Social Structures
Author: Firdavs Kabilov, PhD Fellow at the Maynooth University School of Law and Criminology, Maynooth University
Climate change has become a defining global challenge, with far-reaching implications for the governments and businesses. As the urgency to address climate change increases, novel avenues are being explored to catalyse action. One such avenue is climate litigation, a strategy that seeks to hold governments and businesses accountable for their contributions to climate change. The United Nations Environment Programme’s latest report Global Climate Litigation Report: 2023 Status Review shows that climate change-related lawsuits have substantially increased in recent years. As of December 2022, there were 2,180 climate-related cases filed in 65 jurisdictions, including international and regional courts. This brief post will focus on some of the most recent and notable cases to highlight emerging trends on climate change litigation and their impact on government policies and business practices.
Most climate change lawsuits fall into one or more of the following six categories:
1) cases relying on human rights (see: recent UN Resolution, which declared clean and healthy environment as a human right);
2) challenges to non-enforcement of climate-related laws and policies at the domestic level;
3) litigants seeking to keep fossil fuels in the ground;
4) advocates for greater climate disclosures and tackling greenwashing;
5) claims addressing corporate liability for climate harms; and
6) claims addressing failures to adapt to the impacts of climate change.
Although cases brought before domestic courts rely on national laws for their legal basis, there seems to be an evolving consensus among commentators and the worldwide judiciary on the role of the 2015 Paris Agreement, an international climate treaty, as being instrumental in shaping the legal basis for climate lawsuits. A remarkable example is the Heathrow Airport Expansion Case (UK), which concerned the legality of the UK government’s Airport National Policy Statement (‘ANPS’), which facilitates support for the airport expansion. In February 2020, the Court of Appeal ruled that the ANPS had not been lawfully adopted, because the Government failed to consider the implications of the Paris Agreement. Although, the UK Supreme Court eventually overturned the Court of Appeal’s decision by ruling that the ANPS was produced lawfully, the judgment made it clear that full climate implications must be considered at the planning permission stage.
In recent years, the growing climate change activism has also led to increased action against corporations. In a notable case, the Hague District Court ordered oil and gas company Royal Dutch Shell to comply with the Paris Agreement and reduce its carbon dioxide emissions by 45 per cent from 2019 levels by 2030. This was the first time a court found a private company to have an obligation under the Paris Agreement. This is a significant development in the interplay between international climate change law and nationally enshrined core legal concepts (in this case, duty of care in Dutch tort law). The Court recognized that Shell had an ‘obligation of result’ to reduce CO2 emissions resulting from Shell’s activities and a ‘best-efforts obligation’ to reduce emissions generated through its business relations, including suppliers and end-users. While Shell was not found to be in violation of these obligations per se, the Court recognized that Shell’s climate policies were insufficient and thus there was a risk of imminent breach of its obligations.
Climate litigation has also touched upon the financial sector, holding institutions accountable for inadequate disclosure of climate-related risks, or promoting unsustainable investments. In July 2018, Mr. McVeigh, a pension fund contributor, filed a lawsuit at the Federal Court of Australia against the Retail Employees Superannuation Trust (‘REST’), an Australian pension fund, alleging that REST violated the Corporations Act 2001 by failing to provide information on climate change related business risks and any plans it had to address those risks. Pursuant to Corporations Act 2001 (Section 1017C), superannuation beneficiaries (in this case the claimant) are entitled to request information to make an informed judgement on the management and financial performance of the fund. McVeigh requested information from REST regarding REST’s knowledge and opinion of its climate change business risks (both the physical and climate transitional impacts) and the actions taken by REST to deal with such risks. While some information was provided, McVeigh alleged this was not sufficient to allow him to understand or make an informed judgement about the management of the pension fund and its investment performance. The claim also questioned whether REST had complied with the provisions of the Superannuation Industry (Supervision) Act 1993 (Section 52) to act in the best interests of its members, exercise adequate care, skill and diligence in setting an investment strategy. In its defence, REST argued that climate change risk was just one of many material factors to be considered by Australian investors and denied that climate change was likely to have a material impact on the financial performance of the fund.
Before the trial was set to begin, REST reached a settlement with the claimant and set out the details of the settlement in a press release. REST acknowledged that ‘climate change is a material, direct and current financial risk to the superannuation fund across many risk categories, including investment, market, reputational, strategic, governance and third-party risks.’ To address this risk, REST agreed to implement a net-zero carbon footprint by 2050 goal for the fund, to measure, monitor and report climate progress in line with the Task Force on Climate-related Disclosures, to ensure transparency regarding climate disclosure and portfolio holdings.
Climate change litigation is becoming a mechanism for accelerating climate action, promoting climate justice and drawing the attention of governments and the private sector to the urgency of the matter. In the example of McVeigh case, we saw that climate litigation can compel financial institutions to assess climate risks, disclose information transparently, and adapt their practices to a changing regulatory landscape. These developments also show how domestic courts can rely on the Paris Agreement in recalibrating well-established legal duties in national legislation. Last but not least, climate change litigation is evolving into ‘a risk’ in its own right for governments and businesses across sectors and jurisdictions, further challenging existing policy, legal and financial arrangements.