Climate litigation is no longer a concern reserved for large corporations. In 2025, lawsuits targeting greenwashing, emissions disclosure, and fiduciary failure have intensified across virtually all jurisdictions. For entrepreneurs — particularly those scaling internationally or operating in high-emission sectors — understanding the financial implications of climate-linked legal action is becoming increasingly non-negotiable.
From city-led claims to shareholder activism, businesses are more frequently being held accountable not just for environmental impact but for the accuracy of their sustainability disclosures. The risks extend beyond reputational damage. Legal costs, settlement provisions, and the obligation to reflect contingent liabilities in financial statements all demand a proactive accounting strategy.
Tracking the Climate Litigation Surge in 2025
A series of high-profile lawsuits in 2025 has signalled a step-change in how governments and communities seek redress for climate-related harm. In May, Colorado’s Supreme Court allowed the city of Boulder to sue ExxonMobil and Suncor for decades of climate deception — a greenwashing case that could set major legal precedents in the coming years.
Meanwhile, the state of Maine recently launched its own litigation against oil majors, alleging that fossil fuel companies deliberately underreported emissions data, misleading regulators and consumers alike. Although such lawsuits often target the largest players, smaller firms can still be exposed, especially those in supply chains or industries under intense ESG scrutiny. Cases may involve accusations of greenwashing, failure to disclose material risks, or even negligence in achieving advertised sustainability benchmarks.
Where Are ESG Lawsuits Emerging?
While the United States continues to lead in climate litigation cases, in the UK, post-Grenfell regulation is widening scrutiny around safety and ESG-related disclosures. The most clear example of which is the Building Safety Levy that is set to come into force in autumn 2026. The act will apply to all new residential buildings in the country.
In Asia-Pacific, recent moves by Singapore and Japan to tie ESG metrics to financial supervision signal a new era of enforceability. Businesses operating in or exporting to these jurisdictions must anticipate growing ESG litigation risk, even if not directly headquartered there.
This evolving legal landscape requires entrepreneurs to collaborate closely with accountants and advisors to assess exposure and ensure accurate financial reporting of all climate-related liabilities.
How Accountants Help Businesses Stay Ahead of ESG Litigation
Accountants play a pivotal role in identifying, assessing, and disclosing risks stemming from ESG lawsuits and climate litigation. While lawyers handle defence strategy, accountants are tasked with quantifying potential provisions and ensuring compliance with international financial reporting standards.
Key areas include:
- Assessing whether litigation is probable and material enough to warrant disclosure or provision under IFRS and GAAP
- Estimating potential settlements or fines and calculating their impact on future cash flows
- Ensuring that ESG claims in financial statements are backed by verifiable performance data
- Stress-testing balance sheets for litigation scenarios related to greenwashing, regulatory fines, or stakeholder activism
Entrepreneurs should also view accountants as strategic advisors, helping them not only comply with current standards but also forecast emerging ESG litigation trends by industry and jurisdiction.
Staying Resilient Through Compliance
Legal risk is now a financial risk. For growing businesses, particularly those seeking external capital or market expansion, a single ESG lawsuit can lead to cash flow disruption, reputational fallout, and investor withdrawal. Proactive disclosure and climate-risk modelling are essential steps to future-proof operations.
Entrepreneurs can no longer afford to treat sustainability as a brand asset alone. Instead, it must be operationally embedded, with finance teams equipped to translate ESG risk into financial language. That includes understanding the implications of new sustainability regulations, mandatory ESG audits, and increased public access to climate data.
Connect with Trusted Advisors
Navigating the nuances of climate litigation and ESG lawsuits requires more than legal counsel. Entrepreneurs should work with accounting and advisory experts who understand both the financial mechanics and regulatory expectations of this fast-evolving area.
As a leading international association, INAA’s members offer precisely this blend of insight, combining jurisdiction-specific knowledge with a global view on ESG litigation risk. To stay one step ahead, business leaders can turn to INAA’s trusted professionals for guidance in aligning sustainability goals with financial integrity.