Climate litigation has become an increasingly popular tool for a diverse range of groups promoting their interests in relation to climate change issues. According to a recent report from the Grantham Research Institute on Climate Change and the Environment, the cumulative number of climate change-related cases worldwide has more than doubled since 2015 to over 2,000, with over 500 of these being brought since 2020.
Climate change litigation has become a key instrument to enforce or enhance climate commitments made by governments. Its increasing importance has been fuelled by the success of several high-profile cases: of the eight decisions in this field handed down by the higher courts, six have had favourable outcomes for campaigners for climate action.
The most common strategy used in climate cases is to attempt to introduce emissions standards and international climate treaty considerations into government decision-making and policies. Although ultimately unsuccessful, the legal challenge lodged in 2020 by several environmental groups against the UK Government’s approval of the expansion of Heathrow Airport for failing to consider the country’s international climate commitments represents a high-profile example of this type of challenge.
Following the success of Urgenda Foundation v State of the Netherlands in 2019, in which the Dutch Government was ordered to reduce its emissions by 25% by the end of 2020, it is ‘framework cases’ – those that focus on the design and ambition of a government’s policy response to climate change – that attract the most media and academic attention.
In the recent High Court decision ClientEarth v Department for Business, Energy & Industrial Strategy the High Court found that the UK Government had failed to include enough information in policies to show that its net zero strategy would be sufficient to meet its legally binding emissions reduction targets. The court required the government to return eight months later with an updated and strengthened strategy.
This was a similar outcome to the Supreme Court of Ireland’s finding in 2020 that the Irish Government’s National Mitigation Plan fell short of what was needed to meet the country’s climate commitments. Again, the government was ordered to present a revised and updated strategy containing more detailed information about its climate change policy.
Challenges in the energy sector
It is of no surprise that most climate litigation targets the phasing out of fossil fuels. Most cases take the form of challenging government decisions to grant new permits to coal mines and oilfields, or suing oil and gas companies directly for emissions-linked damages or a failure to transition to greener technologies quickly enough.
But oil and gas producers have begun to challenge governmental climate action. Using an arbitration mechanism (investor-state dispute settlement) contained within the Energy Charter Treaty – a 1990s pact signed by over 50 countries after the fall of the Soviet Union to protect foreign investments in energy in case of expropriation of assets – these producers have already claimed billions of pounds in compensation from EU governments as they commit to moving away from fossil fuels. As recently as August 2022, UK oil and gas company Rockhopper received €190m from the Italian Government through this mechanism.
While there have been efforts to modernise the treaty for a post-Paris Agreement world where climate action is necessary, the threat of these ISDS actions has led to a ‘regulatory chill’, and Laura Létourneau-Tremblay, a doctoral research fellow at University of Oslo, has stated that there are ‘real concerns as to whether the ECT is compatible with the net-zero energy transition.’
Public and private financial institutions
Both the Paris Agreement and the Glasgow Climate Pact have emphasised the role of finance in the transition to a low-carbon future and this is now reflected in an increase in litigation brought against financial and investment institutions.
Cases targeting ‘portfolio emissions’ have been brought against universities, pension funds, and banks in the UK and around the world, with litigants arguing that failure to divest from fossil fuels constitutes, for example, a breach of the law (eg state or human rights law), or financial mismanagement.
It is also clear that litigation is increasingly focusing on investment decisions made by public financial institutions, for example the European Central Bank (as in ClientEarth v Belgian National Bank). There is still uncertainty as to whether such institutions are legally responsible for considering scope 3 emissions (including those arising from investments). However, Mrs Justice Thornton in Friends of the Earth v UK Export Finance commented that UKEF ‘had to demonstrate that funding the project is consistent with a pathway towards limiting global warming to well below 2°C and pursuing efforts to 1.5°C’ – as set out in the Paris Agreement. Such comments may indicate an acceptance that investing institutions must exhibit more comprehensive consideration of climate issues.
Climate litigants are also increasingly finding creative ways of holding investors to account for failing to take account of the financial risk of their investments in relation to climate change and the shift towards cleaner energy. In July 2020, after buying shares for €60 in the co-sponsor of a Polish coal plant, ClientEarth raised a lawsuit against the company for investing in a risky stranded asset.
Similarly, another trend in climate litigation focuses on holding public bodies and corporates accountable for any climate-related claims they make. This is of increasing importance given widespread public debate about the contribution that individual lifestyle and consumer choices can make to climate change and the importance of clear communication by companies about their ‘green’ credentials.
These ‘greenwashing’ challenges may be filed either before the courts or non-judicial oversight bodies such as advertising standards boards.
According to the Grantham Institute’s report, where relevant decisions on merits in climate-related cases have been handed down, 54% of them have had outcomes favourable to climate change action.
While this is a noteworthy figure, there are countless cases and challenges that do not make it to court but still have an impact on corporate and governmental decision-making processes. For example, a legal challenge against South Korean export credit agency, Kexim, resulted in their delaying a decision on whether to finance a gas project off Australia, citing environmental and legal risks.
However, the unintended consequence of the trend of increasing climate litigation may be a reluctance from national and sub-national governments to commit to the kind of ambitious emissions reduction targets that are required to comply with the Glasgow Climate Accord’s aim of limiting global warming to 1.5°C.
The Summary for Policymakers published alongside the latest IPCC report recognised litigation as affecting ‘the outcome and ambition of climate governance’, but a case could be made for the fact that governments are in fact being pulled in opposite directions by the oil and gas industry and environmental organisations alike.
What does the future look like?
There has been a steady increase in the number of climate change cases being lodged annually – now over 200 a year – and there is nothing to suggest that this will change.
Based on recent trends, a further diversification of claimants and defendants can also be reasonably expected, reflecting the way in which climate change has the potential to impact on a broad range of groups and sectors.
While governments and the oil and gas industry will likely continue to be the primary focus for climate litigation, recent years have seen more cases brought against other traditional heavy industries and in sectors including food and agriculture, transport, plastics, and finance.
It is likely that areas such as shipping, aviation, textiles, and steel and concrete will also become the subject of litigation in the coming years.
Recent climate litigation developments also suggest that litigants will continue to broaden the variety of fields in which they bring cases, with the actions of individuals likely to be subject to closer scrutiny and more regularly brought before courts.
It is also anticipated that governments and major emitters will have to respond to an increasing number of cases addressing prevention of and redress for climate change – now commonly known as ‘loss and damage’ – and challenges to energy transition commitments that rely too heavily on emission reduction technologies like carbon capture and storage (CCS).