Climate change and sustainability disputes: Business and human rights perspectives

Climate change and sustainability disputes: Business and human rights perspectives

Few readers will not already be aware that the global number of climate related litigation cases has increased every year. The Grantham Institute¹ reported 1,841 climate litigation cases in 2021, compared with 1,587 in 2020 (with 191 new cases filed between May 2020 and May 2021). This is noteworthy, not least because the global pandemic has increased the logistical challenges of commencing litigation.

What may be less obvious, is the increased use of human rights based arguments by claimants in their efforts to hold governments and businesses legally accountable for the effects of climate change. As of July 2021, the Grantham Institute had recorded more than 100 cases in total; 29 in 2020 and five between January and May 2021.

For those delving into this active and rapidly evolving space for this first time and wondering where to start, our article provides an overview of the landscape, with a particular focus on developments in 2021. We assess the emerging trends in rights-based climate litigation against both States and companies, and the risks and ramifications which these trends pose for companies.

Background: The international legal framework

The international legal framework for States

States are obliged under international law to respect, protect and promote human rights. Human rights obligations exist under treaties and at customary international law. Human rights, including the right to a healthy environment, are also enshrined in many States’ constitutions around the world. According to the UN Environment Programme, more than 100 States recognize and protect some form of right to a healthy environment.

A landmark development in this space occurred recently when, on 5 October 2021, the UN Human Rights Council (UN HRC) adopted a resolution explicitly recognising the human right to a clean, healthy and sustainable environment, and called on UN Member States to cooperate to implement this right. That resolution was adopted by a vote of 43 – 0, with 4 abstentions (Russia, India, China and Japan). This is an important statement by UN HRC Member States that expressly recognises the clear link between environmental issues – including climate change – and the realisation of human rights. It also recognizes that the exercise of human rights (such as the rights to information, public participation and remedy) is vital to the protection of the environment. Through a second resolution, the UN HRC has established a Special Rapporteur on the promotion and protection of human rights in the context of climate change.

The UN HRC resolution is non-binding and arguably its direct effect in international law may be limited – at least until the right to a clean, healthy and sustainable environment is either formally enshrined in a treaty or there is a broader statement of consensus to the same effect, such as a UN General Assembly resolution. Irrespective, the UN HRC’s recognition of this right is likely to encourage further climate change and sustainability claims predicated on human rights arguments.

Indeed, in 2018 the UN HRC Special Rapporteur on human rights and the environment emphasised the likely impact of explicit recognition of the right to a healthy environment. In particular, the Special Rapporteur noted the impact on litigation, suggesting that such recognition would help to provide a safety net to protect against gaps in domestic laws, create opportunities for better access to justice, help to overcome hurdles in rights-based environmental litigation, and minimize risks associated with pursuing judicial remedies. It would also enable the judiciary, individuals, groups, and civil society organizations to contribute to the improved implementation and enforcement of environmental laws.

The UN HRC resolution is therefore likely to feature in future climate change litigation in support of arguments that human rights have been affected by climate change. The UN HRC resolution will bolster arguments based on other international instruments protecting relevant human rights, such as the right to life or the right to private and family life. Such instruments include the Universal Declaration of Human Rights, International Covenant on Civil and Political Rights (ICCPR), International Covenant on Economic, Social and Cultural Rights, UN Convention on the Rights of the Child (UNCRC), and UN Declaration on the Rights of Indigenous Peoples, as well as regional treaties such as the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), American Convention on Human Rights, and the African Charter on Human and Peoples' Rights, and ‘sectoral’ treaties such as the UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (known as the Aarhus Convention) and the Regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean (known as the Escazú Agreement).

