Climate change litigation update

Introduction

Since our last update, we have continued to see climate change-related litigation dominate headlines with new and novel claims being issued against states, corporates and financial institutions across all sectors. Claimants are testing the boundaries of human rights protections, claiming both rights to culture, and rights for future generations not to be disadvantaged in comparison to those living today. Climate change litigation is also expanding into new areas. This can be seen both in terms of unconventional claims, such as novel derivative actions against company boards, and with cases being brought in previously unaffected jurisdictions, such as the Greenpeace Norden claim against the Finnish Government.  

As of May 2023, the total number of climate change cases filed around the world has reached 2550, up from about 2419 in September 2022.¹

This legal update considers key developments and cases since September 2022.

Actions against governments

England and Wales | Greenpeace v (i) Secretary of State for BEIS and (ii) North Sea Transition Authority

On 26 April 2023, the High Court granted Greenpeace permission to proceed with a full judicial review of the UK Government’s decision to award a new round of licences for oil and gas drilling in the North Sea, with fossil fuel companies submitting more than 100 exploration licence applications. Greenpeace argues that the Government made an omission by not taking into account the environmental impact of the consumption of the oil and gas to be extracted under the new licences. The group is also arguing that the North Sea Transition Authority, the co-defendant, opened the round unlawfully.

England and Wales | ClientEarth v Financial Conduct Authority

ClientEarth has failed in its attempt to judicially review a decision of the UK’s Financial Conduct Authority (FCA) to approve the prospectus of a UK oil and gas company, Ithaca Energy plc (Ithaca). Ithaca’s flotation was the UK’s largest public listing of 2022.

ClientEarth had claimed that, although Ithaca acknowledged that climate change on the whole poses risks to the oil and gas sector, the prospectus did not adequately specify either how these risks will impact Ithaca or the significance of these risks.

The High Court refused ClientEarth’s application for permission to apply for judicial review on the basis that, amongst other things:

1. the prospectus did address risks arising out of climate-related factors;
2. Ithaca had disclosed that the Paris Agreement was a risk for Ithaca’s business; and
3. it was open to the FCA to conclude that, in the context of the whole of the prospectus, Ithaca had provided investors with sufficient information to make an informed assessment of risk in accordance with the UK Prospectus Regulation.

ClientEarth has since indicated that it will apply for the decision to be reconsidered.

United States | Layla H. and ors v Commonwealth of Virginia

On 16 September 2022, Richmond Circuit Judge Clarence Jenkins Jr. dismissed a claim brought by several claimants against the Commonwealth of Virginia. The claimants alleged that Virginia’s historic and continued reliance on fossil fuels as its primary energy source is contributing to the climate crisis and therefore violates (i) the claimants’ rights to life and liberty under the Virginia Constitution; and (ii) the state’s sovereign duty to hold the public domain on trust for the benefit of the public.

These allegations were dismissed on the grounds of sovereign immunity, a legal principle which prevents the state from being sued without first giving its consent. This meant that the substantive merits of the legal arguments were not addressed. The status of similar claims being brought against other US states therefore remains uncertain. The claimants’ legal representatives have stated their intention to appeal the decision.

United States | Held and ors v State of Montana

In contrast to above, in June 2023, a landmark climate lawsuit was brought by a group of sixteen children and young people (aged 5 to 21) against the State of Montana for its endorsement of an energy system allegedly driven by fossil fuels. The Claimants claim that the State’s energy policy is responsible for the effects of climate change (particularly drought and wildfires) that are affecting their lives and, therefore, the State is failing to protect their human right to a healthy and clean environment.

The ruling is expected to be handed down in the coming weeks.

Netherlands | RWE and Uniper v the Netherlands (Ministry of Climate and Energy)

In November 2022, the District Court of The Hague dismissed a claim brought by German energy companies, RWE and Uniper, against the Dutch Ministry of Climate and Energy in response to the Prohibition of Coal in Electricity Production Act (the Act). The claimants argued that the measures under the Act, including a total prohibition on coal as a fuel for generating electricity after 2030, is an unlawful infringement on their property rights under the European Convention on Human Rights and the EU Charter of Fundamental Rights because the Act does not offer financial compensation.

The Court held that, while the Act infringes the energy companies’ right to property, it is not unlawful. It applied the “fair balance” test, which considers the nature and scale of the interference and its proportionality, and deemed the Act was fair because it grants owners a transition period to realise revenue and invest in the conversion of the coal-fired plants. The Court also noted that ongoing societal debates on the energy transition and the use of coal meant that the companies could not have expected coal-fired plants to operate without limitations until 2040.

