African Debt, Climate Change and the ICJ

Introduction

The negotiations pertaining to sovereign debt crises place African sovereign debtors on the horns of a dilemma. On the one hand, there is the obvious truism that sovereign debt transactions are based on binding and enforceable contracts. Consequently, it is unsurprising that creditors insist negotiations relating to sovereign debt crises focus primarily on the financial and legal terms of the contract. On the other hand, it has long been recognised that sovereign debt crises are not purely financial or contractual in nature. They are caused by a mix of domestic and international governance, economic, social, political, environmental and cultural factors. Their outcomes also have complex political, social, environmental and cultural implications, as well as financial and economic consequences. Creditors maintain that these considerations fall within the prerogatives and responsibilities of the sovereign debtor and so should be viewed as outside the scope of their discussions with the debtor. The purpose of this policy brief is to argue that, in light of the climate crisis and evolving views of the environmental and social responsibilities of financial institutions, creditors’ constrained approach to sovereign debtors in crisis is no longer sustainable. It needs to be replaced with a new, more holistic approach that is both operationally and legally feasible. First, the policy brief explains why a narrow focus on financial and legal concerns is no longer a sustainable approach to Africa’s sovereign debt situation. Second, it discusses the implications for sovereign debt negotiations of the recent advisory opinion of the International Court of Justice (ICJ) on the legal obligations of states in dealing with climate change. Finally, it makes some recommendations on what African policymakers and other stakeholders can do to push their creditors to adopt a more holistic approach to sovereign debt restructuring.

Africa’s intertwined challenges

Africa is currently facing at least three intertwined challenges. These are sovereign debt; climate change and its impacts; and the social and political implications of a young population facing the prospect of high levels of unemployment and poverty. While, conceptually, the three challenges are distinct from each other, they are functionally intertwined. For example, the Expert Review on Debt, Nature and Climate, in its final report describes the vicious cycle that can be created by these intertwined challenges. The cycle begins with a climate shock, such as a drought, hurricane or flood, that forces a government to borrow to cover the costs of the shock. The shock, therefore, can adversely affect public revenues, the sovereign’s credit rating, the cost of its debt and its debt servicing capacity. It can also result in slower growth that further reduces the state’s capacity to build climate-resilient infrastructure and to make the other investments needed to meet social demands and stimulate growth. The constrained fiscal space increases the state’s incentive to support projects that can relatively quickly generate revenues but may be environmentally and socially damaging. The net effect of these actions is to increase both the state’s vulnerability to climate and other nature shocks and the risk of this vicious cycle repeating itself.¹Expert Review on Debt, Nature and Climate, Healthy Debt on a Healthy Planet: Towards a Virtuous Circle of Sovereign Debt, Nature and Climate Resilience, Final Report (Expert Review on Debt, Nature and Climate, 2025), 8. The Expert Review notes that, in 2023, low-income countries, many in Africa, spent 13% of government revenue on external debt service, of which 4% was dedicated to interest payments. This was more than double what they spent in 2010.²Expert Review, Healthy Debt on a Healthy Planet, 17–18.As a result, African sovereign debtors are often forced to choose between fully paying their creditors and financing the needs of their populations, including healthcare, education, renewable energy, water and climate-resilient physical infrastructure.³UNCTAD, “World of Debt: Africa”, 2023.In fact, between 2019 and 2021, 25 African countries spent more on debt service than on health and seven spent more on debt than on education.⁴UNCTAD, “World of Debt”.To cite another example of the links between debt and social concerns, the Kenyan state faced a debt crisis in 2024. It reached an agreement with the IMF to address its debt challenges that caused it to raise taxes in order to close its budget deficit and meet its obligations to its creditors. This precipitated angry protests by young Kenyans who maintained that the tax rises were unfair and unduly burdensome for young people facing the prospects of unemployment or under-employment. Protesters also claimed that, effectively, their concerns and interests were being ignored by their government.
The intensity of the protests forced the government to back down and take on more expensive new debt to meet its obligations to its creditors. The new debt burdens and the political tensions that state actions generated have further adversely affected economic growth. This, in turn, has limited the government’s capacity to fund the investments needed to grow the economy and meet both the demands and needs of its population and its debt obligations.⁵World Bank, “Despite Improvements, Kenya’s Fiscal Path Is Fragile Amid High Debt Vulnerabilities and Weak Revenue Growth”, Press Release, May 27, 2025; O. Kodongo, “Kenya Could Run Out of Money to Repay Massive Debts: How to Avoid This”, The Conversation Africa, September 17, 2024.Consequently, the risk of further unrest and debt default remains.

