Climate Change and Sustainable Restructuring in International Insolvency Law

Climate variability is reshaping international insolvency law, prompting a key question: should insolvency systems embed climate and sustainability objectives within their core principles? This chapter argues that integrating environmental responsibility into domestic and international insolvency frameworks is now essential. The urgency of climate risk requires insolvency systems to “green themselves” by recognizing climate mitigation and biodiversity protection as public‑interest goals. This includes prioritizing the rescue of “green debtors” with credible transition plans while enabling the orderly liquidation of persistently high‑emission firms to prevent the externalization of environmental costs.

Drawing on existing scholarship, the chapter sketches the foundations of a green‑oriented insolvency regime. Its main features include recognition of environmental protection as a public interest; proper treatment of environmental claims and remediation duties; mechanisms to avoid abandonment of stranded assets; and space for stakeholder participation and challenges to unsustainable restructurings. Insolvency law can thus become a proactive tool of sustainable restructuring.