Russia | Ecodefence and ors v Russia

Two NGOs filed a challenge at the Supreme Court of the Russian Federation on 11 September 2022 against two pieces of Russian legislation, the Presidential Decree “On Reducing Greenhouse Gas Emissions” and the Russian Government resolution “Strategy of Socio-Economic Development of the Russian Federation with Low Greenhouse Gas Emissions up to 2050”.

The NGOs claim that these measures are insufficient to meet Russia’s agreed domestic and international climate targets, in particular the Paris Agreement, and that they therefore violate the claimants’ rights to life, health and a favourable environment, as well as the rights of indigenous peoples. The NGOs further argue that the constitutional principle of equality of human and civil rights is likewise violated to the extent that Russia’s insufficient response to the climate crisis places future generations at a disadvantage to current generations. 

The claimants have sought an order from the Supreme Court to compel the Russian President and Government to replace these acts with measures that will reduce Russia’s CO2 emissions to 31% of 1990 levels by 2030 and 5% of 1990 levels by 2050.

New Zealand | Lawyers for Climate Action NZ v The Climate Change Commission and ors

Lawyers for Climate Action NZ (LCANZ) (a non-profit group of over 350 lawyers) brought judicial review proceedings against the New Zealand Minister for Climate Change and the Climate Change Commission, a body set up to advise the Minister on budgets for domestic emissions. LCANZ challenged the Commission’s 2022 budget advice to the Minister on a number of grounds, including:

1. that the Commission made a mathematical or logical error in its advice on the compatibility of New Zealand’s Nationally Determined Contribution with the Paris Agreement’s 1.5°C target;
2. that the Commission erred in its advice on the emissions budget by misinterpreting or misapplying its statutory purpose and mandatory considerations when recommending the budget; and
3. that the budget advice was “irrational, unreasonable and inconsistent with the legislative purpose of contribution to the global 1.5 degrees effort”.

In November 2022, New Zealand’s High Court rejected all of the claims. It did not find errors in the advice and did not consider that the Commission had mischaracterised or misapplied the stipulated considerations. The Court also held that the advice, which includes increasing national emissions until 2030, was not irrational or unreasonable as the reasons and information on which it was based justified the advice.

England and Wales | Friends of the Earth v Secretary of State for Levelling Up, Housing and Communities

The claimants relying on four grounds to challenge the Government’s decision:

Private Law

United States | ClientEarth complaint against Cargill

On 4 May 2023, ClientEarth filed a complaint with the US National Contact Point (NCP) against Cargill over it alleged failure to conduct adequate environmental and human rights due diligence on its soya supply chain in Brazil. ClientEarth notes that Cargill has a monitoring, verification and reporting system in place to end deforestation related to soya production in its supply chains, and a policy commitment to support Indigenous Peoples and Local Community Rights. ClientEarth alleges that despite this, the company does not conduct proper environmental due diligence in line with OECD Guidelines to help eliminate links to deforestation and human rights abuses.

United States | Delaware and Hoboken legal challenges against fossil fuel corporations

In 2020, the State of Delaware and City of Hoboken in New Jersey filed claims in their respective state courts to compel a number of oil and gas majors (including bp, Shell, ExxonMobil, Chevron and ConocoPhillips) to pay for climate damages they allegedly knowingly caused. The oil and gas majors appealed the US Court of Appeals for the Third Circuit's decision to allow the two lawsuits to proceed in the state courts where they were filed. In April 2023, on the back of several similar decisions, the Supreme Court rejected the companies' applications to shift the cases to the federal court, and ruled that the cases could proceed to trial in the state courts.

The City of Hoboken also recently amended its claim which now alleges that the companies conspired to defraud the public under New Jersey's Racketeering Influenced Corrupt Organizations Act.

United States | Municipalities of Puerto Rico v ExxonMobil Corp, Shell Plc and Chevron Corp

Sixteen Puerto Rico municipalities have filed a claim in the US District Court for the District of Puerto Rico, seeking damages from ExxonMobil Corp, Shell Plc and Chevron Corp following the 2017 hurricane season in which Puerto Rico “suffered apocalyptic damage”. The municipalities allege that these storms were intensified by climate change, which has been accelerated by the conduct of the defendants. In total, the municipalities have asserted 14 causes of action under federal and Puerto Rican law, including common law, consumer fraud, deceptive business practices, false or misleading advertisements as well as strict liability claims based on failure to warn and negligent design defect.