These examples underscore the shortcomings of the current conceptually constrained approach to sovereign debt renegotiations. Pursuant to these, creditors are expected to base their credit decisions only on economic and financial considerations and to defer to the sovereign’s decisions regarding the environmental, social, political, cultural and distributional impacts of particular transactions. Their responsibilities for any impacts
beyond these should be based on how political and legal processes in the debtor country determine the responsibilities for the political, cultural, social and environmental impacts of the transaction should be distributed among the various stakeholders. It is important to note that agreement on this limitation on creditor responsibility has slowly broken down. There is growing acknowledgement that creditors’ narrow legalistic approach, which prioritises their financial contracts over the debtor’s other legal and constitutional obligations, is no longer fit for purpose. It does not adequately account for the fact that both the debtor’s and the creditor’s decisions and actions have environmental, social, cultural and political impacts and that they have responsibilities in regard to these impacts. There are two important points to note about this development. First, there is not yet any consensus on the scope or duration of each of the stakeholders’ responsibilities for these impacts. Second, debtors and creditors need to develop a new conceptual framework for assessing sovereign debt transactions that incorporates and treats with appropriate regard their financial, economic, social, political and environmental impacts. This more holistic approach should also incorporate all the relevant legal obligations, on both the debtor’s and the creditor’s side, into their renegotiations.

The international community is confronting two conceptual challenges in developing this framework. First, such a framework will be complex and difficult to operationalise. The reason is that, in principle, it means that the parties will have to account for all the financial, economic, social, political, cultural and environmental impacts of the transaction over its full life cycle. Given that this could play out over a number of years or even decades, it would seem to be beyond the realistic capacities of all parties. Moreover, the framework will have to pay appropriate attention to the differences in capabilities and resources of the different actors in the sovereign debt transactions. Second, without more clarity, debtors and creditors are reluctant to commit to a conceptual framework that may result in their being allocated responsibilities that they do not fully understand. In particular, they are reluctant to agree on the proposed division of responsibilities until they can more confidently assess either the risks they are assuming or the liabilities that may arise therefrom. The recent ICJ advisory opinion on climate change⁶International Court of Justice, “Advisory Opinion on the Obligations of States in Respect of Climate Change”, July 23, 2025. offers some useful guidance on how to develop such a framework.

The ICJ advisory opinion and its implications for debt

In 2023, the UN General Assembly agreed to seek the ICJ’s advice on the following
two issues:⁷UN General Assembly, “Request for an Advisory Opinion of the International Court of Justice on the Obligations of States in Respect of Climate Change”, 2023.

• the obligations of states under international law to protect the environment from the impact of human-caused greenhouse gas emissions; and
• the legal consequences for states if they fail to meet these obligations and thereby cause significant environmental harm for present and future generations.

