Businesses may encounter litigation if they breach the environmental regulations. In some places, governments and businesses may also face a lawsuit if they do not act for climate change.
The UN Environment Programme estimated that 884 climate change cases had been brought in 24 countries in 2017. In 2020, the number was almost double to at least 1,550 cases filed in 38 countries. The countries encountering the climate change lawsuits are not what we assumed to be in developing countries, including Australia (97), followed by the United Kingdom and the European Union (58 and 55 respectively). Though no court has decreed a defendant to compensate losses for climate harms, the parties sued for the environmental outcomes of missing to accommodate their facilities or operations may be at risk of significant liability. The number of events is on the increase. The key trends are: (1) climate rights; (2) domestic enforcement; (3) keeping fossil fuels in the ground; (4) corporate liability and responsibility; (5) failure to adapt and the impacts of adaptation; and/or (6) climate disclosures and greenwashing.
Several examples are extracted from the reports below to reveal the potential liabilities:
- “The U.S. utility Pacific Gas & Electric, discussed below in Section 2.B.6, provides a stark example: In 2019, facing billions of dollars in liability for its role in causing wildfires, the company filed for bankruptcy. Those claims were ultimately resolved by settlements valued in excess of $25 billion.”
- “In May 2019, a group of eight Torres Strait Islanders submitted a petition against the Australian government to the United Nations Human Rights Committee, alleging that Australia is violating their human rights under the International Covenant on Civil and Political Rights (ICCPR) by failing to establish sufficient greenhouse gas mitigation targets and plans, and by failing to fund adequate coastal defense and resilience measures on the islands, which are at risk of inundation due to sea level rise. “
- “In Gloucester Resources Limited v. Minister for Planning, a company brought an action against the planning minister in New South Wales to appeal the denial of the company’s application to construct an open-cut coal mine. The Department of Planning had denied the application in light of, among other reasons, the indirect greenhouse gas emissions of the mine, and the fact that under Section 4.15(1) of the Environmental Planning and Assessment Act the government was required to consider the public interest as part of its review of a development application. The court upheld the department’s decision, concluding that because “the negative impacts of the Project, including [among others] climate change impacts, outweigh the economic and other public benefits of the Project,” the project was contrary to the public interest.”
- “In Harris County v. Arkema, Inc., a local government in Texas sued a chemical manufacturer after flooding caused its facility to lose power and become unable to properly refrigerate certain chemicals stored at the facility that, in turn, led to an explosion, fires, and a massive release of toxic emissions. The county alleged that portions of the facility were built in a documented floodplain and asked for a court order directing the defendant to hire an independent disaster preparedness auditor and to comply with the auditors’ recommendations.”
- “In Lynn v. Peabody Energy Corporation, a class of participants in Peabody Energy Corporation’s employee stock option plans brought a lawsuit alleging that the plan administrator violated its duty of prudence by continuing to invest in the company’s stock well after public information made it clear that doing so was unreasonable.112 The court dismissed the case, finding that plaintiffs failed to meet the high burden of describing an alternative investment that “a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” “
While the courts have to progress in the new litigation cases, litigation cases demonstrate companies’ Science-Based Targets initiative and science of climate attribution, creating a climate-secure world that goes hand-in-hand with successful business operations. What you need for support is reviewing your current ESG or sustainability reports, advising where and how SBTs fit, and developing roadmaps to identify SBTs and monitor progress. Consider setting goals, planning, and communication. From pursuing sustainability, we all look to boost profitability, improve investor confidence, drive innovation, reduce regulatory uncertainty, and strengthen brand reputation.
By: ANewR Consulting Limited, a digital environmental consultant headquartered in Hong Kong since 2008. Our expertise has grown into the context of air and water qualities, noise, green building, waste management, and remediation. With extensive know-how in environmental planning and assessment, feasibility study and policy review, ecological design, monitoring, and audit (EM&A), ANewR has matured to be a leading management consultancy. Standing in the digital transformation reign, ANewR has participated in various environmental digital projects – interactive 3D visualisation, immersive automation virtual environment, Virtual reality, automation system, and monitoring platforms.
(Website: https://anewr.com, LinkedIn: ANewR Consulting Group, Twitter: ANewR – Everyday Newer, YouTube: https://www.youtube.com/channel/UCnpvmxnR9hbNxytSfBdfV8Q/videos)