The international legal framework for businesses

Unlike States, businesses do not have direct obligations under international law to ensure the protection of human rights. However, there is a growing recognition that business enterprises have a responsibility to respect human rights, which includes the responsibility to avoid causing or contributing to adverse human rights impacts through environmental harm, to address such impacts when they occur, and to seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships. This is a key pillar of the UN Guiding Principles on Business and Human Rights (UNGPs), an authoritative international ‘soft law’ (i.e. non-binding) instrument endorsed by the UN HRC in 2011. Moreover, where a business’ activities impact upon the human rights of other persons, they may face legal liability under the laws of the jurisdictions in which they operate. Most commonly, such liability arises in the form of civil claims in tort (see our Cross-border guides to parent company liability for conduct of foreign subsidiaries), and in some cases, under criminal law.

To respect human rights, the UNGPs prescribe (in summary) that businesses should conduct human rights due diligence to identify, mitigate, monitor and report on their actual or potential human rights impacts (i.e. human rights impacts which they might cause, contribute or be directly linked to, through their operations or business relationships).

In recent years, there has been a trend towards States mandating that companies undertake human rights and environmental due diligence through enacting laws which draw from the human rights due diligence expectations of the UNGPs; notably the French Duty of Vigilance Law and German Supply Chains Act. The European Commission will soon promulgate a draft directive which is expected to impose mandatory due diligence obligations that draw heavily from the UNGPs (see our article on the EU Directive).

Rights-based arguments in climate change disputes

There has been a steady development of rights-based arguments in essentially climate-related disputes for a number of years, but since the adoption of the Paris Agreement there has been a marked increase. Significantly, the Paris Agreement declares in its preamble that parties should, when taking action to address climate change, respect, promote and consider their respective obligations on human rights, the right to health, the rights of indigenous peoples, local communities, migrants, children, persons with disabilities and people in vulnerable situations and the right to development, as well as gender equality, empowerment of women and intergenerational equity. This preambular recital marked a major development in climate change treaties, by expressly acknowledging the interlinkage between climate change and human rights.

A July 2021 article by César Rodríguez-Garavito, co-director of the Center for Human Rights and Global Justice at New York University School of Law, ‘Litigating the Climate Emergency: The Global Rise of Human Rights-Based Litigation for Climate Action’,²  concisely summarized the trend. It reports the results of a study of rights-based climate change claims in domestic courts and regional and international judicial and quasi-judicial bodies since the adoption of the Paris Agreement in 2015. It found that since 2015, 92% of climate change cases outside the US have been argued on human rights grounds (e.g. rights to life, health, and human dignity). Between 2015 and May 2021, litigants brought 78 climate-related human rights claims in 30 national jurisdictions and in eight international judicial or quasi-judicial bodies. Prior to 2015, only eleven such claims had been filed anywhere in the world. That is a striking trend. Many of the post-2015 cases are still pending, which means this area of law is still in development.

Interestingly, although a vast majority of all climate related claims have been brought in the US, Europe is leading the way in terms of human rights arguments in climate cases. This coincides with the growing number of European States, such as France, Germany, the Netherlands, and Norway, that have either enacted or are developing legislation which would impose mandatory human rights and environmental due diligence obligations on businesses. Such legislation is likely to give rise to increased litigation by claimants seeking to test the boundaries of the new statutory duties imposed on companies. This has been the experience in France, where a number of claims are pending against French companies based on alleged breaches of the French duty of vigilance law, adopted in 2017.

To date, most of the human rights based climate change cases have been filed against governments and other authorities. This is consistent with the fact that States have direct obligations under international law to protect human rights, as noted above. Where such cases have succeeded around the globe, that success has prompted waves of copycat cases. This is a key feature of climate litigation generally – there is extensive cross-pollination of ideas, with litigants tracking legal arguments raised in other jurisdictions and applying them locally.