The case attracted unprecedented attention. The court received over 150 written submissions. More than 100 states and international organisations made oral presentations in nine days of public hearings. On 23 July 2025, the ICJ issued a unanimous advisory opinion by 15 judges from 15 countries. It was only the fifth time that the court had done this in its nearly 80-year history. Consequently, although the court’s opinion is only advisory, it is likely to be highly influential.⁸It is important to note that the ICJ advisory opinion is not the only advisory opinion on the international legal implications of climate change. See also International Tribunal for the Law of the Sea, “Advisory Opinion on Climate Change and International Law”, May 21, 2024; Inter-American Court of Human Rights, “Advisory Opinion OC-32/25”, May 20, 2025. In addition, the Pan-African Lawyers Union has filed a request for an advisory opinion with the African Court of Human and Peoples’ Rights concerning human rights obligations and climate change. See Columbia Law School, Sabin Center for Climate Change Law, “Africa’s Advisory Opinion Request: Taking Climate Justice to the Continent’s Highest Court”, (blog post), May 7, 2025. As of the date of writing (October 6, 2025), the court has not yet issued its advisory opinion.The first point to note about the court’s opinion is that it held that the obligations of states extend beyond the treaties they have signed and ratified. They also include obligations arising from customary international law.⁹Legal Information Institute, Wex, “Customary International Law”, accessed October 24, 2025,https://www.law.cornell.edu/wex/customary_international_law This is the law with which states comply out of a sense of legal obligation. It is important that the court went beyond discussing treaty law in its opinion. Treaty law is only binding on the states that are parties to the treaty. Customary international law, on the other hand, is binding on all subjects of international law – states and international organisations – regardless of whether they have signed any applicable treaty.

The court declared that there are two relevant customary international legal obligations that are binding on all subjects of international law. The first is a duty to prevent significant harm to the environment. This requires states to exercise due diligence before acting in ways that could cause environmental damage. They must assess both the probability of causing serious harm and the likely extent of any expected impacts. In making these assessments, states must take into account current binding and nonbinding international standards. They must also ensure that companies and individuals subject to their jurisdiction comply with these duties. This means that states need to make sure that they require their own agencies and instrumentalities such as state owned financial institutions and enterprises, and the private financial institutions subject to their jurisdiction, to undertake appropriate due diligence before concluding any transaction that could have adverse impacts on the environment and climate change. The second is a duty to cooperate with other states to protect the environment and to help solve international problems of an economic, social, cultural or humanitarian nature. Here, the court opined that a healthy environment is a precondition for the enjoyment of human rights. It affects the rights to life, health and livelihoods, as well as the rights of children, women and Indigenous people. This means that, pursuant to the court’s opinion, the subjects of international law and all those actors subject to their jurisdiction are required to assess the impact of their proposed actions on human rights and on the environment. The court, in discussing the second issue, advised that states can be held legally responsible if they do not take all measures within their power to prevent significant environmental harm. However, the court viewed the doctrine of common but differentiated responsibilities¹⁰Ellen Hey, “The Principles of Common but Differentiated Responsibilities”, UN Audiovisual Library of International Law, accessed October 24, 2025,https://legal.un.org/avl/pdf/ls/Hey_outline%20EL.pdf.as being applicable to the customary international legal obligations of states. This means that while all states have this duty, its precise contents will vary depending on their histories and capabilities. It also noted in this regard that the critical factor was the effort states make and not the results they produce. This is important in determining the scope of state obligations in terms of due diligence. It is often said that the law is a seamless web, meaning that all legal principles and doctrines are interconnected.¹¹“Lawrence B. Solum, “Legal Theory Lexicon: The Law is a Seamless Web”, Legal Theory Lexicon (blog post), October 15, 2006.Consequently, the fact that the court grounded its decision, in part, on customary international environmental and human rights grounds means that it has implications for any actions by states that can have significant adverse impacts on climate, the environment and customary human rights.

