Climate change litigation update

Introduction

Globally, 2019 saw a strong rise in climate related litigation. As at January 2020, the total number of climate change cases filed to date has reached approximately 1,444¹, up from 1,302 since our update in March last year. Cases have now been filed in at least 33 countries, in addition to cases brought in regional or international courts or commissions. The vast majority of these cases continue to be commenced in the United States (US), followed by Australia, United Kingdom, European Union, New Zealand, Canada and Spain.

World map of cases²

Claimants are increasingly relying on constitutional and human rights laws in their attempts to hold governments accountable for addressing climate change. This is likely to continue following the landmark Urgenda ruling in December 2019, discussed below, which according to the United Nations (UN) High Commissioner for Human Rights, Michelle Bachelete, “provides a clear path forward for concerned individuals in Europe – and around the world – to undertake climate litigation in order to protect human rights.”³

The nature of the claims against corporations has also diversified beyond the unsuccessful tort and public nuisance actions pursued predominately in the US in the 2000s and early 2010s.⁴ This comes as corporations, and their shareholders, increasingly acknowledge the threat of climate change to their bottom line. Meanwhile the growing demand from consumers for environmentally sustainable goods and services is prompting ever increasing scrutiny from consumer advocates and regulators into misleading and fraudulent corporate climate claims or commitments.  

Climate attribution science

Developments in climate litigation are being influenced by advancements in the scientific understanding of climate change. Climate attribution science aims to establish the relationship between anthropogenic emissions and specific extreme weather events. Progress in this field is allowing claimants to better pinpoint and quantify the environmental impact of projects, policies and laws.

As the scientific consensus that humans are at least partly responsible for climate change is now firmly established, disputes are increasingly revolving around proving causation, allocating responsibility and jurisdictional arguments as to the role of the courts in ‘regulating’ climate change. Climate attribution science is essential in resolving such issues, especially as many of the recent studies aim to develop methodologies that link harmful environmental impacts to specific emitters.⁵

For example, the Urgenda case involved the consideration of multiple scientific reports submitted by the parties to quantify the Netherlands’ emissions, the impact of emissions and the required reductions in emissions to meet the State’s commitments. This evidence was essential in establishing the precise boundaries of the duty of care owed by the Netherlands to its citizens.

Climate attribution science is also relied upon by plaintiffs to show that not only is climate change preventable, but that the associated extreme weather events are reasonably foreseeable. This evidence will prove crucial in claims arguing that corporations are failing to act in shareholders’ best interests by failing to address the foreseeable risks posed by climate change. A number of such claims are discussed below.

This legal update considers key developments and cases since our last update.

The cases are divided into the following categories:

1. Constitutional law and human rights claims
2. Private law
3. Company law and climate risk
4. Planning and permitting

Constitutional law and human rights claims

The cases considered below demonstrate that the greatest hurdle for human rights-based climate litigation is not necessarily convincing courts of the dire consequences of climate change and the related impact on an individual’s human rights. Rather, the difficulty lies with demonstrating that the courts are an appropriate mechanism through which to address climate change, a challenge which by its very nature requires coordinated nationwide policy-driven responses. The dismissal of the Juliana case in the US Ninth Circuit Court (discussed in more detail below) is a dramatic illustration of this tension with Judge Hurwitz, in delivering the majority judgment, emphasising:

“We reluctantly conclude… that the plaintiffs’ case must be made to the political branches or to the electorate at large, the latter of which can change the composition of the political branches through the ballot box. That the other branches may have abdicated their responsibility to remediate the problem does not confer on Article III courts, no matter how well-intentioned, the ability to step into their shoes.”⁶

UN Human Rights Committee View Adopted under Article 5(4) of the Optional Protocol

In January 2020 the UN Human Rights Committee considered the case of Ioane Teitiota who had unsuccessfully sought protection from New Zealand due to rising sea levels threatening his life in the Republic of Kiribati. The Committee rejected Mr Teitiota’s claim because the likely timeframe for sea level rises rendering Kiribati uninhabitable is 10 to 15 years and therefore he did not face immediate danger. This timeframe allowed the Republic to take affirmative measures to protect and if required, relocate its population. However, the Committee recognised the right for refugee claims on the grounds of climate change and emphasised that it is unlawful for governments to return people when their life will be at risk due to the climate risks in their home countries.⁷

The Committee stated:

“Without robust national and international efforts, the effects of climate change in receiving states may expose individuals to a violation of their rights … thereby triggering the non-refoulement obligations of sending states”.

