[Arjuna Dibley is an Assistant Professor at the Faculty of Law, National University of Singapore.
This post is part of the IndiaCorpLaw Blog Symposium on ‘Corporate Law and Climate Change: Indian and Comparative Perspectives’.]
International climate change law is in the midst of a ‘corporate accountability turn’. For years, scholars, policymakers, and advocates concentrated on how treaty law shapes States’ obligations to mitigate, finance, and adapt to climate change. Attention has recently focused on how to hold companies responsible for their contribution to climate change, including the duties available to States to regulate corporations within their jurisdiction with respect to their contributions to climate harm.
This ‘corporate turn’ has been aided by a remarkable few months during which three international courts and tribunals have handed down advisory opinions concerning the responsibilities of states for climate change: the International Tribunal for the Law of the Sea delivered its opinion in May 2024, the Inter-American Court of Human Rights issued its opinion in May 2025, and the International Court of Justice (ICJ) followed on 23 July 2025 (together referred to as ‘climate advisory opinions’). Although advisory opinions do not bind states in the same manner as judgments in contentious cases, they are authoritative statements of international law and may shape how states regulate corporations within their jurisdiction.
While corporate lawyers and regulators everywhere ought to be aware of these growing climate accountability efforts, these developments are particularly significant in India where the state plays a significant role as an owner, not just regulator of corporate actors. Notably, public sector undertaking (PSUs) occupy a central position in the coal production, power generation, and the oil and gas industries which are central to the country’s contribution to climate change. This post considers what the climate advisory opinions may mean for accountability for PSUs’ climate impact.
Public Sector Undertakings and Climate Change
India’s most recent greenhouse gas inventory estimates national emissions of 2,959 MtCO₂e excluding land use. The energy sector contributes 75.66 per cent of the total. In India, like in many countries, state-owned companies dominate the energy sector. State ownership is present across the energy system. In FY 2024–25, Coal India Ltd producedapproximately 74.6 per cent of India’s coal. NTPC is the largest electricity generator and ONGC, Indian Oil and GAIL are involved in upstream refining and in gas transmission.
Given the prevalence of these PSUs in the energy system, it may come as no surprise that recent research has shown that these state-owned entities contribute significantly to the country’s emissions. Eight of India’s nine largest energy PSUs account for roughly 11 per cent of national greenhouse gas emissions on a Scope 1 basis, and that the figure increases to 44 per cent once the downstream combustion of the fuels they sell is included. Those firms directed INR 2.33 trillion to fossil fuel projects in FY 2025 against INR 0.30 trillion to clean energy.
At the same time, fossil fuels also remain important for economic development. Researchers estimate that they contributed nearly INR 9 lakh crore to central and State exchequers in FY 2024, equivalent to approximately 16 per cent of combined government revenue. Formal coal-mining employment is approximately 345,000; when informal mining and ancillary work are included, more than one million people depend directly on coal. Transitioning the sector therefore entails substantial fiscal, employment and regional-development adjustments.
Attribution of PSU Conduct
Scholarly analysis of the climate advisory opinions suggests there are two pathways by which states may hold obligations with respect to the role of state-owned companies, like PSUs, in emission production.
The first is through state attribution, whereby the acts or omissions of the PSU are attributed to the state itself. Here the International Law Commission’s Articles on State Responsibility provide the basis for determining whether a PSU’s conduct is attributable either as a ‘state organ’ (Article 4), or because the company is exercising delegated governmental authority (Article 5), or due to conduct carried out under the State’s instructions or under its direction or control (Article 8). Different corporate ownership forms, and the regulatory settings in which the firm sits, are paramount for determining whether attribution is possible.
