The expanding role of economic evidence in climate and environmental disputes
July 2026 | MARKET PULSE | LITIGATION & DISPUTE RESOLUTION
Financier Worldwide Magazine
July 2026 Issue
Climate and environmental disputes have entered a more forensic phase. Early strategic litigation focused on rights, duties and scientific consensus has not disappeared, but courts, regulators and arbitral tribunals are now engaging far more deeply with economic evidence. Claimants and defendants alike are being asked not simply whether climate harm exists, but how costs, risks and burdens should be quantified, allocated and compared.
Nowhere is this shift more visible than in the accelerating volume and sophistication of climate litigation across the US and Europe, with the Netherlands at the forefront of legally mandated climate ambition.
According to the United Nations (UN) Environment Programme’s Global Climate Litigation Report 2025, more than 3000 climate-related cases had been filed globally by mid-2025, with the US accounting for over 1900 and Europe showing the fastest growth rate outside North America.
What distinguishes the current phase is the increasing reliance on economic modelling, damages quantification and counterfactual analysis. “Over the past five years, economic evidence has moved from a supporting role in climate and environmental disputes to a central one,” suggests Kimela Shah, a partner at Oxera Consulting LLP. “Courts are no longer content with broad, qualitative assertions about climate impact. They now expect rigorous quantification, transparent assumptions, and credible modelling of emissions pathways and financial harm.”
This shift is becoming particularly visible in cases where courts are asked to examine not only environmental harm, but also the wider market consequences of climate-related decisions. Ms Shah points to a couple of pertinent cases. One is Milieudefensie v ING, currently before the Amsterdam District Court, where Milieudefensie aims to hold the Netherlands’ largest bank accountable for the emissions linked to its financing activities. The economic evidence in this case examines the broader market impact if ING were to stop providing finance and services to oil and gas companies – an innovative use of economic analysis in addressing causation.
Another example demonstrating the issue of quantifying harm is the diesel emissions litigation. Almost 2 million consumers have filed misrepresentation claims against car manufacturers regarding defeat device software. Here, economists employ tools such as counterfactual pricing and willingness-to-pay analysis to evaluate the extent of consumer losses.
“The scope for such cases continues to broaden, beyond energy sectors, toward transportation, agriculture, food, retail, banking and financing – making economic evidence relevant for quantifying materiality, causation and damages,” adds Ms Shah.
As an example of the courts’ search for objective economic evidence to inform their judgement, the Shell vs ClientEarth judgement (2023) in the UK High Court cited that the legal opinion submitted in the case did not amount to “expertise in climate science, macro-economics, oil and gas price forecasting, accounting, carbon pricing, carbon markets or related fields”. The lack of expert evidence in such areas was cited as one of the reasons for the court to conclude that the prima facie case had not been established by ClientEarth, in handing down its judgement.
From establishing responsibility to pricing consequences
In earlier landmark cases such as Urgenda v State of the Netherlands, the economic dimension played a secondary role, largely confined to feasibility arguments advanced by the state. By contrast, recent proceedings have required more detailed economic scrutiny. The 2026 Bonaire climate decision, in which the District Court of The Hague ordered the Dutch state to set economy-wide emissions pathways and adaptation measures, explicitly relied on economic comparisons between national targets, EU benchmarks and UN standards to assess whether the Netherlands was making an equitable contribution to global mitigation efforts.
This focus reflects a broader judicial trend. According to the Grantham Research Institute’s Global Trends in Climate Change Litigation 2025 Snapshot, courts are increasingly asked to adjudicate between competing transition scenarios, each supported by expert economic evidence on costs, competitiveness impacts and long-term welfare outcomes. This marks an evolution from questions of scientific attribution toward questions of economic proportionality.
“Climate disputes are less about proving harm or duty and more about pricing future risks, allocating scarce transition capital and determining whose economic assumptions prevail.”
In the US, climate litigation remains numerically dominant but economically fragmented. Federal political resistance to climate regulation has pushed much litigation into state courts and consumer protection frameworks. As a result, economic evidence often centres on disclosure, market impact and investor reliance rather than national mitigation pathways. The Sabin Center notes that US courts are now regularly confronted with expert testimony on loss causation, share price impact and the valuation effects of alleged misstatements on environmental performance.
The nature of disputes: familiar structures, new economic depth
Renewable energy disputes remain the most established category of climate-related conflict. These cases, often arising from subsidy regimes, grid access, planning delays or power purchase agreements, have long relied on financial modelling. What has changed is the context. As subsidies taper and market exposure increases, disputes increasingly hinge on assumptions about changes in investor risk exposure (for example due to terms of subsidies being revised) and the bankability of long-term demand for green power. According to Chambers and Partners’ analysis of European energy disputes, parties are now deploying climate-aligned economic scenarios as evidence, rather than treating climate policy as an external constraint.
Net-zero policy disputes, however, represent a sharper departure. The Netherlands has become a focal point for litigation challenging the adequacy and internal consistency of transition policies. In cases against the Dutch state and large corporates such as Shell and ING, claimants have relied to some extent on economic evidence, for example to argue that stated transition pathways are internally incoherent or incompatible with available investment flows. The Dutch courts’ reluctance to impose company-specific emissions reduction percentages, as seen in the 2024 Shell appeal judgment, turned in part on the absence of a clear economic or industry consensus to form the basis of a legally court-enforceable decision on firm-level allocation of global carbon budgets.