United States | Platkin and ors v Exxon Mobil Corp and ors

The New Jersey Attorney General, Matt Platkin, the Department of Environmental Protection and the Acting Director of the New Jersey Division of Consumer Affairs have commenced a lawsuit in the New Jersey courts against a number of energy majors. The claimants allege that the defendants engaged in a “climate deception” campaign regarding the consequences of emissions from fossil fuels in order to inflate and sustain the market for fossil fuels. It is claimed that this led to increased emissions, accelerating global warming and resulting in climate related harm to residents in New Jersey. The complaint includes claims for a failure to warn consumers and the State about the risks posed by their fossil fuel products, negligence, impairment of the public trust, trespass, public nuisance and private nuisance. The claimants are seeking a range of financial remedies.

England and Wales | Municipio de Mariana and ors v BHP Plc and ors

The damages claim against BHP over the 2015 Fundão mining disaster in Brazil is set to commence on 7 October 2024 in the English courts. BHP had sought permission to appeal the Court of Appeal’s decision to allow the claim to proceed; however, on 24 May 2023 BHP’s application was dismissed by the Supreme Court.

The claimants are seeking up to £36bn to compensate for alleged damage to their homes and livelihoods, making it the largest opt-in class action lawsuit ever brought in the UK.

Italy | Greenpeace and ors v Eni and ors

The Italian oil major Eni and its two biggest shareholders (the Italian Ministry of Economy and Finance and the Italian state lender and public investment bank, Cassa Depositi e Prestiti) are facing accusations from environmental groups that they used lobbying and greenwashing tactics to promote fossil fuels despite being aware of the associated risks since 1970. 

Greenpeace Italy and the Italian advocacy group Re Common have sought an order from the Italian courts to compel Eni to cut its carbon emissions by 45% by 2030.

Belgium | Carbon Market Watch complaint against FIFA

In December 2022, Carbon Market Watch filed a complaint against FIFA with the Belgian advertisements ethics panel. The complaint alleged that FIFA’s advertising of the 2022 Qatar World Cup as “carbon neutral” was misleading and false. The grounds for the complaint included that (i) the claim had not been validated by an independent body; (ii) the methodology used to measure carbon neutrality was flawed; and (iii) FIFA had failed to meets its obligations in terms of offsetting to support its carbon neutrality claim. Similar complaints were made to the advertising authorities in France, the Netherlands, the UK and Switzerland.

In June 2023, the Swiss advertising regulator ruled that FIFA had misled consumers by claiming that the World Cup was carbon neutral. The Swiss Fairness Commission, Switzerland’s advertising regulator, ordered FIFA to “refrain in the future from alleging that the 2022 football World Cup in Qatar would allegedly be climate and C02 neutral” unless it could provide “full proof of the calculation . . . of all CO₂ emissions caused by the tournament, and proof that these CO₂ emissions have been fully offset”.

South Korea | Solutions for Our Climate v SK Lubricants Co.

In October 2022, Solutions for our Climate filed a claim against SK Lubricants Co regarding certain green claims contained in advertising for its lubricant products. The claimant alleges that the claims were false and that the Verra-certified offsets, relating to the Guanaré reforestation project in Uruguay, failed the ‘additionality’ requirement. This is a principle in the voluntary carbon market that, in order to qualify as a genuine carbon offset, the impact of the scheme must be greater than what would have been achieved had the scheme not been in place (e.g. offsets that ‘protect’ an acre of rainforest that would not have been deforested, regardless of the scheme, would not satisfy the additionality principle). 

The NGO further alleges that SK Lubricants did not purchase sufficient offsets to satisfy its claim that consumers were helping the products achieve “zero carbon emissions”. The claims have been brought under:

1. Article 3 and 17 of the Act on Fair Labelling and Advertising; 
2. Article 3 of the Enforcement Decree of the Act on Fair Labelling and Advertising (Presidential Decree); and
3. the Public notice by the Fair Trade Commission (which requires accurate, up-to-date, objective scientific evidence for advertising which relates to the environment).