Although the decision is not binding on states, it opens the door for further refugee claims to be made on the basis of climate change.

Juliana v US

In January 2020, the Ninth Circuit Appeal Court dismissed the claim in the high profile Juliana litigation in which the plaintiffs, represented by Our Children’s Trust, sought relief for governmental action and inaction in regulating carbon dioxide pollution. The action was founded upon the plaintiff’s explicit and implicit constitutional rights and the public trust doctrine.

Despite acknowledging that fossil fuel combustion will wreak havoc on the earth’s climate if unchecked, the Court found it had insufficient power to order the US Government to prepare and implement an enforceable national remedial plan to phase out fossil fuel emissions. Judge Hurwitz noted in the judgment: “any effective plan would necessarily require a host of complex policy decisions entrusted, for better or worse, to the wisdom and discretion of the executive and legislative branches”.⁸  Julia Olsen, chief legal counsel of Our Children’s Trust has emphasised that the “Juliana case is far from over” as the plaintiffs will seek to appeal the decision.⁹

Urgenda Foundation v Kingdom of the Netherlands (Urgenda)

In December 2019, the Supreme Court of the Netherlands ruled that the state owes a duty of care to protect its citizens from climate change in accordance with its obligations under the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). This was the culmination of a 7-year judicial process, with the nation’s highest court ultimately finding that “climate change threatens human rights” and that “in order to ensure adequate protection from the threat of those rights resulting from climate change, it should be possible to invoke those rights against individual states”.

This latest ruling confirms the previous decisions of the lower Dutch courts that found the Netherlands must reduce its greenhouse gas emissions by at least 25% compared with 1990 levels by the end of 2020. See our previous updates on this litigation here and here.

Re Greenpeace Southeast Asia and Others

In December 2019, the Commission on Human Rights of the Philippines announced that the world’s biggest carbon polluters could be held liable for their role in contributing to climate change. The announcement was preceded by a 3-year investigation into whether 47 major fossil fuel firms, including Shell, BP, ExxonMobil and Chevron, should be accountable for the human rights harms caused to Filipino citizens as a result of climate change. The petition prompting the investigation was submitted by Greenpeace Southeast Asia as well as a number of other individuals and organisations.

The Commission ruled that whilst legal responsibility for climate change is not addressed by current international human rights law, major fossil fuel companies are morally obligated to respect human rights, as enunciated in the UN Guiding Principles on Business and Human Rights. These companies are also obligated to invest in clean energy. Further, under the laws of Philippines, the Commission considered that the existing civil and criminal laws of the Philippines provided grounds for action against these companies.

Sacchi et al. v. Argentina et al.

In September 2019, Greta Thunberg and fifteen other children filed a petition against the five highest emitting nations that have ratified the UN Convention of the Rights of the Child (CRC), being Brazil, Argentina, France, Turkey and Germany.

The plaintiffs argue that the five countries have violated their rights under the CRC by failing to take adequate government action in reducing greenhouse gas emissions in response to climate change.

The plaintiffs have asked the Committee to make recommendations that the countries take certain actions including:

• to review, and where necessary, amend their laws and policies to ensure that mitigation and adaptation efforts are accelerated;
• initiate cooperative international action to establish binding and enforceable climate measures; and
• ensure children’s right to be heard in all efforts to mitigate or adapt to the climate crisis.

The Committee must first determine if the petition is actionable before making findings or recommendations, which requires the plaintiffs to prove they have exhausted all domestic remedies. The petition addresses this by arguing that there are practical problems preventing them from complying with this condition.

Any recommendations ultimately made by the Committee, while technically binding on states that are a party to the CRC, will not be strictly enforceable and will rely on signatories living up to their commitments.

Petition of Torres Strait Islanders to the UN Human Rights Committee Alleging Violations Stemming from Australia’s Inaction on Climate Change

In May 2019, a group of eight Torres Strait Islanders lodged a complaint with the UN Human Rights Committee against the Australian government for breaching human rights obligations owed under the International Covenant on Civil and Political Rights (ICCPR). It is argued that the Australian government’s failure to take sufficient action to curb emissions and implement adaptation measures has violated the right to culture, right to a family and right to life under the ICCPR.¹⁰

The complaint is yet to be reviewed by the Committee, and will be the first climate change case brought by inhabitants of low-lying islands, and also the first one brought against the Australian government in respect of breaches of human rights obligations in the context of climate change.

