, human rights advocates must include restitution for the climate harms caused by historical emissions in their efforts. Holding SOEs accountable for their significant contribution should form an essential part of such efforts.
State of play: SOEs in existing climate litigation
SOEs are rarely featured in climate litigation, but they have been named in at least three domestic cases and in three complaints lodged with multilateral organizations.
Two of the three domestic cases involve direct climate change impacts. In 2019 and 2020, respectively, ClientEarth and Greenpeace sued Polska Grupa Energetyczna, a Polish state-owned utility company. Both pending cases seek to halt greenhouse gas emissions from coal power plants in accordance with the Polish Environmental Protection Act. The third is a 2023 consumer protection action prohibiting Petronas, a Brazilian state-owned oil company, from spreading misleading information about its current activities, emissions, and reduction plans.
Advocates have also turned to multilateral mechanisms or complaint processes at the Organization for Economic Development and Cooperation (OECD) and the United Nations (UN). In 2011, Climate Network and Concerned Scientists Norway filed a complaint with the OECD’s grievance mechanism against Statoil, a Norwegian state-owned energy company, for failure to consider the Kyoto Protocol when investing in Canadian tar sands. The case was ultimately rejected based on procedural and scope failures but demonstrates the potential of uncommon legal fora for holding SOEs accountable for climate-related harms.
The work of UN special rapporteurs involving SOEs is especially instructive for rights-based practitioners. In 2021, two special rapporteurs issued communications to China and Bosnia Herzegovina regarding the construction and expansion of several coal-fired power plants by Chinese SOEs. These communications addressed the impacts the coal plants would have on substantive and procedural human rights, as well as the global climate system, because of increased emissions.
In 2023, similar communications were sent by five special rapporteurs to five countries, including Saudi Arabia, and 13 financial institutions. The communication criticized SOE Saudi Aramco for its non-compliance with Paris Agreement targets and violations of its responsibilities for human rights protection under the UN Guiding Principles on Business and Human Rights. The communications themselves, however, are unenforceable without additional action, underscoring the continued relevance of courts with binding jurisdiction.
Loss and damage litigation as a tool for SOE accountability
There are unique challenges to including SOEs in climate litigation. SOEs’ ownership structure may allow them to invoke sovereign immunity defenses that could impose a formidable barrier to entry for litigants. Precedent, however, shows that distinctions can be drawn between the actions of the state and its enterprises, thus exposing the latter to increased liability. Moreover, existing domestic and international law suggests immunity for SOEs is less extensive than for the state itself.
Judicial impartiality is also a concern in jurisdictions where large emitters are located, such as Saudi Arabia and Russia. Nevertheless, cases in the emerging field of loss and damage reveal a potential path for holding SOEs accountable that may also help litigants avoid being pulled into the SOE’s contentious home jurisdiction.
While loss and damage litigation is a nascent field of practice, the current caselaw demonstrates its most common vehicle of redress is tort and consumer protection law. Tort law may seem like an unorthodox approach to achieving justice for human rights violations. However, climate change’s devastating impacts on people’s homes, lives, and livelihoods suggest that these areas of law, supported by the binding jurisdiction of domestic courts, may provide effective remedies to those already bearing the burden of SOE emissions.
While SOE parent companies are not named as defendants in loss and damage cases, SOE subsidiaries have been included in a few high-profile cases brought by local and state governments in United States courts. In lawsuits brought by Rhode Island, Multnomah County, and Puerto Rico, Motiva is named as a defendant. At various points in its history, Motiva has been owned, or partially owned, by Saudi Aramco. Rhode Island did not specifically address Saudi Aramco’s relationship with Motiva, but Multnomah County and Puerto Rico do include the Saudi SOE as a related party in their defendants discussion. Citgo, which is majority-owned by Venezuelan SOE PDVSA, has also been a defendant in US loss and damage litigation (Delaware v. BP; Baltimore v. BP).
While it remains to be seen whether these cases will eventually assert jurisdiction over SOEs like Saudi Aramco and PDVSA, they demonstrate the potential that loss and damage litigation has for holding SOEs accountable, if only through their affiliates. By using tort and consumer protection claims, plaintiffs in existing loss and damage cases are using well-established areas of law that proscribe certain harmful actions (nuisance, property damage, etc.) rather than appealing to broader rights-based arguments. This strategic choice should be viewed not as a replacement for rights-based litigation but as a complement to these efforts.
Holding SOEs accountable for their contributions to the climate crisis and related rights violations will not be achieved through a singular legal avenue. As the fields of climate litigation and policy demonstrate, a multipronged approach is needed. Loss and damage litigation represents a new tool among many that can help hold SOEs accountable for the harms they have contributed to.