We analyze whether climate litigation—court cases in which climate change law, policy, or science is a material issue—against publicly traded companies in the United States and Australia reduces their greenhouse gas emissions. Existing research typically examines the role of legislative and executive institutions in decreasing emissions yet neglects the judiciary. Using firm-level panel data on emissions, exposure to climate litigation, and relevant covariates, we show that suing and achieving legal victories against US corporations over climate change reduces their emissions substantially, with the largest reductions arising after judges issue rulings against firms. We find no significant results for Australian corporations. Then, using process-tracing methods we identify three potential mechanisms—direct sanctions, reputation costs, and operational disruptions—that may explain why climate litigation reduces corporate emissions. Our findings have important implications for future research and policy, suggesting the existence of a previously under-examined path for climate action: the courts.