The Rodríguez-Garavito study noted that litigants have predominantly followed a two-pronged approach – arguing that courts should benchmark State climate action against the Paris Agreement goals, climate science reports by the UN Intergovernmental Panel on Climate Change (IPCC), and other authoritative sources, whilst invoking human rights norms, frameworks and enforcement mechanisms.³

Notable examples of claims against States include:

• a suit brought by NGO the Urgenda Foundation, on its own behalf and on behalf of close to 900 Dutch citizens, against the Dutch government to require it to do more to reduce greenhouse gas emissions in the Netherlands.⁴ In 2015, the claim succeeded at first instance on the basis of Dutch tort law, and the Hague District Court ordered the Dutch government to take steps to reduce its greenhouse gas emissions by at least 25% by the end of 2020. On appeal, the Hague Court of Appeal upheld the decision, but based its judgment on human rights grounds rather than tort law. In its landmark 2018 judgment, the Hague Court of Appeal applied international and European human rights law and found that the ECHR rights to life and to private and family life required the Dutch State to take measures to prevent dangerous global climate change. The Court drew heavily on climate change treaties including the Paris Agreement and on climate science, particularly the IPCC reports. In 2019, the Dutch Supreme Court upheld the decision. This case led to global copycat cases, including a successful suit against the French government, recent claims brought against the Polish and Italian governments, and an equally landmark case in Germany, Neubauer v Germany, which challenged Germany’s climate law as violating the plaintiffs’ fundamental rights protected by Germany’s constitution.⁵ That claim succeeded in 2021, with the German Constitutional Court holding that the national climate targets and annual emission amounts allowed under the Federal Climate Change Act until 2030 were incompatible with the German constitution, because they would violate the plaintiffs’ fundamental rights in the future, insofar as those targets lacked sufficient specifications for further emission reductions from 2031 onwards. Urgenda and Neubauer have also proved a stepping stone to actions against companies on similar grounds, as discussed below;
• a 2019 petition to the Committee on the Rights of the Child by 16 children, alleging that five States violated the petitioners’ rights under the UN CRC, including the cultural rights of the petitioners from indigenous communities, by making insufficient cuts to greenhouse gases and failing to encourage the world’s biggest emitters to curb carbon pollution. In 2021, the petition was found to be inadmissible on jurisdictional grounds (the petitioners had failed to exhaust all domestic remedies), however the Committee made some important findings. It accepted that States are legally responsible for the harmful effects of emissions originating in their territory on children outside their borders and emphasised that the fact that all States are causing climate change does not absolve States of individual responsibility. The Committee also found that the youth are victims of foreseeable threats to their rights to life, health and culture, and that countries have extraterritorial responsibilities related to carbon pollution;⁶
• a 2020 decision of the Inter-American Court of Human Rights that held that Argentina had violated the right of indigenous groups to a healthy environment due to the lack of effective measures to stop activities harmful to them;⁷
• a 2020 claim filed against 33 States before the European Court of Human Rights by six Portuguese children and young adults alleging breach of the ECHR by failing to take sufficient action on climate change, and seeking an order requiring the States to take more ambitious action (proceedings ongoing);⁸
• a 2021 petition to the UN Special Rapporteur on human rights and the environment, Special Rapporteur on the rights of indigenous peoples, and Special Rapporteur on the rights of persons with disabilities, over the Australian government’s inaction on climate change. The complaint was submitted by an NGO on behalf of five young Australians, and relies on the climate vulnerability of young people, First Nations people, and people with disabilities, in terms of violations of their rights to health and culture. Importantly, the claimants rely on the UN HRC’s recognition of the right to a clean, healthy and sustainable environment and the Paris Agreement’s acknowledgment that climate change is a human rights issue; and
• a 2021 claim in the Brazilian courts against the Brazilian government and the Brazilian Environmental Ministry seeking to compel Brazil to take more ambitious action on climate change. The claimants rely on the constitutionally recognized right to a health environment, as well as fundamental rights such as the right to life, dignity, health, food, and housing, along with the Paris Agreement and several well established principles of international environmental law.⁹

Claims against States may indirectly impact companies, such as by leading to stronger regulation for companies, increasing the costs of compliance and doing business, and impacting the views of the judiciary as well as wider society (leading for example, to shifts in investor or consumer sentiments). In some instances, cases against States have laid the groundwork for similar cases against companies.