This suggests that the court’s opinion should be applicable to the renegotiation or restructuring of African debt. This follows from the fact that whatever actions African sovereign debtors take to deal with their debt crisis can affect their ability to manage their greenhouse gas emissions. It can also affect their ability to meet their human rights obligations. Similarly, the terms on which their creditors propose to address these crises will have implications for their own environmental and human rights responsibilities and for the customary human rights and environmental obligations, both domestically and extraterritorially, of their home states.
The customary international legal obligation of due diligence suggests that African sovereign debtors and their creditors need to understand the environmental and climate impacts of their transactions. The only way that they can meet this objective is to do ex ante impact assessments of the likely environmental and social impacts of their proposed transactions. In this regard, it is important to recall that the obligation is one of conduct and not of results. Consequently, both the debtor and its creditors will need to demonstrate that they have done due diligence that is appropriate both to the scale of their transaction and to their respective capabilities. This suggests that the principle of common but differentiated responsibility can help define the scope of the debtor’s and the creditors’ obligations.
According to the obligation to cooperate identified by the ICJ, the parties must also work together to resolve their transactions’ negative environmental, social, economic and cultural impacts. Once again, their respective responsibilities will differ depending on their capabilities. In addition, in order to meet the applicable customary international law requirements, they will need to demonstrate that they have made an effort to cooperate
in reaching an outcome that is consistent with their customary climate and human rights obligations. It is important to note the relevance of a range of applicable soft international law standards. While these standards are non-binding, they are the product of deliberation and agreement by a qualified group of experts or diplomats regarding their view of the standard of conduct expected from international law-respecting actors. The following are some of the most authoritative and relevant international norms and standards.

• UN Guiding Principles on Business and Human Rights
• UNCTAD Principles on Promoting Responsible Sovereign Borrowing and Lending
• UN Global Compact
• OECD Principles of Responsible Conduct for Multinational Enterprises
• World Bank Environmental and Social Framework.
• 2022 IIF Principles on Stable Capital Flows and Fair Debt Restructuring

While private financial institutions are not subjects of international law, many of them have recognised that they have human rights and environmental responsibilities. They have adopted human rights and environmental and social policies that often specifically refer to these international standards.¹²BlackRock, “Our Approach to Engagement on Corporate Human Rights Risks”, January 2025; Barclays, “Barclays Group Statement on Human Rights”, February 20, 2024.These individual policies are relevant to determining each entity’s views of its obligations and responsibilities and provide a basis on which to assess its compliance with its own views of its responsibilities. The ICJ opinion may therefore offer new opportunities to make debtor and creditor states, and creditor institutions, accept responsibility for the environmental and social impacts of their actions.

Recommendations

There are at least three ways in which African sovereign debtors can use the ICJ opinion in the management of their debt challenges. First, they can use the decision to bolster their arguments for incorporating the environmental and social impacts of debt in their negotiations. They can point out that the debtor state cannot avoid international legal responsibility for the effects of the transaction on its greenhouse gas emissions and on the human rights of its citizens. They can also point out that creditors and their home states have a legal obligation to assess these impacts and cooperate with the sovereign debtor in managing them. Thus, the ICJ opinion can help make the case that current approaches to sovereign debt renegotiations that limit their scope to financial and economic issues are inconsistent with their customary international legal obligations. Such approaches are thus complicit in forcing the debtor state to violate its customary international legal obligations.
Second, African states can use the ICJ advisory opinion to promote a global political agreement on a new conceptual framework for debt negotiations that is consistent with the customary international legal obligations of all subjects of international law. This framework must incorporate the principles of due diligence, cooperation and common but differentiated responsibilities. The G20 could assist in this regard by appointing a technical committee to assess how most effectively to incorporate these customary international legal obligations into sovereign debt negotiations. One option is to use the DOVE (Debts of Vulnerable Economies) Principles.¹³In this context, “vulnerable economies” refers to countries that are either in debt default or in debt distress. Daniel Bradlow, “A New Conceptual Framework for African Sovereign Debt: Finding an Optimal Outcome that Addresses Five Challenges”, Journal of African Economies 33, supplement 2 (December 2024): ii62–ii77.

These are based on 22 international norms and standards applicable to sovereign debt:¹⁴Bradlow, “A New Conceptual Framework”; see also Daniel Bradlow, “A Proposal for a New Approach to Restructuring African
Eurobonds: The DOVE Fund and Principles”, SouthViews 242 (November 4, 2022).

