Climate litigation remains a major risk for UK businesses, says Grantham report

According to the Grantham Research Institute’s latest annual report on climate litigation (58-page / 2.7MB PDF), climate-related litigation remains a significant risk for organisations, with as many as 230 new climate-related cases filed globally in 2023.

With the UK second only to the US in the report’s list of jurisdictions with the highest number of new climate-related claims filed last year, Emilie Jones, a litigation expert at Pinsent Masons, said UK businesses need to be aware of their potential heightened exposure to these claims.

“The data in the report underscores that climate-related litigation is not going anywhere – this remains and will remain a key risk for businesses to manage. It is a risk that has the attention of many different stakeholders, from customers to insurers and prudential regulators,” Jones said.

“While climate litigation is a phenomenon that is global – and increasingly so, with 55 countries now recorded as having seen cases in this space – organisations based or operating in the UK should particularly take note.”

Outside of the US, the jurisdictions with the highest number of recorded cases to date are the UK, with 139 cases, and Australia, with 132 cases. In 2023, however, Australia saw slower new claims activity than some other jurisdictions, with the most active jurisdictions after the US being the UK, with 24 new cases; Brazil, with 10 new cases; and Germany, with 7 new cases. These countries also have high aggregate numbers of recorded cases - alongside the UK’s 139 recorded cases, Brazil has 82 recorded cases and Germany has 60 cases.

The report also revealed that businesses from a wide range of sectors beyond the fossil fuel industry, which is traditionally seen as having higher exposure to climate-related claims, can be exposed to climate-related litigation, with other at-risk sectors including aviation, the food and beverage industry, e-commerce and financial services.

According to the report, the rate of growth in the number of climate cases has slowed somewhat in the last couple of years, with fewer new cases being filed in 2023 compared to 2022 and 2021. However, Jones said, businesses are unlikely to find much comfort in the slight decline.

She also commented that in some areas recent court decisions that have gone against climate activists could have a dampening effect on new claims.

“In the UK, the failure of the derivative claims for breach of directors’ duties which have been attempted in recent cases may well have caused claimant groups to take stock of the viability of such claims as a means of strategic litigation,” she said.

The report also highlights the global rise in greenwashing or ‘climate washing’ litigation. Describing this as “one of the most rapidly expanding areas of climate litigation”, the report notes that over 140 greenwashing cases have been brought globally, of which 47 were filed in 2023 alone.

“Businesses should take note of the report’s particularly striking finding that a high proportion – over 70% - of greenwashing claims are successful. This emphasises yet again the importance of businesses reviewing their policies and processes to ensure that any climate or other ESG-related claims are made in appropriate terms and supported by robust evidence,” Jones said.

Michael Fenn, also a litigation expert at Pinsent Masons, said: “The complexity and rapidly developing nature of the current and future landscape in the climate litigation space makes it ever more essential that organisations obtain the right advice about the development and practical implementation of their ESG strategies.”