At the same time, greenwashing litigation has expanded rapidly across Europe. While often framed as consumer or investor protection claims, these disputes hinge on economic substantiation. Regulators and courts are scrutinising lifecycle assessments, carbon offset pricing and the economic rationale behind net-zero claims. A 2025 KPMG review of greenwashing regulation notes that enforcement actions increasingly examine whether the underlying economic data supporting environmental claims would withstand independent verification, not merely whether claims are misleading in a colloquial sense.
This growing scrutiny mirrors more established areas of litigation, while also introducing new evidentiary challenges linked to climate-related data. “We see the need of assessing causation and quantifying impact in other areas of litigation, like antitrust litigation,” says Nicole Rosenboom, a partner at Oxera Consulting LLP. “We can therefore rely on a well-founded toolkit that has been developed over years of practice. The type of data in greenwashing and climate-related securities litigation cases is different though. For example, in greenwashing it hinges on consumer or investor valuation of the alleged green nature of products and services.
“With regard to consumer valuation, it is crucial to present the courts and regulators with unbiased estimates, such as by relying on behavioural economics to assess the willingness to pay,” she continues. “Climate-related securities claims can arise due to greenwashing with regard to investor products or directors providing misleading information about climate risks. Here, economists can assess data on share price analysis, traded debt yields and credit ratings analysis to present an analysis of financial impact.”
Securities litigation arising from environmental issues represents perhaps the most financially explicit use of economic evidence. In both the US and Europe, investors argue that misstatements or omissions regarding climate risk have distorted valuations. These findings are now being cited by claimants to support materiality arguments and by defendants to contest causation.
Empirical research published in Nature Sustainability shows that climate litigation filings are associated with statistically significant declines in firm value, particularly where cases introduce novel legal theories or challenge transition strategies at a fundamental level.
Carbon pricing and the quantification of targets
Carbon pricing has become a central evidentiary battleground. As emissions trading systems and carbon taxes expand, disputes are likely to increasingly focus on price assumptions embedded in policy analysis, project finance and corporate transition planning. The World Bank’s State and Trends of Carbon Pricing 2025 report confirms that around 28 percent of global emissions are now covered by a direct carbon price and that carbon pricing mechanisms raised more than $100bn globally in 2024. These figures, no longer abstract policy metrics, now actively shape litigation narratives.
In planning and permitting cases, particularly in Europe, economic experts are asked to estimate whether proposed projects remain viable under plausible future carbon prices. In investor disputes, claimants argue that failure to account for realistic carbon price trajectories amounts to a misrepresentation of transition risk. In the Netherlands, courts assessing net-zero obligations have compared domestic price signals with EU and international benchmarks, using industry and economic alignment to inform the legal decision.
Quantifying targets presents a related challenge. Courts have become wary of endorsing headline commitments unsupported by economically credible pathways. This has led to closer examination of interim targets, capital expenditure plans and sensitivity analyses. In the Bonaire decision, the court’s reasoning reflects a growing judicial expectation that climate commitments must be underpinned by demonstrable economic feasibility, not merely aspirational policy language. As the court emphasised, “the state is pursuing a climate policy that does not comply, in a binding and transparent manner, with the measures that must be taken worldwide to limit global warming to a maximum of 1.5C by the end of this century”.
What comes next: deeper economics, higher stakes
Looking ahead, the role of economic evidence in climate and environmental disputes is set to intensify. The Grantham Institute anticipates that while the overall growth rate of new cases may stabilise, the complexity and financial stakes of litigation will continue to rise, particularly as cases reach apex courts and involve systemic policy choices. This is likely to place greater weight on expert economic disagreement, judicial comprehension of modelling techniques and standards for admissibility.
In Europe, the interaction between climate litigation and financial regulation will be critical. Expanded sustainability disclosure regimes and evolving green claims legislation mean that economic evidence will increasingly be used ex post, to test whether forward-looking statements were reasonable at the time they were made.
“It is likely that the growing environmental, social and governance (ESG)-related disclosure requirements will provide the basis for further climate-related securities litigation and shareholder activism,” notes Sahar Shamsi, a partner at Oxera Consulting LLP. “Similarly, ESG-related fines may provide impetus for follow-on claims. We are finding applications of the economics and valuation toolkits that are used in securities litigation – such as event studies and share price analysis – and in damages quantification – such as overcharge estimation – to new areas in ESG litigation, including greenwashing.
“The maturing landscape is also starting to bring new demands on economists – in particular, industry knowledge about decarbonisation and transition assets, as well as carbon pricing benchmarks. Whether, for example, a voluntary carbon market benchmark, emissions trading system benchmark or social carbon price benchmark is the right reference point depends on the case by case context. The regulation and antitrust toolkits that have been honed in case law, by generations of economists, should provide a good foundation for the evolving needs in ESG litigation,” she adds.
In the US, the divergence between federal and state approaches suggests continued emphasis on economically framed claims around consumer harm and investor loss.
Across jurisdictions, one theme is consistent: climate disputes are less about proving harm or duty and more about pricing future risks, allocating scarce transition capital and determining whose economic assumptions prevail. As courts engage ever more deeply with these questions, economic evidence is moving from the periphery of climate litigation to its very centre.
CONTRIBUTORS:
Sahar Shamsi is a partner at Oxera Consulting LLP. She can be contacted on +44 (0)20 7776 6624 or by email: sahar.shamsi@oxera.com.
Dr Nicole Rosenboom is a partner at Oxera Consulting LLP. She can be contacted on +31 2088 88385 or by email: nicole.rosenboom@oxera.com.
Kimela Shah is a partner at Oxera Consulting LLP. She can be contacted on +44 (0)20 7776 6639 or by email: kimela.shah@oxera.com.
© Financier Worldwide