Strategic climate litigation will fill the political void
Market Insight 21 December 2021 21 December 2021
Insurance 2022 - the year ahead
Insurers, law firms and the broader financial community will be the first to feel the heat.
Although some governments announced more ambitious emissions targets before and during COP26, experts say these still fall well short of what is needed to avoid catastrophic climate change. As frustration mounts at a perceived lack of ambition, we predict a sharp increase in the use of strategic litigation against governments and businesses to force the pace of change.
Cases based on human rights violations have been achieving success in Europe and have already prompted changes in government policy in the Netherlands and Germany. The first such case was brought by the Urgenda Foundation in the Netherlands and established that the Dutch government owed a rights-based duty of care to its citizens to take more aggressive steps in curbing emissions. In April 2021, the German Constitutional Court made a similar ruling there. And then in May 2021, a Dutch court ordered Shell to achieve a 45% reduction in its net CO2 emissions (including those from consumption of its products) by 2030, to avoid breaching a new rights-based duty of care to the country’s citizens. This decision (the first of its kind in the world) is under appeal.
All of this has inspired a wave of new cases across Europe, many brought against state and regional governments by young people on behalf of the next generation. The most ambitious of these to date is the Agostinho case in the European Court of Human Rights, seeking an order that Portugal and 32 other countries make more rapid cuts in emissions. The court has fast-tracked the case and the hearing could take place in 2022. Meanwhile, Greenpeace and DUH have gone to court in Germany, seeking to force VW, BMW and Daimler/Mercedes in Germany to bring forward their switch to purely electric car production and to curb their sales of internal combustion engine cars in the meantime.
We predict that more rights-based strategic cases will be brought against companies in 2022. These lawsuits will add to the pressure that traded companies in high-emitting sectors are already facing from institutional investors, rating agencies and other stakeholders.