"Climate Litigation Unleashed: The Global Impact of Lawsuits Reshaping Environmental Policies"
Governments, fossil fuel companies, and airlines find themselves increasingly entangled in the web of climate lawsuits, a legal battleground that is transforming the course of climate change action. Isabella Kaminski delves into the profound impact of these legal actions, dissecting how they contribute to the fight against climate change.
The origins of this legal phenomenon can be traced back to 2015 when the Dutch government faced a groundbreaking lawsuit from the environmental advocacy non-profit Urgenda, accusing the state of insufficient efforts to protect its citizens from the impacts of climate change. Urgenda's victory in successive Dutch legal tiers marked the inception of a global surge in climate litigation. With over 2,500 lawsuits documented worldwide, according to databases managed by Columbia University's Sabin Center for Climate Change Law, the momentum shows no signs of waning.
These lawsuits cover diverse terrain, from challenging inadequate state carbon reduction targets to holding corporations accountable for inaction and misinformation, and seeking compensation for climate-related damages. Whether victorious or defeated, these legal battles are reshaping the public narrative on climate change and prompting tangible shifts in government and corporate policies.
A report by the Sabin Center and UN Environment Programme underscores the global influence of this litigation wave, setting precedents for climate action on an international scale. The Intergovernmental Panel on Climate Change (IPCC) recognized litigation as a pivotal force shaping climate policy in 2022. According to Joana Setzer, an assistant professorial research fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science (LSE), climate litigation has evolved into a formidable global movement, demonstrating its positive impact and autonomy in shaping environmental agendas worldwide.
"Legal Landscapes: The Climate-Positive Impact of Global Lawsuits"
In a sweeping examination of 549 lawsuits outside the US where courts have rendered decisions, the London School of Economics' latest annual report reveals that 55% of these cases globally have had a climate-positive ruling. While detailed analysis of case outcomes within the US remains sparse, the findings underscore a significant global trend where climate-positive rulings often favor the claimant against corporations or public authorities.
These influential lawsuits have not only reshaped legal landscapes but have also sparked tangible changes in public policy. A standout example is the Urgenda case in the Netherlands, where the country's highest court mandated a 25% reduction in greenhouse gas emissions by the end of 2020 compared to 1990 levels, establishing it as the nation's fair share to combat climate change. This landmark ruling prompted the Netherlands to elevate its climate action ambitions, incorporating "Urgenda" measures into its national budget for 2022.
Australia, too, witnessed a policy shift as bushfire survivors successfully argued that New South Wales' environmental watchdog had a duty to release a climate plan. This resulted in the agency's draft of its first climate plan, demonstrating the tangible impact of legal action on governmental bodies.
Several lawsuits have acted as roadblocks to polluting projects, with a Queensland court recommending the rejection of Waratah Coal's massive coal mine plans in north-east Australia due to "unacceptable climate change impacts." Environmental authorization for the project, led by billionaire Clive Palmer, was subsequently denied.
Beyond immediate policy changes, litigation has proven effective in safeguarding a country's climate policy from political fluctuations. In the Netherlands, for instance, where a far-right victory in the general election raised concerns about potential policy dilution, the Urgenda decision set a minimum threshold for government achievement, offering resilience against the ebb and flow of electoral cycles. As Sarah Mead, co-director of Urgenda's Climate Litigation Network, notes, judges play a pivotal role in independently assessing the risks created by governments or corporations, detached from the uncertainties of electoral cycles. This underscores the enduring impact of climate litigation in shaping policies that transcend political whims.
"Beyond Borders: The Expansive Impact of Climate Litigation"
The ripple effect of climate litigation extends far beyond courtroom victories, influencing institutions and sparking movements that transcend national boundaries. According to Sarah Mead, litigation has the power to compel other institutions to address the climate crisis, as seen in South Korea where a constitutional climate lawsuit awaits resolution. In response, the Human Rights Commission has boldly condemned the national target to cut greenhouse gas emissions, citing a violation of the rights of future generations.
Legal victories, even when specific to a region, can catalyze broader change. In the United States, a recent ruling saw 16 young people successfully argue that Montana had violated their constitutional right to a "clean and healthful environment" by promoting fossil fuel use. While not setting a direct legal precedent elsewhere, it fuels a growing movement to embed green provisions into state constitutions, clarifying government duties and providing a stronger legal foundation for climate action challenges.