Family Farmers and Greenpeace Germany v. Germany

In October 2019, the Administrative Court of Berlin dismissed an action by three German families and Greenpeace Germany challenging the government’s failure to adhere to a cabinet decision to reduce greenhouse gas emissions by 40% below 1990 levels by 2020, recorded in the Climate Protection Plan, instead finding that the target was not legally binding. Notwithstanding this, the Court held that government climate policy is subject to judicial review and must be compatible with the government’s duties to safeguard fundamental rights under the German Constitution – the Grundgesetz.

The plaintiffs alleged the government was bound by the Climate Protection Plan and that their failure to abide by the targets, by only reducing emissions by 32% instead of the specified 40%, violated human rights and breached rights to life and health, occupational freedom and right to property enshrined in the German Constitution. However, the Court found that the government was entitled to wide discretion in determining how to fulfil its constitutional obligations, as long as precautionary measures to protect rights are not wholly unsuitable or inadequate.

The Court noted that in the context of the European Union’s target of 40% emissions reductions by 2030 and 20% below 1990 levels by 2020, the German government’s 32% reduction was not completely inadequate. Ultimately, the Court held that the plaintiffs had not conclusively demonstrated that the government had violated its obligations by setting inadequate climate protection targets.¹¹

Takeaways

The Urgenda decision has been heralded as a landmark ruling providing a clear path forward for concerned individuals around the world to pursue climate litigation to protect human rights. The principles in the case will add significantly to the current global legal and political pressure being applied by citizens on their governments to take urgent action on climate change.

However, the Juliana decision reminds us that success in such claims are jurisdictionally specific and will depend on the extent to which the judiciary is willing to bind the executive and legislative arms of government to commitments on climate change on the basis of human rights. Family Farmers indicates that even where a nation has committed itself to specific reductions, the courts may be hesitant to find that failing to meet those targets constitutes a breach of human or constitutional rights. With litigation continuing across a range of jurisdictions, these issues are likely to continue to arise as more states address the relationship between climate change, human rights and the separation of powers between policymakers and the judiciary. To date, these types of claims have been commenced in Canada, US, Pakistan, Norway and Colombia.¹²

The Teitiota, Sacchi et al and Torres Strait petitions reflect a growing movement by individuals who have been disproportionately impacted by climate change to rely upon international human rights conventions in an attempt to hold states accountable. The Philippine Commission’s decision similarly demonstrates that where available, domestic human rights bodies may also provide leverage for further action on climate change. This decision has the potential to lead to further litigation against fossil fuel companies, and tougher domestic laws on legal liability for climate change.

Internationally, the combination of the Philippine Commission and Urgenda decisions are likely to lead to an explosion of new claims which place human rights front and centre.

Private law

As we begin 2020, we move further into what is referred to as the “second wave” of climate change litigation targeting private entities.¹³ The “first wave” from 2005 to 2015 largely consisted of unsuccessful public nuisance and tort claims in the US which failed on causation grounds. The recent “second wave” of litigation more broadly challenges private entities with claims founded on human rights, corporation law, fraud and misleading conduct and failures to adhere to planning controls and environmental laws.

The number of claims seeking to influence corporate behavior relating to climate change continues to increase, with the most common defendants being fossil fuel corporations and associated entities.

Milieudefensie et al. v. Royal Dutch Shell plc. (Shell)

In April 2019, the environmental group Milieudefensie/Friends of the Earth Netherlands commenced proceedings against Shell alleging Shell’s contributions to climate change violate its duty of care under Dutch law and human rights obligations.

The case was filed in the Hague Court of Appeal. It argues that given the Paris Agreement’s goals and the scientific evidence regarding the dangers of climate change, Shell has a duty of care to take action to reduce its greenhouse gas emissions. The duty is said to arise from the Dutch Civil Code as further informed by the ECHR which guarantees rights to life (Article 2) and rights to a private life, family life, home, and correspondence (Article 8). The plaintiffs’ argument outlines how Shell’s long knowledge of climate change, misleading statements on climate change, and inadequate action to reduce climate change help support a finding of Shell’s unlawful endangerment of Dutch citizens and actions constituting hazardous negligence.