Research on state attribution for emissions from state-owned companies, tends to be circumspect about the prospects of success of this accountability pathway for emissions. Investment arbitration regarding Indian entities further illustrates the difficulty. In White Industries Australia Ltd v Republic of India (UNCITRAL, Award, 30 November 2011), the tribunal considered whether the acts and omissions of Coal India Limited were attributable to India. On the effective-control route, the tribunal required evidence both of India’s general control over Coal India and of its specific control over the acts at issue. The Government’s power to appoint Coal India’s board, together with evidence that it had intervened on other occasions, did not suffice. Claims founded on Coal India’s conduct were therefore dismissed.
That outcome reflects the demanding ‘effective control’ test under which Article 8 attribution is examined. While other articles could be used, the case highlights the challenges of state attribution even if PSUs are heavily controlled by the State.
Due Diligence Obligations Regarding PSU’s Climate Conduct
The second route does not depend on attributing a PSU’s conduct to the State. It concerns the State’s own obligation to use the means reasonably available to prevent significant environmental harm.
The ICJ held that the customary duty to prevent significant environmental harm applies to the climate system as a whole and is not confined to conventional bilateral transboundary harm. The applicable due-diligence standard is stringent and requires heightened vigilance and prevention.
Due diligence is an obligation of conduct, not a guarantee of a particular result. A State must regulate, assess risks, monitor compliance and enforce its rules. The ICJ also stated that a state’s failure to take appropriate action to protect the climate system—including in relation to fossil-fuel production and consumption, exploration licences and fossil-fuel subsidies—may constitute an internationally wrongful act.
PSUs are of course already subject to some regulation relating to climate change. Some PSUs are subject to climate specific regulation. PSUs listed as “obligated entities” under the Greenhouse Gases Emission Intensity Target Rules 2025, as amended in 2026, must meet facility-specific emissions-intensity targets, register under the Indian Carbon Market framework, submit the prescribed documents and surrender carbon-credit certificates to cover any shortfall. The compliance mechanism now covers 490 obligated entities across eight sectors, and the January 2026 addition of petroleum refineries and petrochemicals brings in the refining PSUs, including Indian Oil, Bharat Petroleum and Hindustan Petroleum. Coal mining and thermal power generation, which are the largest sources of PSU emissions, fall outside the notified sectors altogether. Listed PSUs falling within the top 1,000 listed entities by market capitalisation must also submit a Business Responsibility and Sustainability Report, including Scope 1 and Scope 2 emissions disclosures.
Corporate and securities law add governance and disclosure requirements for PSUs related to climate change. For PSUs incorporated under the Companies Act, section 166(2) requires directors to act in good faith in the interests of the company and specified stakeholders, and “for the protection of environment.” The environmental limb of the duty is broad, but no court has read it to require emission reductions. Such a reading is unlikely to emerge as the duty is owed to the company and enforced by the company or its shareholders, and for PSUs the controlling shareholder is the Union government itself. Section 134(3)(n) requires the Board’s report to describe the company’s risk-management policy, including risks that, in the Board’s opinion, may threaten the company’s existence.
These incumbent greenhouse gas and corporate law requirements leave many holes with respect to creating incentives for PSU emission reductions. The BRSR covers the major listed PSUs only, and disclosure is in any event not the same as an emission reduction obligation. Carbon-market obligations attach only to specified facilities in the notified sectors. These limitations would allow PSUs to shift emissions-intensive activity to entities and facilities beyond the disclosure and compliance boundary, with no change in underlying emissions. Further, the emerging carbon market is set up on the basis of PSU emissions intensity only. The effect is that as output increases, emissions will also be allowed to increase, limiting the extent to which this measure reduces climate harm.
Conclusion
The climate advisory opinions do not dictate the content of Indian corporate climate regulation. But they do articulate a baseline against which its adequacy can and will likely be judged. The expectations for state response to this changing baseline might be higher, where the state itself owns the corporations producing the bulk of national emissions, such as the PSUs. In relation to these corporations, intensity-based emissions targets and disclosure mandates that leave coal mining and power generation untouched sit uneasily with a duty that is now described as ‘stringent’ and carrying a heightened need for vigilance.
– Arjuna Dibley