Biodiversity litigation: Environment analysis
Market Insight 12 April 2022 12 April 2022
UK & Europe
Insurance & Reinsurance
Interviewed by lead paralegal at Lexis®PSL Barbora Kozusnikova, Clyde & Co associate Zaneta Sedilekova and senior associate Wynne Lawrence, discuss biodiversity litigation and what businesses can do to mitigate risk in this area.
What is biodiversity litigation?
There is no universally established definition of biodiversity litigation yet. However, biodiversity litigation can be defined as any legal dispute at the national, regional or international level that concerns conservation of, sustainable use of, access to and benefit-sharing of genetic resources, species, ecosystems and their relations. This definition encompasses both biodiversity cases brought for a strategic purpose of effecting a market-wide change to enhance biodiversity protections or prevent harms, as well as those brought for a specific purpose of protecting particular species or habitats.
Are there any examples of these kinds of claims so far—against a State or a corporate?
There have been several biodiversity cases against states and a few against corporations. For example, in January 2022, five French NGOs brought a case against the French Government alleging failures of the French Government in regulating authorisation and marketing of pesticides, which scientific evidence points to as a major cause of collapse of pollinator populations. The claimants are asking the court to repeal the pesticide approval process and grant compensation for the systemic ecological damage suffered.
Another French case of note was brought in March 2021 against the French supermarket chain Casino under the 2017 French Vigilance Law, which requires French companies to implement due diligence plans, and concerns a wider issue of ecosystem destruction. In this case, Casino is being sued for its involvement in the cattle industry in Brazil and Colombia, which the claimants allege have caused environmental and human rights harms. In particular, the claimants state that the yearly vigilance plans released by Casino since 2018 lack substance and/or applicability, are vague, superficial and not proportionate to the harms committed to the Amazon and its Indigenous Peoples. They demand that the court orders Casino to establish, implement and publish a detailed compliant vigilance plan which at a minimum, analyses the risks of damage from supply of beef to Casino from its subsidiaries in South America, especially in Brazil and Colombia.
Other biodiversity-related cases stem from the school of thought called Rights of Nature, which seeks recognition of natural features, such as rivers and forests, as legal persons in their own right. This idea has been pioneered by Indigenous Peoples and environmentalists around the globe, with some significant successes. For instance, in Canada, Muteshekau Shipu (Magpie River), which runs for 300 km in northern Quebec, was granted legal personhood in 2021 and given nine rights, including the right to flow and the right to be safe from pollution. In 2020, a class action was filed in the Argentinian Supreme Court against a provincial and municipal government for their alleged failure to protect environmentally sensitive wetlands. The lawsuit seeks recognition of the Paraná Delta as a legal entity with its own rights. Although these cases often result in a mere declaration of rights, they lay the ground for future lawsuits brought in the name of the natural objects seeking injunction of certain activities, compensation for ecological harms, and financial contributions to ecosystem conservation and restoration.
What are the developments that have led to an increase in these claims?
There are many legal, regulatory and technological developments that have enabled an increase in biodiversity-related claims. We analyse these in Clyde & Co’s recent Biodiversity liability and value chain risk report, which we published in collaboration with the Global Resilience Partnership.
On the legal front, the rise in climate change litigation, with almost 2,000 ongoing or concluded cases against states and corporations, coupled with an increasing scientific understanding of the dependencies between climate change and biodiversity loss, has led many active climate litigants to turn their attention to the biodiversity crisis. Without appropriate legislative action to halt global biodiversity decline, civil society is bound to fill the political void with litigation, as it has done with climate change.
In addition, there have been legislative developments around the world requiring corporate actors to carry out enhanced due diligence throughout their operations and value chains. The most progressive legislative duty (the French Duty of Vigilance, which requires French-incorporated entities to identify and prevent adverse human rights and environmental impacts resulting from their own activities, from activities of companies they control, and from activities of their subcontractors) has already generated litigation as mentioned above.
The UK has introduced similar due diligence requirements in the recently adopted Environment Act 2021 in relation to forest-risk commodities (see News Analysis: New Environment Act demands more diligence in supply chains). The EU has proposed extensive due diligence obligations in its draft Corporate Sustainability Due Diligence Directive published in February 2022 (see: LNB News 23/02/2022 68). Once in force, ‘mandatory human rights and environmental due diligence (MHREDD)’ will oblige companies to gain more information and transparency over the impacts of their activities across their value chains. With knowledge and transparency, the risk of getting things wrong and being held to account for such failures increases. In England, these developments are further enhanced by the increasing willingness of courts to disregard separate legal personality of subsidiaries and hold their UK-based parent companies accountable for environmental harms caused abroad. Vis-a-vis banks and financial institutions, the current anti-money-laundering regulations could carry a significant biodiversity liability risk, if they are seen facilitating transactions linked to illegal biodiversity-harmful activities abroad. Regulatory requirements seem to follow the trajectory already adopted in the development of climate-risk related disclosures including through the work of the Taskforce on Climate-related Financial Disclosures. In March 2022, the ‘Taskforce on Nature-related Financial Disclosures (TNFD)’ published the beta version of its proposed framework for disclosure of nature-related financial information (see: LNB News 16/03/2022 50). This was followed by the publication of the first drafts of what promises to be a standardised approach to sustainability-related disclosure frameworks by ‘International Sustainability Standard Board (ISSB)’, established by the IFRS at COP26 (see: LNB News 31/03/2022 122).
Finally, technology is also advancing. Remote sensing and data-driven supply chain management have proven to be powerful tools in gaining transparency and raising the standards of care for corporate actors.
What should businesses be doing to mitigate risk in this area?
Businesses should first gain an understanding of the emerging legal, regulatory and technological trends mentioned above. Once this understanding is in place, it is important to prepare for the upcoming legislative changes in the jurisdictions where their headquarters and operations are based, or those of their significant value chain partners. Such preparation, as mentioned in the Biodiversity liability and value chain risk report, could include mapping of biodiversity liability risk across value chains, scenario analysis and audit of value chain contracts for oversight, control and compliance mechanisms. This will help prepare a company to implement mandatory human rights and environmental due diligence as these requirements come into force and report on nature-related financial risks in line with new standards.
This article was first published by Lexis®PSL on 5 April 2022.