The Dutch case against the government served as a beacon for similar lawsuits worldwide, inspiring legal actions in Germany, Belgium, Nepal, and Colombia. However, the path of climate litigation is not always paved with victories. Notable setbacks, such as ClientEarth's unsuccessful attempt to sue Shell's board over climate risk management, highlight the financial and reputational risks faced by campaigners. The outcomes of some cases can also set unhelpful legal precedents.
Enforcement emerges as a significant challenge in the aftermath of legal victories. In the UK and Ireland, campaigners return to court due to perceived inadequacies in implementing judgments challenging government climate policies. Colombia's Supreme Court ruling in 2018, mandating the protection of its Amazon region from deforestation, garnered applause, yet serious deforestation persisted until a change in government in 2022. These instances underscore the complexities and ongoing struggles associated with enforcing legal decisions in various jurisdictions, shedding light on the multifaceted landscape of climate litigation's influence.
"Lawsuits as Narratives: Shaping the Climate Action Discourse"
The impact of climate litigation goes beyond court victories, as even unsuccessful cases shape narratives around climate action, influencing decision-makers to reconsider their approaches, according to the LSE report. An illustration of this is the case of teenager Anjali Sharma in Australia, whose unsuccessful attempt to establish the legal duty of care for young people from climate change prompted Senator David Pocock to introduce a bill requiring governments to consider the well-being of present and future children in decisions contributing to climate change.
Climate litigation not only raises awareness about the climate crisis but also energizes civil society. A YouGov poll revealed strong public support for a lawsuit by six young Portuguese individuals against 32 governments heard at the European Court of Human Rights in late 2023. In Ireland, the Irish Climate Case, which gathered over 12,000 signatures before winning at the Supreme Court in 2020, mobilized climate activists and legitimized their demands.
Joana Setzer, an expert in climate litigation, sees it as a "powerful storytelling tool" that communicates the climate crisis and its underlying causes more effectively than science alone. Successful litigation against governments has paved the way for lawsuits against corporations, exemplified by Dutch NGO Milieudefensie's case against Shell. In 2021, the court ruled that Shell must reduce CO2 emissions by 45% compared to 2019 levels, prompting a shift in Dutch media coverage and increasing awareness of corporations' crucial role in addressing climate change.
The landmark Shell case has inspired similar lawsuits, including one against Italian oil major Eni. Beyond the fossil fuel industry, an Indonesian island threatened by rising sea levels has initiated legal action against Swiss cement producer Holcim, highlighting the expanding reach and impact of climate litigation as a potent force in reshaping the discourse on climate action.
"Legal Leverage: Unraveling the Impact of Climate Litigation on Corporations"
Among the most impactful endeavors in the realm of climate litigation are claims against greenwashing, proving effective in compelling tangible changes. Arla Foods, a European dairy company, faced a marketing ban in Sweden earlier this year for using the phrase "net zero climate footprint," deemed misleading by a court. Austrian Airlines, similarly, was mandated to publicly admit misleading the public with CO2-neutral flight advertisements.
Beyond holding polluters accountable, climate litigation aims to catalyze broader shifts in corporate behavior, and evidence suggests this objective is gaining traction. Milieudefensie, following its successful case against Shell, issued threats of legal action against 29 multinational corporations unless they published ambitious climate plans. One targeted company, Dutch retailer Ahold Delhaize, subsequently increased its corporate target to cut CO2 emissions, particularly aiming for a 45% reduction in emissions from the supply chain of its supermarket brand Albert Heijn by 2030, compared to 2018 levels.
While Ahold Delhaize insists that its heightened ambition was unrelated to Milieudefensie's campaign, the ongoing pressure from climate litigation organizations continues to influence corporate strategies. Milieudefensie, for instance, has identified five financial institutions as potential litigation targets, indicating a sustained effort to push for accountability.
Ingrid Gubbay, European head of human rights and environmental law at law firm Hausfeld, notes that litigation has significantly driven corporate climate risk management in recent years, impacting both the private sector and policymakers. A study by the London School of Economics found that litigation poses a real cost risk to fossil fuel firms, leading to a decrease in their share prices. The stock market's response was notably pronounced after cases against carbon majors, with a significant reduction in relative value following case filings and unfavorable judgments, underscoring the tangible economic repercussions of climate litigation on these industries.
