UK & Europe
Insurance & Reinsurance
In November, the eyes of the world will be on Scotland as Glasgow plays host to the 2020 UN Climate Change Conference (COP 26). Recent events like the Australian bush fires mean that climate change is at the front of public conscience.
Protests by Extinction Rebellion and Greta Thunberg are the traditional way for climate activists to make their voices heard. However, activists and others are also now using the courts too.
Litigants have started to flood the courts in other jurisdictions. According to the Grantham Institute 1,328 cases had been brought across 28 countries as of May 2019. The US has seen by far the most litigation, but other countries including Australia and the UK have encountered a significant number.
Climate change litigation emerging across the world in the last two decades can broadly be categorised into three classes: (1) administrative cases against governments and public bodies; (2) delictual claims against companies perceived as those responsible for climate change; and (3) claims brought by investors against companies for failing to account for possible risks to assets, business models and supply chains.
To date, the most prevalent type of climate litigation has been class 1, with the aim of challenging decisions of governments and public bodies and influencing their conduct. This can provide a powerful alternative to traditional activism.
The high water mark is now the case of Urgenda v Netherlands. There, in December 2019, following on action brought by the Urgenda Foundation (a pro-sustainability organisation) and a group of private citizens, the Dutch Supreme Court ordered the Dutch state to limit greenhouse gas emissions to 25 per cent below 1990 levels by 2020.
The case was based in part upon alleged breaches of articles 2 and 8 of the European Convention of Human rights. Article 2 protects a person’s right to life. Article 8 protects their right to private and family life. The convention obliges nations to take immediate, proportionate steps if a real and immediate threat to people’s lives and welfare exists. It was found that climate change presented such a threat and that the Dutch government’s existing pledge to lower emissions by 17 per cent was insufficient to meet the Netherland’s fair contribution towards the UN goal of keeping global temperatures within two degrees of pre-industrial levels. The ruling required the Dutch government to take immediately more effective action on climate change.
The logic of the Urgenda case is that although governments are not obliged to take measures resulting in an disproportionate burden upon them, due to the severity of the consequences of climate change, they do require to put in place “effective” climate change mitigation measures. There is no reason why similar action could not be taken against public bodies in Scotland.
A number of other themes are beginning to emerge. Businesses, particularly companies producing fossil fuels, are facing actions for damages from public authorities in the US based upon their alleged contributions to the climate crisis. The bases of the actions include arguing that petroleum is a defective product, by reason of its harmful side-effect in emitting carbon dioxide during combustion. Directors and officers could face potential legal action from investors if they fail to adapt practices in line with international scientific consensus or take the measures necessary to respond.
Companies also face actions from regulators and others for false green advertising – “greenwashing” claims. There has even been a case to protect a belief in climate change under employment regulations.
Scotland is beginning to encounter climate change litigation. The recent case of Shell UK Ltd v Stichting Greenpeace in January 2020 involved environmental activists occupying partially decommissioned oil platforms in the North Sea. The activists were concerned that if the structures were left in the ocean, as was proposed, they may degrade and result in pollution of the marine environment. In interdicting Greenpeace, the court recognised only in exceptional circumstances would the right to freedom of expression be granted in relation to protests on private property. With further, frequent climate emergency protests likely in the lead up to COP 26, courts may well require to adjudicate upon similar disputes.
Undoubtedly climate change is going to affect a wide range of businesses from energy companies to heavy manufacturing, from investment funds to insurers. Businesses need to act now to respond to the risks of climate change. Failing to do so may see their future washed away.
This article was first published in The Scotsman.