The plaintiffs seek a ruling from the court that Shell must reduce its CO2 emissions by 45% by 2030 compared to 2010 levels and to zero by 2050, in line with the Paris Agreement.

A claim has also recently been lodged by environmental groups and local governments in the French courts against Total, which, like the Shell litigation, seeks to force the company to reduce its emissions. The plaintiffs are seeking orders from the court to require Total to acknowledge the climate risks associated with its business activities and align its business with the Paris Agreement.

Takeaways

Private law claims have, to date, largely been unsuccessful in the US.¹⁴ However, the Shell case seeks to extend the principles from the Urgenda litigation to private companies. While each case relies on the ECHR, the results may differ. It remains to be seen whether similar litigation against corporations based on human rights claims will be commenced.

Company law and climate risk

Companies, shareholders and consumers are increasingly accepting that corporate action on climate change is not necessarily mutually exclusive with acting in shareholders’ best interests. In a recent update we discussed the obligations on directors of companies in Australia and New Zealand to disclose climate risks in their annual reporting. Regardless of any formal disclosure requirements, corporations around the world are becoming more aware that the physical and transitional risks of climate change pose a very real threat to their current business models.

The cases below demonstrate that shareholders, consumers and regulatory bodies are often willing to commence proceedings where corporations are perceived to have failed to take, or to have misrepresented, meaningful action on climate change.

On 29 March 2019, the Centre for Policy Development in Australia released an update of a 2016 legal opinion by Noel Hutley SC and Sebastian Hartford Davis on how Australian law requires company directors to consider, disclose and respond to climate change. The Opinion emphasises five material developments since 2016, including increased litigation risks, that have elevated the need for directors to consider climate risks and opportunities and reinforced the urgency of improved board level governance of this issue. The Opinion states that the “exposure of individual directors to ‘climate change litigation’ is increasing, probably exponentially, with time”.¹⁵ See our update on the Opinion for more detail.

Complaint against British Petroleum (BP) in respect of violations of the Organization for Economic Cooperation and Development (OECD) Guidelines

In December 2019, ClientEarth filed a complaint against BP’s advertising campaign launched under titles "Keep Advancing" and "Possibilities Everywhere" in January 2019. It argues that the campaign is misleading in the way it presents BP's low-carbon energy activities.

The complaint alleges that the campaign breaches the OECD Guidelines for Multinational Enterprises, which require clear, honest, accurate and informative communications between enterprises and the public. ClientEarth argues that the advertising campaign gives a false impression of the relative scale of renewable and low-carbon energy in BP's business, omits full lifecycle emissions for natural gas, claims an inaccurate emissions saving against coal combustion, and asserts that increases in global primary energy demand are both desirable and inevitable for human progress and development.

ClientEarth requests that BP take steps to correct the allegedly misleading information, including by withdrawing specific advertisements and issuing a statement explaining the withdrawal. The complaint further asks that the UK National Contact Point find BP in violation of the OECD Guidelines if BP does not take the requested steps.

Complaint against Australia and New Zealand Banking Group Limited (ANZ) in respect of the Organization for Economic and Development (OECD) Guidelines

On 30 January 2020, Friends of the Earth Australia along with three individuals filed a complaint with the Australian National Contact Point (ANCP) of the OECD against ANZ. The complaint alleges that ANZ has not adhered to the standards of the OECD Guidelines relating to due diligence, disclosure, environment, and consumer interests.

Specifically, the complainants argue that the Paris Agreement targets reflect the standard to which ANZ should be held under the OECD Guidelines. They point out that ANZ is therefore breaching its greenhouse gas reporting requirements, is failing to conduct adequate due diligence regarding climate risks and is failing to prevent or mitigate environmental impacts as a major financer of fossil fuel energy.