"Climate Litigation: Shaping the Financial Landscape"
Despite the absence of published research on the long-term impacts of climate litigation on corporate value, the financial and reputational costs associated with even modest share price drops are increasingly significant for investors, banks, and companies. Notably, the ongoing Dutch litigation against Shell did not prevent the company from dropping a 2021 target to gradually reduce oil production for the rest of the decade. However, Joana Setzer emphasizes that the financial and reputational repercussions make climate litigation a noteworthy concern for financial institutions.
Financial institutions are beginning to acknowledge climate litigation as a substantial risk that demands anticipation and addressing. Frank Elderson, a member of the European Central Bank's executive board, emphasized its growing significance at a recent conference. This recognition is leading to concrete actions, such as French bank BNP Paribas announcing in May that it would cease funding new gas projects following a lawsuit against the bank for financing fossil fuels—the first climate-related lawsuit against a commercial bank, which remains ongoing.
In Europe, climate litigation has played a role in propelling the development of new corporate sustainability laws. Lawyers anticipate it will become a recurring theme in annual reporting as companies worldwide face stricter disclosure rules. The impact is evident in BP's climate-related financial disclosures report, which acknowledges that legal proceedings could reduce its financial liquidity and credit ratings.
Even insurance companies are feeling the effects, as demonstrated by the lawsuit filed by Hawaii-based fossil fuel firm Aloha Petroleum against its insurer for refusing to cover climate lawsuits. This case represents a growing trend in legal challenges related to insurance coverage.
While climate litigation is contributing to increased corporate transparency and sustainability efforts, there are concerns about potential legal backlash that could impede climate action. In the US, antitrust lawsuits targeting companies collaborating on climate change initiatives raise fears of penalizing early movers and hindering further progress—a tension point within the industry's net-zero alliance. The evolving legal landscape around climate action underscores the multifaceted and dynamic role that litigation plays in shaping the financial future of corporations.
"Litigation Landscape: Climate Action as a Legal Battleground"
In several countries, vulnerable workers and communities are challenging climate change action that they argue disproportionately harms them, seeking a just transition that addresses social and environmental impacts. The Mexican Center for Environmental Law is suing the Mexican government, asserting that its energy sector program for 2022-36 lacks consideration for overall well-being, reduction of negative impacts, and the guarantee of human rights.
Compensation claims by companies against government climate policies are escalating through dispute settlement systems embedded within investment treaties. For instance, following the Queensland Land Court's recommendation on the Waratah coal mine, entrepreneur Clive Palmer initiated legal action against the Australian government under a free trade agreement with Singapore. Palmer's Singapore-based company, Zeph Investments, owner of Waratah Coal, is seeking A$69 billion in compensation, alleging bias on the judge's part for being "pro-climate change, anti-coal."
Controversial dispute settlement mechanisms, as observed in such cases, have prompted calls for their termination by UN experts, citing their role in impeding progress on climate change and environmental crises while adversely impacting human rights. Joana Setzer notes that courts are becoming battlegrounds, with litigation emerging as a potent weapon for both proponents and opponents of climate action. Despite uncertainties about its longevity, litigation has, for now, outpaced the impact of many climate laws, evolving into a transnational movement with significant influence.
"In the complex legal landscape of climate action, litigation has emerged as a powerful and dynamic force, shaping corporate behavior, influencing policy decisions, and sparking a global movement for environmental accountability. From challenging greenwashing practices to holding governments and corporations accountable for their climate impact, lawsuits have become a critical tool in the pursuit of climate justice.
The impacts of climate litigation extend beyond the courtroom, affecting financial markets, corporate strategies, and public awareness. While the long-term consequences on corporate value are yet to be fully explored, even modest shifts in share prices are prompting financial institutions to view climate litigation as a significant risk that demands attention.
However, the legal battleground is not without challenges, with concerns about potential legal backlash, secretive dispute settlement systems, and the need for a just transition for vulnerable communities. As courts become arenas for climate-related conflicts, the future of climate litigation remains uncertain, but its current impact surpasses the effects of many enacted climate laws.
In this ever-evolving legal saga, litigation stands as a catalyst for change, pushing the boundaries of environmental accountability and serving as a driving force in the global push for climate action. The courtroom, it seems, has become a central arena in the fight for a sustainable and just future."