However, claims have also been brought against companies directly – a review of the Sabin Center Climate Case Database indicates that as at the date of this article, at least 22 climate related cases have been brought against companies based on alleged breaches of human or fundamental rights. The Grantham Institute recorded more than 100 such cases in total (i.e. against State and companies), which means just under a quarter of all claims have been against companies – a not insignificant proportion.

Most of those have been brought since 2017. This reflects the trend of climate litigation more generally – litigants initially target State actors then shift to target corporate entities.

Notable examples of claims against companies include:

• a petition before the Philippines Commission on Human Rights asking that it investigate “human rights implications of climate change and ocean acidification and the resulting rights violations in the Philippines” and “whether the investor-owned Carbon Majors have breached their responsibilities to respect the rights of the Filipino people”. In December, 2019, the Commission announced its finding that major fossil fuel companies could be held liable for climate change impacts. The report is not yet available, but reportedly the Commission concluded that major fossil fuel companies have an obligation to respect human rights as articulated by the UNGPs, and that whilst legal liability for climate damage is not covered by current international human rights law, fossil fuel companies have a clear moral responsibility – and there is an onus on individual countries to pass strong legislation and establish legal liability in their courts.
• a 2021 claim against the Belgian National Bank for allegedly failing to meet environmental, climate, and human rights requirements when purchasing bonds from fossil fuel and other greenhouse-gas intensive companies (proceedings ongoing);¹⁰
• a claim brought by NGOs, including Milieudefensie, against Royal Dutch Shell before the Hague District Court alleging that its global contributions to climate change violate its duty of care under Dutch law and human rights obligations.¹¹ In May 2021, the court ordered the defendant company to reduce by 2030 its net emissions (both from its own operations and from the use of the fossil fuels it produces) by 45% relative to 2019 levels. Human rights based arguments were central to the claimants’ pleadings. The claimants relied on the unwritten standard of care under the Dutch Civil Code to argue that Royal Dutch Shell has an obligation to “contribute to the prevention of dangerous climate change through the corporate policy it determines for the [defendant’s] group”, and argued that this standard should be interpreted consistently with international human rights law, including the ECHR (specifically the Article 2 right to life, and the Article 8 right to private and family life), and the equivalent provisions of the ICCPR, and “soft law” explicitly endorsed by the defendant company on its website and in other corporate materials that was relevant to the matters of climate change and human rights: the UNGPs, the UN Global Compact, and the OECD Guidelines for Multinational Enterprises.
  
  In reaching its judgment, the Dutch court observed that the claimants could not directly invoke the human rights protections of the ECHR and ICCPR against the defendant, but it accepted that human rights principles informed the interpretation of the unwritten standard of care in the Dutch Civil Code. Specifically, when interpreting the standard of care, the court held that the UNGPs constitute “an authoritative and internationally endorsed soft law instrument” and represent “universally endorsed content”. Accordingly, businesses “should respect human rights”. Taking this into account, and the serious risks faced by the Dutch people as a result of climate change, the court found that the defendant company’s standard of care required it to reduce its carbon emissions. The case is on appeal.

Potential ramifications for companies

As can be seen, a number of landmark cases have been brought on human or fundamental rights grounds against both States and companies. A number of these cases have led to copycat cases around the globe, and successful claims will certainly lead to further claims – for example, since the Milieudefensie v Shell judgment, NGOs have threatened copycat cases in the Netherlands against 60 companies, including major emitters and those who finance them. Since the Neubauer case in Germany, copycat fundamental rights cases have been filed against numerous German car companies for violations of fundamental rights through inadequate action to reduce vehicle emissions.¹²