France | ClientEarth and ors v Danone

Danone is facing legal action in France for its alleged failure to reduce its plastic footprint and to publish and implement a satisfactory environmental strategy. In January 2023, three environmental groups brought a complaint to the Paris Tribunal Judiciaire against Danone on the basis that it had failed to satisfy the French Corporate Duty of Vigilance Law passed in 2017 (the Duty of Vigilance), which imposes a duty on large French companies to respect, protect and minimize violations of human rights and the environment and publish their strategy to do so in an annual vigilance plan.

The environmental groups allege that Danone is in breach of the Duty of Vigilance for failing to produce an adequate plan or strategy for reducing the use of plastics in its products and for failing to specifically account for and disclose its plastics use. The claimants are seeking an enforcement order from the court to require Danone to publish a new vigilance plan within six months which includes its plans to phase out plastics.

Danone has rejected the accusations, noting its commitment to managing environmental risks and stating that it is in the process of implementing a strategy to reduce its use of plastic and develop alternative materials. The company has emphasised the need to mobilize the industry as whole against plastic pollution, rather than directing culpability towards an individual company.

France | TotalEnergies v Greenpeace and ors

On 28 April 2023, French oil major TotalEnergies filed a claim against Greenpeace France and climate consultancy, Factor-X, over a report claiming that the energy company underestimated its 2019 greenhouse gas emissions. A first procedural hearing will take place on 7 September 2023 at the Paris judicial court to set a calendar for arguments. However, it will likely be several months before a judge begins to rule on the merits of the case.

Germany | Deutsche Umwelthilfe v Mercedes-Benz AG

In September 2021, environmental NGO, Deutsche Umwelthilfe (DUH), brought an action against Mercedes-Benz in the Regional Court of Stuttgart for allegedly failing to commit to phase out the sale of passenger cars with internal combustion engines (ICE) by 2030. DUH argues that Mercedes-Benz is not adhering to its allocated carbon budget and is violating the fundamental right to climate protection. The claim is one of the first civil proceedings to rely on the decision in Neubauer v Germany where the Federal Constitutional Court found that Germany has a limited total CO2 emissions budget available.

DUH sought an order from the Court that, unless Mercedes-Benz could prove greenhouse gas emission neutrality for Scope 3 emissions resulting from the intended use of their ICE passenger cars, it should refrain from placing ICE passenger cars on the market after 31 October 2030. This ban precedes the 2035 date proposed by the EU.

On 13 September 2022, the Regional Court of Stuttgart dismissed the case on the grounds that it is the legislature’s role to decide the appropriate measures to protect the climate. DUH appealed the decision on the same day but the appeal was dismissed on 31 September 2022.

Following these rulings, in February 2023, the Braunschweig Regional Court in Germany dismissed a similar claim brought by Greenpeace against Volkswagen which had sought to prohibit the sale of ICE vehicles after 2030.

England and Wales | ClientEarth v Board of Directors of Shell 

On 9 February 2023, ClientEarth filed a derivative action claim against the Board of Directors of Shell in the English High Court. ClientEarth claimed that the directors were in breach of their statutory duties, namely under sections 172 and 174 of the Companies Act 2006, by failing to prepare the company for the physical and regulatory changes that will be brought about by climate change.

However, in May 2023, the English High Court dismissed the claim, which was determined “on paper” (i.e. without any oral submissions), on the basis that the climate-related directors’ duties that Shell had allegedly breached were “incidental” and “vague” and that it was for the directors themselves to determine how best to promote the success of the company. ClientEarth has exercised its right to have the decision reconsidered at an oral hearing, which is due to take place in the week commencing 10 July 2023.

Human Rights and Constitutional Claims

Sweden | Anton Foley and ors v Sweden (Aurora Case)

On 25 November 2022, a class action lawsuit was brought under the European Convention on Human Rights (ECHR) against Sweden for its alleged failure to adequately mitigate climate change.

The action is being brought by over 600 claimants who argue that Sweden has interfered with their rights under the ECHR, specifically their rights to life, private and family life, non-discrimination and property. They claim that the violations are a result of Sweden’s failure to take necessary measures to mitigate climate risk, and, in particular, to prevent global temperatures exceeding 1.5°C above pre-industrial levels, resulting in heatwaves and shorter winters that will negatively affect human health and life and increase both the spread of disease and likelihood of flooding. On that basis, the claimants have sought an order from the Court to compel the Swedish Government to implement measures to reduce its share of greenhouse gas emissions based on the best available science.

