With compelling evidence that even 1.5 degrees of global warming will mean suffering for millions, climate activism is heading to the courtroom.
Climate activists are on the prowl. Armed with not for profit law firms they are becoming increasingly creative in their attacks on governments and business. During 2020 in Australia alone, there have been dozens of cases lodged, often aimed at halting or challenging government approvals of private sector projects. Indeed, Australia has one of the highest rates of climate litigation outside of the United States. [1]
As legislative compliance avenues have been exhausted, activists have increasingly moved to human rights and common law challenges. A good example of the latter is Sharma et al v. the Minister for the Environment, which invokes the Minister’s duty of care for young people to attempt to prevent approval of a thermal coal mine extension. Another is O’Donnell v. Commonwealth, which alleges that the Australian government has “…breached its duty of disclosure and misled and deceived investors in failing to disclose” climate risks related to its issuance of government bond. And one of the most famous is the Urgenda case in the Netherlands, which has forced the government to significantly up the ante on its emission reduction targets.
Of course, a growing number of fossil fuel firms have been directly sued for their projects’ environmental harm. Not for profit law firms such as the Environmental Defenders Office, Environmental Justice Australia and Equity Generation Lawyers have been busy progressing such cases. This includes a landmark case applying new Queensland Human Rights legislation, challenging the state’s Land Court to reject Clive Palmer’s proposed Waratah coal mine near the Adani Carmichael project in the Galilee Basin.
It’s not just governments facing the brunt of the law. Superannuation funds and banks have found themselves under attack for failing to consider climate risks in their investing and lending activities. Similar to the O’Donnell case, McVeigh v. Retail Employees Superannuation Trust (REST, lodged in 2018) involved a member of the fund challenging the manager on its failure to disclose or address climate risks. In early November it was settled just before court proceedings were due to commence, with REST agreeing to improve its climate risk assessment and disclosure, along with measurement of the emissions intensity of its portfolio and a realignment to achieve carbon neutrality for the fund by 2050. While not creating a legal precedent, the settlement nevertheless sends a clear signal to the influential sector, which controls substantial holdings in all listed companies and can exert its influence to pressure carbon polluting companies to clean up their acts and transition to clean energy alternatives.
And a number of progressive governments have themselves got in on the act, with jurisdictions such as the state of New York suing fossil fuel firms (in this case Exxon Mobil Corporation) for their complicity in misleading their investors with regard to the deleterious impacts of their products on the global climate. Thus far such cases have failed to stick in court.
Conversely, local governments have come under attack from residents when they have attempted to amend development plans to limit coastal developments subject to erosion due to sea level rise. While it’s a natural response from a well heeled owner of waterfront property wanting to avoid value loss or have their , a number of back downs have eroded local governments’ authority to assert prudent controls. In turn this raises risk for purchasers of vulnerable property, while insurance affordability is progressively reduced. As long ago as 2011 the Australian Local Government Association commissioned a report to help councils prepare for this risk.
What has been less common in Australia — thus far — is the practice of companies suing governments (or other companies) on climate grounds. 2014 marked one of the first such examples: filed as a show case and later withdrawn, perhaps as a warning shot above the bows. In it, the Illinois Farmers Insurance Company challenged Cook County (covering greater Chicago) over its failure to implement effective stormwater management capacity in light of increasing extreme inundation events as a result of climate change, which was leading to increased payouts by the insurance company.
The insurance industry has a great deal to lose from climate change as acute physical climate risks in the form of extreme weather events become more intense and/or frequent over time. It is perhaps surprising that insurers have not been more active in pursuing stronger government action on emissions reduction. And the impacts cascade: as insurers retreat from coverage in vulnerable areas (initially by raising premiums), the proportion of under- and un-insured assets increases. Vulnerable property values decrease, resulting in losses for owners when selling. Banks face default risk in the case of asset damage to uninsured properties. Some of the burden passes to government social services, as mortgage holders are forced from their homes.
As the extent of business and individual losses due to climate inaction becomes more apparent, there is likely to be a boom in climate litigation. To the extent that your business is not seen to be taking genuine action to reduce emissions in line with science based plans aligned with the IPCC’s 1.5 degree target, it could be vulnerable. While governments and major emitters associated with the fossil fuel industry will remain the major targets (and are fertile territory given evidence of their long term knowledge and suppression of information about the risks of climate change), other sectors are not immune. Airlines, shipping, steel, cement, petrochemical derivatives and meat based agriculture are amongst industries that could have actions brought against them, particularly as science-aligned emissions reduction targets are legislated by states and countries.
[1] Columbia University’s climate litigation database http://climatecasechart.com/ tracks cases globally.
[2] https://equitygenerationlawyers.com/wp/wp-content/uploads/2020/11/Statement-from-Rest-2-November-2020.pdf
[3] https://www.environment.gov.au/system/files/resources/d9b2f9cf-d7ab-4fa0-ab0e-483036079dc7/files/alga-report.pdf
