Trends in global climate change litigation

"Climate change litigation" spans a broad spectrum of cases; including:

1. Claims brought against states to increase climate change mitigation measures.
2. Strategic cases brought against private corporations to curb carbon-emitting behaviour (often as tort or nuisance claims).
3. Planning and permitting cases relating to fossil fuel projects.
4. 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.

Recent key cases in this area include: Conservation Law Foundation, Inc. v. Shell Oil Products US, Sarah Von Colditz against ExxonMobil, People of the State of New York v. Exxon Mobil Corp., McVeigh v. Australian Retail Employees Superannuation Trust. In the English Courts, we have seen the case of Deutsche Bank AG v. Total Global Steel Ltd, as well as a complaint filed by Client Earth (an environmental law charity) in December 2019 against BP in respect of violations of the OECD Guidelines following the release of its "Possibilities Everywhere" advertising campaign. Notably, a 2019 study found that more cases of climate litigation affecting the financial sector were filed in 2018 than in any previous year.

Whilst this area of litigation remains in its early 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 organisation 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.  A decision in the second of these cases was handed down by the Supreme Court in December 2020.  The Supreme Court overturned the Court of Appeal's decision that the Secretary of State's decision to designate a third runway at Heathrow Government policy was a violation of the Planning Act 2008 and the Human Rights Act 1998.  The Court of Appeal had 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 designate a third runway Government policy, the Secretary of State had violated the Planning Act 1980.  On that basis, the Court of Appeal ruled that the decision was required to be retaken.  However, the Supreme Court overturned that decision finding that the Secretary of State had properly taken the Paris Climate Change Agreement into account and had acted rationally by making the decision by reference to the Climate Change Act 2008, which enshrined Government policy on carbon targets and emissions into UK law, and therefore represented Government policy. See R (on the application of Friends of the Earth Ltd and others) (Respondents) v Heathrow Airport Ltd (Appellant) [2020] UKSC 52

More 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 "CCA"), the Paris Agreement and other legal commitments.  The UK Treasury responded to the pre-action letter defending the COVID 19 recovery plans, and highlighting the emergency nature of the plans which it said were set up to deal with short term and acute liquidity issues resulting from the economic repercussions of COVID 19.  The Treasury indicated that it did not consider the COVID 19 recovery plans to be incompatible or inconsistent with the CCA and stated that the Paris Agreement has no direct effect in domestic law.  It remains to be seen how this case will progress.  If the case makes it to court, it could represent the first wholesale challenge to the Government's approach to climate change.

Globally, we can expect to see the number of legal challenges relating to climate change continuing to rise. In the English Courts, we might see increasing amounts of climate change litigation brought against businesses in relation to the need to diversify their investment portfolio to ensure exposure to climate change risk is minimised and to disclose the climate change risk inherent in their investments. The cases highlighted above 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.