Climate-related litigation is increasingly being used as a tool to hold private and public sector actors to account over their contributions to climate change. According to the Grantham Institute's 2023 Global Trends in Climate Change Litigation Policy Report (the "Report") – which was published on 29 June 2023 – around two-thirds of climate-related cases have been filed since 2015: between 1986 and 2014, approximately 800 cases were filed, but between 2015 and May 2023, approximately 1,557 cases were filed.
Although the majority of the climate-related cases identified in the Report were brought against regional and national governments, the Report identified an increase in the number of climate-related cases brought against private sector actors. Of the 190 climate-related cases identified in the Report as being filed between June 2022 and May 2023, around 46% were filed against an increasingly diverse pool of private sector actors. This reflects the growing recognition by prospective litigants of litigation as an effective means of influencing the actions private sector actors are taking to address climate change. We discuss the trends identified in the Report in this blog post.
The trends identified in the Report
The Report groups the claims filed against private sector actors between June 2022 and May 2023 into the following key categories:
- Loss and damage;
The Report notes that 'loss and damage' cases are becoming increasingly prevalent in polluter-pays cases, whereby 'carbon majors' are being sued on the basis that the greenhouse gas emissions associated with their products have contributed to climate change and linked extreme weather events, which have caused compounded losses to different communities. Thus far, around 60 of these cases have been filed against 'carbon majors', mainly by non-governmental organisations. The relief sought by claimants in these cases has differed: some have sought financial damages based on the historic responsibility of companies, whilst others have sought to align companies' activities with international standards, such as the Paris Agreement (for further information on 'loss and damage' cases, read our earlier blog post here).
However, 'loss and damage' cases have by no means exclusively focussed on 'carbon majors'. Several cases have been filed against auto-manufacturers with the aim of prohibiting the production and sale of internal combustion engine vehicles, whilst others have been filed against financial institutions in relation to their due diligence obligations.
- Investment strategies;
The Report highlights that recent cases have focussed on what constitutes a reasonable investment strategy in the context of low-carbon transition. These cases have mainly been brought by shareholders and trustees of companies.
Initially, such cases predominately focussed on the financial impacts already sustained by the company due to mismanagement and failure to disclose climate risks. Some sought redress for actual losses, whilst others sought confirmation from the company that aligning investments with environmental objectives is not a breach of fiduciary duties More recently, cases have focussed on predicting future impacts, with shareholders and trustees arguing that continued investment in fossil fuel projects will lead to long-term losses, for example.
- Climate-washing; and
"Climate-washing" litigation – which the Report defines as cases that challenge companies, and occasionally governments, over misinformation or misleading claims associated with climate change – has risen sharply in the last two years: since 2015, 81 climate-washing cases against companies have been filed across the world, 53 of which were filed in 2021 and 2022. Such a rise is attributable to the growing frustration from environmental groups with corporate claims about contributions to tackling climate change, as well as the increasing number of regulatory initiatives aimed at addressing 'greenwashing'. Such initiatives are presenting avenues for environmental groups to challenge companies' and financial institutions' claims (for further information on greenwashing cases – which is broader than climate-washing, since it related to misinformation or misleading claims associated with environmental issues – read our earlier update here).
- Combined strategies targeting the full lifecycle of high-emitting activities.
Cases also continue to be filed against new fossil fuel developments. Claimants are targeting multiple stages of the value chain of such developments, from project development to financing. The Report observes similar trends in cases addressing deforestation, whereby litigants have targeted the financing and communications of agriculture companies that are contributing to deforestation. Recent legal developments aimed at addressing deforestation may well increase avenues for prospective litigants (for more information on these developments, read our earlier update here).
These categories serve to show that litigants are becoming more innovative and sophisticated in employing climate litigation strategies. Litigants are combining requests for relief to include compensation for past and present losses, contributions to anticipated future costs, and requests for courts to order companies to align their activities with the Paris Agreement. Given the increase in both international and national legislation and regulatory activity aimed at combatting climate change, the increasing availability of litigation funding, and the altruistic motivations of many litigants, it is likely that litigants will continue to explore innovative and sophisticated climate litigation strategies (for more detail on the reasons behind the rise in climate litigation, please read our earlier blog posts in relation to the Grantham Institute's 2021 and 2022 reports here and here).
Future trends
The Report predicts increasing litigation against private sector actors focussed on the following issues in the coming years:
- The biodiversity–climate nexus;
Litigation seeking deforestation-free supply chains is likely to increase, due to a number of legislative developments requiring companies to carry out due diligence throughout their operations and value chains (see, for example, our earlier blog posts on the EU Corporate Sustainability Due Diligence Directive here and the EU Deforestation Regulation here), as well as enhanced remote sensing and financial data. The Report suggests that litigants are likely to argue that more ambitious measures are needed to restore forests and enhance their carbon absorption capacities.
- The duties of companies to protect the ocean;
The Report suggests that future cases could include questions about the duties of companies to protect the ocean from further impacts of climate change, as well as exploring the topics of ocean acidification and ocean-based carbon dioxide removal techniques.
- Extreme weather events; and
The Report notes that as extreme weather events become more frequent and severe as a result of climate change, there is likely to be a corresponding increase in the number of claims arising in the wake of such events. Although these cases may not directly focus on climate change, they may have significant influence on how the outcomes of climate-related disasters are understood.
- Short-lived climate pollutants.
The Report suggests that litigation could be brought against companies involved in the trade of products that emit short-lived climate pollutants, such as black carbon soot and tropospheric ozone. Such cases could be based on existing tort (e.g. nuisance) or human rights laws, regulations related to pollution and environmental protection, and/or environmental legislation that seeks to hold polluters accountable for the damage caused to the climate.
However, the risk of facing climate-related litigation is by no means limited to these issues, and so all private sector actors need to be aware of the heightened litigation risk illustrated by the Report.
Originally published 06 July 2023.
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