• Principle 1. Guiding Norms: Sovereign debt restructuring should be guided by six norms: credibility, responsibility, good faith, optimality, inclusiveness and effectiveness. ‘Credibility’ requires confidence in the process; ‘responsibility’ requires that all parties pay appropriate attention to their financial, social, environmental and human rights commitments; and ‘good faith’ underscores a sincere commitment to a fair and human rights-focused resolution to the debt crisis. The principle of ‘optimality’ emphasises the goal of reaching an optimal outcome. This is an outcome that offers each of them the best possible mix of economic, financial, environmental, social, human rights and governance benefits. Such an outcome takes into account the circumstances in which the sovereign debtor and its creditors are negotiating, as well as their respective rights, obligations and responsibilities. ‘Inclusiveness’ and ‘effectiveness’ ensure that all creditors and affected populations have timely access to relevant information and that negotiations are concluded efficiently.
• Principle 2. Transparency: Both negotiating parties and affected parties should have access to the information they need to make informed decisions regarding the debt restructuring.
• Principle 3. Due Diligence: The sovereign debtor and its creditors should each undertake appropriate due diligence before concluding a sovereign debt restructuring process.
• Principle 4. Optimal Outcome Assessment: At the earliest feasible moment, the negotiating parties should publicly disclose why they expect their restructuring agreement to result in an optimal outcome. This principle requires the negotiating parties to evaluate, as far as possible, the anticipated impacts of any proposed agreement on the sovereign borrower and affected parties across economic, social, environmental, governance and human rights dimensions.
• Principle 5. Monitoring: The restructuring process should incorporate credible and transparent mechanisms for monitoring the implementation of the restructuring agreement. These mechanisms should audit both the financial performance and the broader impacts of the transaction.

Third, activists around the world can use the judgment to strengthen the resolve of both debtors and creditors to adopt and comply with this new conceptual framework. They can say that creditor and debtor states have an international legal duty to prevent significant harm to the environment and to cooperate to protect the environment. This duty extends to ensuring that companies and individuals subject to their jurisdiction act in conformity with these duties. They can be held legally responsible for failing to comply with these duties.
In this regard, they can use international mechanisms to hold debtors and creditors accountable for failing to perform their duties. These include the National Contact Points,¹⁵OECD, “National Contact Points for Responsible Business Conduct”, accessed October 24, 2025, https://www.oecd.org/en/networks/national-contact-points-for-responsible-business-conduct.html which exist in each state that has signed on to the OECD Principles of Responsible Conduct for Multinational Enterprises. Another possibility is the independent
accountability mechanisms of multilateral development banks.¹⁶Daniel Bradlow et al., “The Perspectives Project: Documenting and Reimagining IFI Accountability”, American University Washington College of Law Digital Commons, accessed October 24, 2025, https://digitalcommons.wcl.american.edu/accountability-perspectives/.A third option is to use the grievance mechanisms that some commercial banks have created.¹⁷BankTrack, “Bank Human Rights Complaints Channels: A User’s Guide”, accessed October 24, 2025, https://www.banktrack.org/campaign/hrusersguide#menuitem-1.There are also the courts in the growing number of states in which governments, central banks and private actors have been sued for violating their obligations to combat climate change.¹⁸Joana Setzer and Catherine Higham, “Global Trends in Climate Litigation: 2025 Snapshot” (Grantham Research Institute on Climate Change and the Environment, London School of Economics, June 25, 2025).

Conclusion

The scope and complexity of the climate issue and the potential liability that may arise from its impacts have pushed concerned states to try to understand their international legal obligations in this regard. As the ICJ advisory opinion demonstrates, all states have customary international legal obligations to deal with the crisis, regardless of whether they are signatories of any particular climate-related treaties. These obligations apply in any context in which their decisions and actions may have adverse implications for the climate and for the human rights that depend on a healthy environment. This brief has argued that, therefore, such obligations should apply to sovereign debt crises. It has also offered some recommendations on how sovereign debtors in distress or crisis and their stakeholders can use the ICJ advisory opinion to enhance their bargaining power in negotiations with their debtors.