Principles on the Climate Obligations of Enterprises

The Principles on the Climate Obligations of Enterprises (Enterprises Principles) focus on the obligations of investors and enterprises in the context of climate change. The Principle were formulated by a group of international experts (on international, environmental, tort, human rights and company law), and reflect the group’s understanding of the law as it stands or will likely develop. The Enterprises Principles state five kinds of obligations for enterprises: (i) reduction of greenhouse (GHG) emissions from enterprises’ activities; (ii) reduction of GHG emissions from enterprises’ products and services; (iii) consideration of suppliers’ GHG emissions; (iv) procedural obligations on disclosure and impact assessment; and (v) incorporation of enterprises’ performance by financiers and investors in their banking and investment strategy. Broadly, enterprises should reduce the GHG emissions of their own activities to the same extent as the country or countries where the activities take place. As such, the burden will mainly be on enterprises in developed countries. Global enterprises, specifically multinationals listed on the major stock exchanges, consequently have a further-reaching responsibility to reduce GHG emissions. Enterprises must also ascertain and take into account the emissions of their suppliers to the extent reasonably and feasibly possible.