In addition, ANZ is accused of failing to provide sufficient information to its customers – for example, its indirect emissions from business lending are omitted from its sustainability reports. The claim places reliance on a similar claim brought before the Dutch National Contact Point of the OECD against ING, thus illustrating the multi-jurisdictional influence that decisions in a single nation can exert.¹⁶

The orders sought include ANZ being required to disclose high risk greenhouse gas emissions resulting from business lending, divest from investing in coal and phase out investment in other fossil fuel industries, commit to the targets in the Paris Agreement and conduct comprehensive climate-related scenario analysis for all sectors it finances. Interestingly, the claimants also request that the ANCP recommend to the Australian government that stronger laws be drafted for emissions and energy reporting.

The three individuals involved in the complaint are Australian citizens who have all been recently impacted by the Australian bushfire crisis.

The People of the State of New York v Exxon Mobil Corporation (Exxon)

In December 2019, the Court found Exxon not guilty of perpetrating a longstanding fraudulent scheme concerning the management of business risks relating to climate change.

The core allegation by the New York Attorney General was that Exxon’s publicly disclosed projected climate change costs were inconsistent with internal projections, which had the effect of misleading investors and the investment community. The common law fraud claims were withdrawn during closing remarks, leaving the remaining statutory fraud claims under New York’s Martin Act and Executive Act.

On 10 December 2019, the Court found Exxon not guilty of the allegations. The Court ruled that the New York Attorney General failed to prove that Exxon made material misrepresentations that misled any reasonable investor. The case largely turned on the fact that the misrepresentations were not “material” as required by the Martin Act, as the majority of the evidence indicated that investment decisions were not based on speculative assumptions of future climate change costs. The New York Attorney General did not provide testimony from any investor who was allegedly misled. There was also no evidence that Exxon’s stock price increased immediately following publication of the alleged misrepresentations.

The Court noted that the decision was not intended to absolve Exxon from responsibility for contributing to climate change through the emission of greenhouse gases, and reinforced that the proceedings were a securities fraud case rather than a climate change one. See our recent update on the decision, and our earlier update on the background to the matter.

Commonwealth of Massachusetts v Exxon:

In October 2019 (before the above decision was handed down), the Commonwealth of Massachusetts Attorney General filed a complaint in Suffolk County Superior Court alleging that Exxon had deceived investors by not disclosing climate change-related risks to its business, and had deceived consumers through greenwashing campaigns and misleading advertisements that failed to disclose the impact of its fossil fuel products on climate change.¹⁷

The matter is currently the subject of jurisdictional arguments as to whether the case should be heard in the Federal or State court.

Mark McVeigh v Retail Employees Superannuation Pty Ltd (REST)

In July 2018, Mark McVeigh commenced proceedings against REST, one of Australia’s largest pension funds with total assets over A$50 billion and around 2 million members. Mr McVeigh’s claim originally centered on REST’s failure to adequately disclose its strategy to manage climate change risks, which allegedly prevented Mr McVeigh from making informed judgments about the fund’s performance and management, and also breached REST’s statutory disclosure requirements.

The claim has since been extended to alleging that REST breached its fiduciary duties by failing to adequately consider the risks of climate change in managing investments. REST denies that it has breached any equitable or statutory duties, stating that climate change risks, which are only one of many material factors that funds must consider, are factored into its investment strategy and decision-making. See our last update for more background on the matter.

Following a pre-trial hearing on preliminary costs issues, Justice Perram of the Federal Court of Australia noted that “The case appears to raise socially significant issues about the role of superannuation trusts and trustees in the current public controversy about climate change. It is legitimate to describe the Applicant’s litigation as being of a public interest nature.”¹⁸

Asset and fund managers worldwide are currently grappling with the issue of mitigating climate change risks when managing client’s assets. This case, the first of its kind, is therefore being closely watched for any guidance as to the relevant legal boundaries which may apply to such considerations. The matter has been listed for hearing on 20 July 2020.

Takeaways

As one of the first cases about disclosure of climate-related financial risks to go to trial, the outcome of the New York case is significant. The fact that Exxon succeeded however reflects the circumstances in which that particular case was brought and should not necessarily be considered an indicator that other cases will similarly fail.

In particular, although the Massachusetts case similarly argues that Exxon misled investors, it is based on more recent events than that on which the New York case is based, during which some investors have become more critical of fossil fuel investments. Further, it is a broader claim in that it also argues that Exxon breached consumer protection laws. It may therefore produce a different result.

In an Australian context, the progression of the ANZ complaint and the REST litigation is likely to be closely watched by the financial and investment communities both within Australia and more broadly.