Copycat cases might not succeed in all jurisdictions. Indeed, it is fair to say that the Dutch court in Milieudefensie placed greater weight on the UNGPs than courts in other jurisdictions have to date. To put that in the English law context, a broad analogy to the claim in Milieudefensie may be made with common law negligence under English law. This has been subject to extensive litigation in the English courts in recent years. In two high profile judgments, the UK Supreme Court has been willing to allow claims to proceed against English domiciled parent companies where claimants alleged that they suffered harm as a result of the activities of a foreign subsidiary.¹³ In these cases, the Supreme Court considered whether there was a real issue to be tried on the basis that the parent company assumed a duty of care towards the claimants by its actions (e.g. holding itself out in published materials as exercising supervision and control over the foreign subsidiary). Notably, in assessing the arguments around the existence of a duty of care at common law, the UK Supreme Court did not consider in either judgment the relevance of international principles and standards, in particular the UNGPs. This was despite interventions by the International Commission of Jurists and CORE Coalition arguing that the UNGPs should be considered when interpreting the extent of the parent company’s duty of care. This indicates that courts in other jurisdictions may be more reluctant than the Dutch Court in Milieudefensie to allow claims against companies on the basis that the human rights principles in the UNGPs (and other international standards) are “universally endorsed”.

Similarly, arguments for the expansion of torts or imposition of novel duties of care on companies may be resisted by other courts. The decision of the New Zealand Court of Appeal in Smith v Fronterra¹⁴ was hotly anticipated in the wake of Milieudefensie – commentators were eager to see whether another court would also impose a novel common law duty of care and hold major greenhouse gas emitting companies liable for climate change. The plaintiff in that case is an elder of Ngāpuhi and Ngāti Kahu descent and climate change spokesperson for the Iwi Chairs Forum, claiming customary interests in lands and other resources. Smith sued seven New Zealand companies involved in industries that emit greenhouse gases or manufacture and supply products which emit greenhouse gases when burned (including a power station, dairy farms, and an oil refinery). Smith claimed that the defendant companies have a duty to cease contributing to climate change – in a proposed amendment to the claim he pleaded that indigenous Maori principles and values should infuse the court’s consideration of the issues in relation to the causes of action.

The novel tort component of his claim had survived an initial strike out application but, in October 2021, the Court of Appeal struck out his claims in full. The court held that “the magnitude of the crisis which is climate change simply cannot be appropriately or adequately addressed by common law tort claims pursued through the courts”. Rather, it calls for “a sophisticated regulatory response at a national level supported by international co-ordination”. The court noted, however, that the judiciary does have a role in holding the government to account on climate action. The New Zealand court’s unwillingness to find a duty of care against a company stands in contrast to the Australian Federal Court’s imposition of a novel duty of care on a State actor in Sharma v Minister for the Environment¹⁵ (although the Australian court did not rely on human rights arguments). The Sharma decision is now on appeal.

Despite the potential hurdles that climate-related claims against companies might face, copycat cases are still being brought. For many litigants, winning on the merits is often not as important as the publicity the case generates. A bigger battle is being fought in the courts of public opinion. Cases are also increasingly funded by donations or crowdfunding.

Moreover, as has been seen in France, the emergence of mandatory human rights due diligence laws in various jurisdictions will likely fuel the proliferation of claims against companies, including in relation to climate change. In such cases, consideration of the UNGPs and other international principles and standards will very likely be central to the arguments around the company’s liability. The profile of such cases is also likely to raise both ‘license to operate’ and reputational issues for businesses.

A more novel arena in which corporations may be targeted is international criminal law: a concerted push has been made by climate lawyers and NGOs to develop “ecocide” as a new crime against humanity, and this could implicate not only States, but also companies (albeit through the vehicle of prosecutions of natural persons given the current limits of international criminal jurisdiction).¹⁷ In December 2021, the initiative received support from Bangladesh, Samoa and Vanuatu during the annual meeting of the International Criminal Court’s 123 member nations. More than a dozen other States, as well as the Pope and the UN Secretary-General, have expressed support for the international initiative, and Belgium’s Parliament has passed a resolution expressing support not only for the international effort but also calling for domestic ecocide legislation.