Increasing Corporate Concern over Climate Action Litigation

Budha Ismail Jam v. International Finance Corp.

Fishermen sued IFC on the grounds that it approved a $450 million loan for the Tata Mundra Ultra Mega Power (Coal) Project without ensuring that developers would adhere to environmental standards.

Resulting pollution prevented fishing nearby and reduced fish population.

The legal journey:

Lower courts accepted the IFC’s argument that it has immunity as a foreign government under the 1945 International Organizations Immunities Act (IOIA).

The U.S. Supreme Court determined in a 7-1 ruling that those protections have limits.

The bottom line:

There is no longer absolute legal immunity for the IFC and similar organizations. 

In the most recent Allianz Risk Assessment survey, 33% of the 3,000 respondents said the threat of legal and regulatory action poses the most significant impact in relation to corporate climate risk.

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