Report: Climate change - global trends in climate change litigation and impact on businesses

In this report 'a rising tide of litigation' we explore the liability risks that organisations have and continue to face as plaintiffs attempt to use the courts to further their cause or sue for damages.

This article looks at the global trends in climate change litigation, revealed from the analysis of the rising tide of litigation, the novel approaches being deployed by climate change claimants more recently (particularly product liability claims) and courts’ responses to climate change litigation, which are likely to have implications for businesses globally.

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Key trends in litigation

The following are some key trends in climate change litigation:

  1. Strategic climate change litigation cases (those that aim to have an impact beyond the court room) against governments and corporations are on the rise.
  2. Judges/courts are starting to show willingness to hold governments accountable for climate issues under constitutional and/or common law principles, and by driving legislative and regulatory changes.
  3. Decisions in one country can shape the outcome in others – indeed at least two US courts have cited the Dutch case Urgenda in their analyses.
  4. A wider body of case law and a better understanding of the science of climate change and attribution science will influence courts’ thinking.
  5. Although “most climate change litigation to date has proceeded in courts in developed countries…Litigants and courts in the Global South are beginning to make use of burgeoning climate change litigation theories and know how”.
  6. Transnational cases (such as Lliuya – Peru/Germany) are likely to increase.

Key differences between jurisdictions

Differences are apparent between jurisdictions:

  1. In those where there is a constitution, cases have relied on constitutional or human rights regimes, such as the rights to life and dignity (see for example Leghari v Pakistan).
  2. Whether the constitution expressly enshrines environmental rights (for instance, in Norway the constitution establishes a “right to an environment that is conducive to health and to a natural environment whose productivity and diversity are maintained”)
  3. Existing environmental statutes: review of the provisions of such statutes can assist with framing cases in such a way as to compel action.
  4. Environmental regulations: action can be taken where the regulations are being breached, but also to promote the establishment or improvement of such regulations.
  5. Existing international commitments, such as the Paris Agreement: these can be used as benchmarks against which to assess a country’s mitigation efforts
  6. The use of juries in civil litigation.

Implications for businesses

Trickle down effects of administrative cases

Administrative cases may have a direct impact on environmental policy-making. They open the doors for citizens to hold governments to climate commitments and to drive policy and legislative changes. If lawsuits succeed, governments may be prompted to review their environmental laws and commitments to ensure they are adequate, so as to lessen the risk of future litigation.

If governments adopt a firmer stance on climate change, either as a result of climate litigation or as a pre-emptive measure to ward against such claims being brought, there will be consequential legal and regulatory impacts on companies operating within those jurisdictions.

Depending on the industry, it may be sensible for businesses to keep a watchful eye on the course of strategic climate litigation, as there is the clear potential for judge-made law to have wide reaching implications on regulation surrounding GHG emissions, particularly where the government is targeted.

Impact on businesses beyond oil

Oil majors are currently facing threatened or pending litigation on a number of fronts and across a number of jurisdictions. Their liability insurers and reinsurers will undoubtedly be watching these cases with keen interest.

To date the targets of climate change litigation have primarily been governments and oil majors, but as the viability of climate change-related actions increases, so other businesses could find themselves in the crosshairs. Already claims have been brought or contemplated against car manufacturers and airlines for the physical effects of climate change. Other sectors may be targeted in due course.

Companies in a number of sectors may find themselves exposed not just to damages claims for climate change, but also the cost of defending litigation, the reputational harm of being associated with such litigation and the consequential impacts on operations and value.

Companies need also to consider reputational risks – customers and/or investors might begin to shun a company alleged to be acting in a way that is seen to be environmentally unethical.

The significance of these trends should not be underestimated, as litigation increasingly represents a powerful tool in the hands of those who seek to attribute blame for the effects of climate change, obtain compensation and drive change. download full report below.

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Find out more from our Resilience Expert:

Nigel Brook