Climate change and litigation risk

"Climate change litigation" spans a broad spectrum of cases; including claims brought against states to increase climate change mitigation measures, strategic cases brought against private corporations to curb carbon-emitting behaviour (often as tort or nuisance claims), planning and permitting cases relating to fossil fuel projects and claims relating to the need for institutions or businesses to take account of climate change risk in making investments, or to disclose the climate risk arising in respect of existing investments (amongst others). 

Whilst this area of litigation remains in its infancy in the English courts, businesses should be alive to this ever-increasing risk.  Recent climate change cases in the English courts which have hit the headlines include the High Court cases brought by Plan B, a British non-profit with the mission to realise the goals of the Paris Climate Change Agreement, in relation to fracking and in opposition to the proposed third runway at Heathrow.  The decision in the second of these cases was handed down by the Court of Appeal in April 2020.  The case, brought jointly by Plan B, Friends of the Earth and other co-claimants, was brought against the Secretary of State for Transport, alleging that the decision to permit a third runway at Heathrow amounted to a violation of the Planning Act 2008 and the Human Rights Act 1998.  The Court of Appeal found that, having signed up to the Paris Climate Change Agreement, the goals of that Agreement were now part of Government policy.  By failing expressly to consider and address the climate change targets set out in that Agreement before taking the decision to approve the third runway, the Secretary of State had been in violation of the Planning Act 1980.  The decision was therefore invalid and was required to be retaken, taking consideration of the non-carbon dioxide climate impacts of aviation and the effects of emissions beyond 2050.

Most recently, the UK Government's COVID-19 recovery plans were challenged when a pre-action letter was sent to the Prime Minister, Chancellor of the Exchequer and the Governor of the Bank of England, amongst others, alleging unlawful allocation of Government and Bank of England Funds, contrary to the Climate Change Act 2008, the Paris Agreement and other legal commitments.  If this case makes it to court, it will represent the first wholesale challenge to the Government's approach to climate change. However, as mentioned briefly above, climate change litigation is much broader than those cases brought in relation to planning, permitting and government action.  Globally, litigation trends in this area show that we can expect to see climate change litigation brought against businesses in relation to the need to diversify their investment portfolio to ensure exposure to climate change risk is minimal, to incorporate climate change risk in their investments and to disclose the climate change risk built into their investments. 

These cases reflect the importance of companies and corporations, even those who do not traditionally operate in the fossil fuel sector, or other sectors directly related to climate change, remaining alert to the potential impact of climate change risk on investments, supply chains and mergers and acquisitions.