Australia | Daniel Billy and ors v Australia (Torres Strait Islanders Petition)

In a landmark decision on 23 September 2022, the UN Human Rights Committee (the Committee) found that the Australian Government’s failure to protect Torres Strait Islanders from the effects of climate change was a violation of their right to culture (Article 27) and the right to be free from arbitrary interference with privacy, family and home (Article 17). The Committee asked the Australian Government to compensate the Torres Strait Islanders for the harm suffered, engage with the communities to assess their needs and take measures to secure their safe existence on their islands.

The petition was originally submitted by eight indigenous residents and six of their children from four small, low-lying islands in the Torres Strait region. The individuals alleged that the Australian Government’s inaction on climate change has violated their rights under the International Covenant on Civil and Political Rights (ICCPR). The Torres Strait Islanders argued that changing weather patterns, such as severe flooding caused by tidal surges, had destroyed family graves and denied them the ritual of communicating with deceased relatives, while heavy rainfall and storms had decimated the land and trees that form part of their natural diet.

The Torres Strait Islanders specifically claimed that the Australian Government had violated their right to non-discrimination / legal framework / right to remedies (Article 2), right to life (Article 6), right to be free from arbitrary interference with privacy, family and home (Article 17) and their right to culture (Article 27). They also claim violations of their children’s rights (Article 24(1)) under the ICCPR. They alleged that these violations were caused by the Government’s failure to take sufficient action to reduce greenhouse gas emissions and adequately fund the upgrade of coastal defences such as seawalls.

On 30 March 2023, the Australian Government issued its response which detailed the steps it has taken including passing legislative reform, updating its NDCs, funding commitments, and the Nature Positive Plan among other consultation and adaptation measures in the Torres Strait Islands.

Consumer Protection

United States | Dorris v Danone Waters of America

On 13 October 2022, a class action lawsuit was filed against Danone Waters of America in the US District Court for the Southern District of New York. The claimants allege that the manufacturer and seller of Evian Natural Spring Water had made false and misleading representations that the product was carbon neutral. Danone’s claims had been certified by a high-profile third party: The Carbon Trust. Further, the claimants allege that the defendant has engaged in greenwashing by marketing the product as carbon neutral and charging consumers a premium based on this representation.

The claimants argue that, in breach of the defendant’s express representations, the bottles it produces are not carbon neutral. The manufacturing of the bottles still produces CO2 emissions, contrary to a reasonable consumer’s understanding of the term carbon neutral. The claimants are bringing the claim on a number of grounds, including the alleged violation of California Consumers Legal Remedies Act, New York’s General Business Law, breach of express and implied warranties, unjust enrichment and fraud.

Germany | Verbraucherzentrale Baden-Württemberg e.V. v Commerz Real Fund Management S.à.r.l.

In December 2022, Verbraucherzentrale Baden-Württemberg (the Consumer Centre for Baden-Württemberg) filed a claim against fund manager Commerz Real Fund Management S.à.r.l. (CRFM) in the Regional Court of Stuttgart. The claimant alleged that CRFM’s claims in its klimaVest (climate fund) were misleading because:

1. they suggested that investing EUR10,100 per year would lead to an absolute reduction of 3.5 tonnes of CO2; and
2. CRFM had not been consistent in its claims regarding the volumes of CO2 that would be reduced because it proffered different figures across two websites.

The claimant argued that CRFM had not made it sufficiently clear that the reference to its CO2 reduction was a goal, and not necessarily something that CRFM could deliver.

On 31 January 2023, the Court found the claims to be misleading under the German Act Against Unfair Competition. It agreed with the claimant that consumers would understand these claims to be firm commitments, not targets that may or may not be delivered. The Court also found the differing statements on the CO2 reduction targets to be misleading by omission.

Netherlands | RCC - CvB Ruling on Shell "Compensate your emissions"

The Dutch Reclame Code Commissie (RCC), an advertising regulator, has dismissed Shell’s appeal against a ruling that its "Make a difference. Compensate CO2 emissions" campaign was misleading and must be withdrawn.

The campaign, which originally stated “Make a difference. Drive CO2 neutral”, was challenged by nine law students who argued that the claims made in the campaign breached the Dutch Advertisement Code. See our February 2022 update for more background on the case. In July 2022, Shell appealed the ruling, arguing that the decision held Shell to an impossible evidential standard which would hinder Shell’s ability to communicate its carbon offsetting programme.

In October 2022, the Committee held that, despite replacing “neutral” with “compensate”, Shell’s claims had not materially changed.