Planning and permitting

Many jurisdictions have long incorporated obligations relating to ecological sustainable development in their planning controls. This provides scope for claimants to push for the widest possible interpretation of such obligations so as to address the contributions which individual projects may have on climate change.

Specific instance under the OECD Guidelines for Multinational Enterprises submitted to the Slovenian and UK National Contact Point for the OECD Guidelines

In November 2019, 17 civil initiatives and organisations filed a complaint to the Slovenian and British contact points for the OECD Guidelines, demanding that British oil and gas company, Ascent Resources, fully adhere to the Guidelines when applying for a permit to expand fracking operations in Slovenia. The complaint principally concerns Ascent Resources’ controversial hydraulic fracturing project in East Slovenia. It is alleged that Guidelines on corporate social responsibility have not been complied with, especially in regards to the contribution to sustainable development, as hydraulic fracturing has been found to have numerous detrimental impacts upon the local environment, people’s health and the climate.

Friends of the Earth et al. v. Total

Six non-governmental organisations are suing Total in France, alleging that it failed to adequately assess the threats to human rights and the environment of the Tilenga oil project in Uganda and Tanzania. Under France's Duty of Vigilance Law, French companies must identify and prevent risks to human rights and the environment that could occur as a result of their business practices. The allegation made is that the project’s vigilance plan does not properly account for the project's potential life cycle greenhouse gas emissions.

This is the first claim to be made under the French Duty of Vigilance laws which were introduced in 2017 amid resistance from businesses and will be crucial in determining their future interpretation and application.

Wildlife of the Central Highlands Inc v VicForests

In the first litigation post the recent Australian bushfires, an interlocutory decision was handed down by the Supreme Court of Victoria on 29 January 2020 arising from the Victorian bushfires. On 28 January 2020, an urgent interim injunction was sought by the Wildlife of the Central Highlands Inc to prevent VicForests (a State government statutory entity) from logging bushfire impacted forests. The plaintiff alleged that the particular forests contained threatened species and in light of the fact that the Commonwealth and State bushfire responses had not yet concluded, it was premature to harvest these forests. The case put by the plaintiff relied upon incorporation of the “precautionary principle” in the relevant Code of Practice for Timber Production, which it asserted justified a ‘wait and see’ response, subject to finalisation of the ongoing governmental responses.

The Court accepted that even though the plaintiff’s submission resulted in an unprecedented expansion of the construction and application of the Code (in the context of the implementation of the precautionary principle), due to the severity of the bushfires and their unprecedented impact, this may be an appropriate construction. Accordingly, an interim injunction was granted and the matter will proceed to a full hearing on 18 February 2020.

Takeaways

Increasingly, it can be expected that challenges will be lodged in relation to developments which are likely to generate significant greenhouse gas emissions, particularly in a context where these developments are inconsistent with the goals of the Paris Agreement. As we have seen in Australia with the likes of the Rocky Hill decision (see our updates on this here and here), it is possible that the courts will, in appropriate circumstances, use international or national policies, laws or regulation to refuse new development that will intensify the climate change problem or conversely, suffer from the future impacts caused by climate change.

Conclusion

While governments continue to bear the brunt of the claims, the trend in bringing claims against major carbon emitting corporations is continuing and is expected to increase in 2020. Cases against other corporates, including financial institutions and investors, are also anticipated to increase as communities and shareholders seek accountability for their role in greenhouse gas mitigation. Increasingly, we expect that adaptation and climate resilience issues may underpin future litigation, particularly in the wake of significant climatic events, such as the recent dreadful Australian bushfires. The recent VicForests decision is one such example.

2020 also formally sets the start of the commitments made by nations under the Paris Agreement, which should provide a setting for future litigation across a number of fronts.

In our view, litigation will increasingly be used as a tool to achieve outcomes consistent with a net zero emissions future. Indeed, during the course of preparing this update over the course of one month, there were a number of significant cases or complaints lodged, and we expect the number of cases to increase exponentially, both across jurisdictions and subject matter.

Please contact a member of our climate change team if you would like further information about any of the cases covered in this update, or would like to discuss climate change issues more generally.

The authors would like to acknowledge the contributions of Chloe Saker, Shaun Buckton and Sophie Sanderson to this update.