Climate change litigation accelerating as impact of cases rises

The Grantham Research Institute on Climate Change and the Environment at LSE said just over 800 cases were filed between 1986 and 2014, while over 1,000 cases have been brought in the last six years, since the Paris Climate Change Agreement in 2015. Between 1 May 2020 and 31 May 2021, 191 new climate change cases were filed worldwide.

The vast majority of claims since 1986 have been in the US, and the other jurisdictions with the highest volume of cases are Australia, the UK and the EU. However, the Global Trends In Climate Litigation 2021 Snapshot (45 page / 4.57MB PDF) said in the past year cases had been filed for the first time in Guyana, Taiwan, the East African Court of Human Rights and the European Court of Human Rights, and case numbers were growing in ‘Global South’, or less-developed, jurisdictions.

Most cases were brought against governments with parties seeking to enforce or enhance climate commitments. Researchers identified 68 cases outside the US in which claimants challenged the adequacy of climate action concerning direct acts or omissions by governments. Around half of these were ‘systemic mitigation’ cases focused on broad government action instead of challenging specific policies or decisions.

Claims against corporations have historically been dominated by cases against fossil fuel companies, but the report found that claims were now being filed against a wider range of private sector organisations, For example, in 2020, an action was brought against New Zealand dairy company Fonterra claiming a duty of care to reduce emissions, and cases are also being filed against companies with a more indirect role such as those in the financial services sector.

The researchers pointed out that claims against financial services firms could in turn increase the cost of capital for high emitters.

Non-governmental organisations (NGOs) and individuals, working either together or separately, are responsible for an increasing number of claims.

The report said the number of ‘strategic’ cases, which aim to bring about some broader societal shift such as advancing climate policies, creating public awareness, or changing the behaviour of government, was dramatically on the rise. It also reported that litigation that is aligned with climate goals is, on balance, seeing success, and has been demonstrated to have a direct regulatory impact.

However, the report also said litigation that could weaken or undermine mitigation or adaptation efforts was a “growing phenomenon”. It included in this category cases with an intentional goal of opposing climate action, such as challenging governments’ climate regulations as breaches of bilateral investment treaties; as well as cases that could result in delays to or rollbacks of climate action or policies.

Nevertheless, the majority (58%) of climate change cases decided outside the US had received judicial outcomes favourable to climate change action. Around a third (32%) had unfavourable outcomes, and 10% had ‘neutral’ outcomes.

Dispute resolution expert Michael Fenn of Pinsent Masons, the law firm behind Out-Law, said: “This report illustrates why the risk of climate change related litigation is one which businesses across a wide range of sectors cannot afford to ignore. Numbers of climate change cases are rising rapidly, including in the UK which is now the third most popular venue for climate change cases after the US and Australia, and these are being brought against a wider range of private sector organisations and framed in a growing variety of ways.”

Fenn said the fact that cases are increasingly being brought by NGOs and groups of individuals for strategic purposes, could bring a different dynamic to litigation to that which most commercial parties are used to, potentially increasing costs and making settlement on commercial terms more difficult.

“What is more, the data shows that this strategic litigation can really work: the report suggests that litigation aligned with climate goals is on balance seeing success, and a number of significant decisions have been handed down in the last 12 months, including the recent Royal Dutch Shell decision in the Netherlands. Businesses should expect more of this type of strategic litigation going forward, and prepare for it,” Fenn said.

Dispute resolution expert Emilie Jones of Pinsent Masons said the increasing focus on financial services organisations and claims relating to alleged greenwashing or failure to adequately disclose or manage climate-related risk meant that continuing to focus on risk management remained crucial for the financial services sector.

“It is also important to note the warning in the report to all businesses of a future increase in claims relating to acts or omissions in their supply or value chains. Businesses need to be considering carefully how to identify and manage climate-related risks in their supply chains,” Jones said.

The researchers predicted climate change litigation would continue to grow and the range of claims and defendants will continue to diversify. It identified as growth areas: supply and value chain litigation; cases challenging government support to the fossil fuel industry; and so-called ‘just transition’ cases, in which claimants oppose climate change adaptation or mitigation projects due to their impacts on the environment and communities,.

Jones said this showed that organisations would not necessarily avoid litigation simply by taking strong action towards net zero goals.

“There needs to be a recognition that measures taken may adversely affect some stakeholders, and the litigation risks of claims by those stakeholders navigated in the context of the organisation’s overall climate strategy,” Jones said.