31 July 2019

With climate change litigation increasing globally, could you provide a brief overview of the concept and highlight how it can be used to put pressure on governments and companies? Are there any interesting recent examples?

Climate change litigation is an umbrella term for a number of different forms of applying pressure through the courts on the issue of climate change.

The more obvious examples are administrative law actions against governments and public bodies for failing to act, and damages claims—usually against companies—for the destructive effects of climate change (or for costs spent in reducing the impact of climate change, such as flood defence works). However, it can also encompass legal action by activist investors, seeking to hold these same companies (and, importantly, their directors) to account under principles of company law. The aims of such litigation can be equally varied, including:

  • prompting behavioural changes by governments, public bodies or companies
  • obtaining financial compensation for those whose lives and/or livelihood have been affected by climate change
  • seeking injunctive relief against activities perceived as causing climate change

For more speculative cases, the litigation is as much about raising publicity as it is about financial gain recompense. But of course, in the damages actions it is the very threat of potentially huge pay-outs that generates the publicity.

We have picked a couple of examples of climate change litigation to demonstrate the creative ways in which governments and companies are being challenged in different jurisdictions. In some overseas jurisdictions, we are seeing individuals or communities taking actions against companies (often based in other countries) involved in the extraction, refining or use of fossil fuels (for example Lliuya v RWE AG, or Kivalina v Exxon).

In the UK, most court action has taken the form of judicial review of government decisions. For example, the recent Plan B cases, seeking judicial review of the decision to build a third runway at Heathrow airport and of the failure to revise 2050 emissions reduction targets (as being in breach of the Climate Change Act 2008).

However, climate change claimants are learning what works from each other and there is a lot of crossfertilisation of ideas, so it would be wrong to assume that just because a particular country has not seen climate change litigation to date that somehow the jurisdiction is a safe haven.

What are the most common legal grounds for a case to be brought against a government or a company? What is the impact of such action?

Climate change litigation against companies is usually rooted in tortious principles—in arguing that claimants have suffered harm caused by the action of the defendant, often in negligence or nuisance. Actions against public bodies generally take the form of judicial review—scrutiny of the decision-making process related to policy or government action. However, there is clearly room for creativity in these cases and so there are no hard and fast rules.

Of course, the courts do not recognise a duty to protect the environment per se (at least not yet— that is a whole other subject) so simply contributing greenhouse gases to the atmosphere does not create legal liability.

Therefore, novel avenues for linking climate change with established areas of legal liability are continually being explored. For example, claimants are exploring product liability issues with arguments that hydrocarbon fuels (such as oil) are defective products as they have the side-effect of damaging the environment.

A successful claim in tort might mean payment of damages. However, a claimant might also seek injunctive relief. This is also a key remedy in the UK in the event of successful judicial review. A court ordered injunction in respect of activity or policy seen as contributing to climate change could have a huge impact on government action or business of a defendant.

However, it is important to note that none of the headline cases of climate change litigation have yet been successful, and so their direct impact has been limited. Nevertheless, just one successful claim of this sort could set a hugely important precedent, and there is a growing fear in some defendant quarters that, in the current political environment, such claims may turn out to be less speculative than they might first appear.

Of course, no company wants to be the test case (let alone the losing one) and this itself drives greater preemptive action from those companies, as they seek to incorporate climate change concerns into their Environmental Social and Governance (ESG) profile, both to be seen to do the right thing (to reduce the chance of being targeted) and to use in evidence that it has behaved appropriately (to counter arguments that it is has failed to reach the legal standard required if the matter should be litigated).

What do you believe will be the main consequences of the rise of climate change litigation? Is it a positive step or are there any concerns?

The rise of climate change litigation should not be a surprise to anyone. Let us start by remembering that recourse to the courts is commonplace for those who have suffered harm due to the act of another, or who believe a public body has failed in its duties, and of course that is exactly what the claimants in climate change litigation claim is happening. Indeed, the claimants argue, climate change is the greatest man-made environmental danger facing the planet, and so the courts must step in.

The counter-argument is equally well rehearsed. Even accepting the claimants’ proposition that climate change is an existential risk (and many defendants might not accept that proposition) there is a question over whether the courts are the appropriate forum to resolve these questions of liability. Undoubtedly, the defendants say, if this is a threat of such magnitude and complexity—as well as of truly global reach—then does it not call for a political answer, reached by those who are directly accountable through our democratic systems? One of the first lines of defence—and one that has been successful in numerous cases—is that these claims should be dismissed as not being proper cases for the courts to hear (‘non-justicable’).

The question of ‘justicability’ has had some force to date—where courts have given judgment, they have often pointed to the need for a policy solution rather than a legal one.

It has to be said, though, that such defences are easier to run when the defendant is able to point to pro-active governmental action.

Is the legal route the best way of encouraging governments and companies to address the threat posed by climate change? For instance, in the UK, has recent activism not proved more successful than legal means in leading to changes in government policy?

It is probably for the activists to answer that question, but we can say that activists are becoming much more sophisticated and are increasingly likely to creatively employ the legal route. Litigation is expensive and time consuming and the odds are against the claimants. However, well-targeted legal action can put pressure on defendants—in particular governments—to act. One has only to look to the ongoing ClientEarth air quality litigation in the UK and elsewhere in the EU to see an example of success in using legal action to advance an environmental agenda.

One advantage that legal action has over more traditional forms of protest is that the issues are often clearer (or become clarified in the course of litigation). It also lends greater legitimacy where a court has reached an impartial judgment, as opposed to a decision forced on a government or company by activist agitation.

Companies are likely to be influenced by the material costs of litigation (or threatened litigation). This will not be the case on every occasion, but if a company knows that it can make changes and so avoid the risk of having to defend its position in court, and if the cost of doing so is acceptable, then it might find that route preferable.

At least, that is the hope of the activists who are trying to put legal risk on the board’s agenda for these companies.

Another tool of litigation is disclosure. In many jurisdictions there is a requirement for companies to make available documents that are adverse to its case, even if those documents are confidential. Companies will be concerned about the disclosure of sensitive internal documents discussing issues such as the impacts of climate change—even those who believe they have nothing to hide still fear documents being read out of context. We know some businesses are already considering disclosure risks.

Do you expect climate change litigation to change in the future? What trends should we expect and in relation to what particular environmental issues? E.g. mandatory disclosures on climate change.

There is greater focus than ever on ESG factors as they relate to corporate bodies. The UK government is putting more emphasis on requiring companies to report on environmental matters, and—as most recently put forward in the Green Finance Strategy—in particular with regard to climate-related matters.

It is likely that this trend will continue (an interim report on the Green Finance Strategy is expected next year, with more concrete legislative action potentially to follow).

This might not only make a change to how companies report but also to their exposure to litigation. Company reports must be signed off by the board of directors and by auditors. In both cases, claimants might seek to exploit significant omissions or misrepresentations in relevant climate-change related disclosure in the courts.

Climate change is one of the key factors that we advise clients to carefully consider when looking to their overall ESG profile.

More generally, climate change is likely to stay on government’s radar in the UK. Given the increasing prevalence of extreme weather events and related impacts from droughts, flooding, and heatwaves, we would expect this to be high on any government’s agenda for the foreseeable future.

Interviewed by Tom Inchley.

Originally published on LexisPSL.

Key contact

Michael Barlow

Michael Barlow Partner

  • Head of Environment
  • Head of Water
  • Head of ESG

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