Tue 22 Mar 2022

Why the legal sector could make or break commercial accountability for climate change commitments

At COP26, several agreements were reached for countries to fight the climate crisis. From an agreement for countries to cut carbon dioxide emissions and reduce use of coal, to promises relating to financial investment in clean energy and to stop deforestation, countries that attended the conference agreed to take action to protect the environment.

The debate about whether all of this goes far enough is well underway and actions and follow-through will undoubtedly speak louder than words. Those who made commitments at the conference may need to be held to account, and this is where the role of litigation will be important.

Climate change litigation is already a feature of the modern legal landscape. The successful litigation against the Dutch government by the Urgenda foundation, where the Dutch courts held that the government had to reduce its emissions by at least 25% compared to 1990 levels by the end of 2020, has led to similar litigation across Europe.

Increasingly, the right to be protected against the harmful effects of climate change is seen as a fundamental human right. But for those concerned about the effects, it is important to engage with the political process. The same is true of engaging with the legal process, and that point is not lost on those leading the charge.

In September 2019, Greta Thunberg and 15 other children filed a petition against the five highest emitting nations which have ratified the UN Convention of the Rights of the Child (Brazil, Argentina, France, Turkey and Germany). The argument being made was that these five countries had violated the petitioners' rights as children under the convention, by failing to reduce emissions in response to climate change.

However, while much climate change litigation has been directed to public bodies thus far, we are starting to see a shift in focus to private businesses. Essentially, these cases seek to extend the principles established in Urgenda and other cases relating to public bodies.

One example is a current case in the Netherlands by Milieudefensie and others against Royal Dutch Shell, which is seeking to force the company to take responsibility for mitigating climate risks in future. The court is being asked to grant an order obliging Shell to reduce its CO2 emissions by 45% by 2030 as compared to 2010 levels, and to zero by 2050. There is also similar litigation now in France against Total.

A more extreme example of the sort of litigation being pursued is the case by Saul Lluiya, a Peruvian famer who has sued RWE AG in Germany, arguing that the company should contribute to the cost of flood protection at his farm situated just below a melting glacier. In that case, and in many of the cases currently being commenced against private companies, the question of causation - whether the company can be said to have caused the plaintiff's loss - will be important.

In that regard, climate science has an increasing role to play and judges need to recognise the value of that science. In the Shell case, their lawyers argued that it was pointless for Shell to reduce its production of oil and gas because other firms would just increase theirs, so that globally the position would remain the same. However, the court rejected that argument having heard evidence from an expert at the Stockholm Environment Institute in Seattle. It will be a crucial moment for courts hearing these cases to determine which argument will be successful.

The argument being made by Shell is not unusual, particularly in criminal law.  Defendants often argue that the loss or damage would have happened anyway and so their own contribution to it could not be seen legally as a cause. Climate change litigation is perhaps unlikely to be successful unless courts are willing to be bold and take an approach based on whether the company has actually caused harm, rather than focussing on whether it has simply increased risk.

The actions of the courts and lawyers at either end of climate change cases now will play a crucial role by setting a precedent and direction of travel for future cases, and giving a clear guide to the extent to which private businesses could be held to account.

Looking toward the future, how long will it be before governments start to hold companies to account, as they did in the USA in the 1990s with big tobacco, on the basis that if you cause a health crisis, you have to pay for it? Shareholders will also need to start careful analysis of decisions taken by companies and directors will need to ensure proper risk assessment of climate impact, or they too could find themselves on the wrong end of litigation.

First published in The Herald

Make an Enquiry

From our offices we serve the whole of Scotland, as well as clients around the world with interests in Scotland. Please complete the form below, and a member of our team will be in touch shortly.

Morton Fraser MacRoberts LLP will use the information you provide to contact you about your inquiry. The information is confidential. For more information on our privacy practices please see our Privacy Notice