New LSE report highlights climate litigation cases challenging the integrity of carbon credits
Since 2015, courts and regulators have recorded 161 separate climate-washing lawsuits against companies. This is according to the new LSE report “Global trends in climate change litigation: 2025 snapshot”. Dig into the docket and one pattern leaps out: more than one-third of those cases challenge the integrity of carbon credits themselves. Even more striking is the win-loss record. Of the 100-plus cases that have already reached judgment, well over 60 per cent ended in victory for the claimants—a success rate that would make any risk manager sit up straight.
What these numbers tell us is simple: if your organisation buys or relies on offsets, the chances of being sued—or seeing a counter-party sued—are no longer remote. They are demonstrably rising, and the plaintiffs are usually winning. Below, we unpack what is driving this trend and what prudent companies can do about it.
The statistic behind the storm
The 161-case data set captures claims filed in jurisdictions from Germany to Australia to the United States. Roughly 54 of them—the “one-third” slice—allege that a company’s offsets were low quality, double-counted or marketed in a way that misled consumers and investors. Courts have rewarded these challenges: consumer-protection agencies in Australia have imposed eight-figure penalties, while Germany’s top civil court forced confectioner Katjes to rewrite its “climate-neutral” label because it relied solely on purchased certificates.
Just as important is the outcome metric. Where a judge or regulator has reached a decision, the claimants have prevailed almost two times out of three. That track record reshapes the risk calculus for any firm still treating offset diligence as a tick-box exercise.
Why carbon credits are suddenly litigation magnets
Three forces are converging. First, regulators are codifying what counts as a credible climate claim; vague language like “net zero” without context now violates advertising and financial-disclosure rules in multiple jurisdictions. Second, civil-society groups and class-action firms have learned how to translate those rules into powerful courtroom narratives—often by focusing on the gap between glossy marketing and the fine print of project documents. Third, an explosion of low-cost, low-integrity credits has made it easier for plaintiffs to prove that a given tonne of CO₂ reduction never really happened.
Why carbon credits are suddenly litigation magnets
Three forces are converging. First, regulators are codifying what counts as a credible climate claim; vague language like “net zero” without context now violates advertising and financial-disclosure rules in multiple jurisdictions. Second, civil-society groups and class-action firms have learned how to translate those rules into powerful courtroom narratives—often by focusing on the gap between glossy marketing and the fine print of project documents. Third, an explosion of low-cost, low-integrity credits has made it easier for plaintiffs to prove that a given tonne of CO₂ reduction never really happened.
From headline cases to board-room risk
Recent litigation illustrates the breadth of exposure:
Consumer deception: Katjes’ loss before Germany’s Federal Court of Justice shows that even small product labels can trigger national precedent.
Regulatory enforcement: Australia’s securities watchdog extracted AU$11.3 million from Mercer Super for overstating the climate credentials of funds backed by offsets.
Criminal prosecutions: U.S. authorities have filed fraud and commodities-law charges against executives who fabricated voluntary-market credits.
Each pathway ends in costs that dwarf the price of a proper pre-purchase investigation.
Turning litigation headwinds into advantage
Our screening service exists to de-risk your offset strategy before the courtroom does. By fusing real-time legal analytics with on-the-ground project verification, we build portfolios that can withstand the scrutiny reflected in those 161 cases—and the many more that are sure to follow.
Bottom line: the data prove that carbon-credit claims are a growing litigation hotspot, and plaintiffs usually win. Companies that embed robust, evidence-rich due diligence now will not only avoid the dock; they will also earn the one commodity in shortest supply in the carbon market today: trust.
