Is the climate changing litigation?

Is the climate changing litigation?

In brief:

  • The past twelve months have witnessed a new wave of climate change action
  • As well as taking to the streets, activists are also using litigation as a means of holding governments and businesses to account
  • Governments remain the primary defendants in these cases, but corporates are increasingly in the firing line

From demonstration to litigation

Over the past twelve months we have witnessed a new wave of climate change action. Efforts to hold governments and businesses to account for failing to tackle climate change are now a global phenomenon.

From the school children who were inspired by Swedish activist Greta Thunberg to organise walkouts, to the mass disruptions caused by Extinction Rebellion, cities across the world have been flooded by millions calling for change.

But it’s not just our streets that are crowded with people looking for a solution.

Court rooms are progressively becoming a key battleground in the fight against climate change, as litigation is increasingly viewed as a viable tool to influence government policy and corporate decisions.

Just last month, Exxon Mobil were taken to court by the State of New York over allegations that the company misled its shareholders and the public about the potential impact of climate change regulation on its business. New York State’s Attorney General claimed Exxon Mobil effectively “cooked its books”, presenting one set of figures externally to its investors – suggesting the company had accounted for the effects of future environmental regulations into their operations – while operating on a different set of numbers. As such, Exxon Mobil was exposed to greater risk than investors were led to believe.

The technicalities on which this legal battle is being fought, however, make this case an outlier. Operating as a securities fraud case, the legal argument does not seek to lay the blame of climate change at Exxon’s feet.

Yet this is not dampening the hopes of protestors, who insist this case is a pivotal moment in the fight against climate change. Standing outside the New York State Supreme Court as the hearing began, activists demonstrated their willingness to support innovative legal methods, as a means to holding companies accountable.

Activist-led and supported litigation is likely to be increasingly common. The media is also a powerful tool in these battles. While Exxon Mobil may actually be facing a securities fraud lawsuit, to the public they are defending themselves for causing climate change. Presenting a purely legal defence to the securities fraud allegations risks ignoring other key audiences, including politicians, regulators, investors and the public at large.

Shifting sands

According to the Grantham Research Institute on Climate Change and the Environment, as of May 2019, over 1,300 cases have been filed across 28 countries, the majority of which have been brought against governments.

As People of the State of New York v. Exxon Mobil Corp. suggests, it appears that a shift in focus is in motion, with corporates increasingly in the firing line. The US appears to be the test bed for many of these cases. As their popularity grows however, we are likely to see similar cases spring up globally.

Have we seen this before?

Many are now drawing comparisons between the rise of climate change litigation and the litigious route that ultimately led to the historic Tobacco Master Settlement Agreement in 1998. At the turn of the century, the four largest US tobacco companies were forced to restrict their product advertising, fund anti-smoking campaigns, and pay out more than $206 billion over 25 years.

As former Mississippi Attorney General Mike Moore declared towards tobacco companies in 1994 “you caused the health crisis; you pay for it”.

A similar approach is now being applied to those deemed responsible for the climate crisis. The litigation is, however, coming in different shapes and sizes. To date, this has included attempting to hold companies to account for:

  • The environmental damage caused by their business operations
  • The failure to take climate risks into consideration throughout decision-making processes, such as company investments
  • Not comprehensively disclosing climate risk to investors and shareholders

Where is this going?

While fossil fuel companies are currently the primary target for climate change litigation, this will likely next spill over into related industries, such as the pension funds that are invested in these fossil fuels. Other sectors associated with climate change – whether aviation or agriculture – may also be a target.

As the popularity of climate change litigation as a tool for holding industries to account increases, it is likely that the pool of defendants will also grow. While mass demonstrations will continue to capture the world’s attention, observers would be wise to keep an eye on the court room too.

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