Environmental and Climate Litigation: A Growing Risk for Businesses

Climate litigation is gaining prominence in Portugal, reflecting an international trend that is increasingly affecting the business sector. These are legal actions — initiated by citizens, NGOs, or even public entities — that aim to hold governments and companies accountable for their contribution to climate change or for failing to meet environmental obligations.

While the most high-profile cases involve states, such as the recent action brought by six young Portuguese individuals before the European Court of Human Rights against 33 countries (including Portugal), the business sector is beginning to take a central role in this new form of litigation. Companies in sectors such as energy, construction, transportation, mining, and finance are particularly exposed, but the risks extend to any organization with a direct or indirect environmental impact.

The main vectors of legal risk include:

• Lack of due diligence in managing climate risks, especially in light of increasing reporting and transparency obligations (such as those imposed by the new European CSRD Directive);

• Sustainability plans that are either not implemented or misleadingly communicated (“greenwashing”), which could lead to litigation for unfair competition or misleading advertising;

• Strict environmental liability, particularly for damage to ecosystems, pollution, or failure to comply with environmental permits;

• Corporate inaction in adopting mitigation and adaptation measures for climate change, which could serve as legal grounds in cases of failure to meet duty of care or breach of contract.

In Portugal, legal actions are beginning to emerge that challenge environmental licenses, business development plans, and even internal sustainability policies, based on national and European legislation, including the Constitution (Article 66), the Environmental Framework Law, and the European Climate Regulation.

For businesses, the impact extends beyond the judicial sphere. Climate litigation can lead to significant reputational damage, shareholder value loss, and adverse reactions from clients, investors, and regulators.

In an increasingly climate-sensitive legal landscape, environmental and climate litigation is not just a future concern — it is a present risk.

Companies must prepare legally for this new context, which is not merely a matter of compliance but rather a strategic decision to protect and enhance their business.