Biodiversity liability and value chain risk report
On 30 June 2022 the LSE’s Grantham Research Institute on Climate Change and the Environment and The Centre for Climate Change and Economics and Policy published their latest annual report analysing global trends in climate litigation: “Global Trends in Climate Change Litigation: 2022” (the Report).
Climate change litigation is growing in importance and scope. Climate change-related cases have more than doubled worldwide since 2015. As the Report records, roughly 800 such cases were filed in the 28 years between 1986 and 2014 but over 1,200 cases have been filed in the subsequent 8 years to mid-2022, of which roughly 300 were filed in the last one and a half years.
This rise reflects both the growing urgency with which wider society views the issues posed by climate change and a changing legal environment. Both have enabled litigation to become an instrument of pressure on governments, corporations and other actors to walk their talk on climate change.
The Report covers the 12 months between May 2021 and May 2022, while placing the developments over this period within the context of the past half century. The 12-month period saw an overall increase of 161 new cases of climate change litigation. 39 of these new cases were filed before courts in the United States and the remaining 122 cases were filed before the courts of 43 other countries and 15 international or regional courts. Climate litigation has therefore become a reality in 4 new countries and 2 new international and regional courts in the last year alone.
Perhaps the most significant trend recognised by the Report is the growth of litigation in the Global South. This year’s snapshot identified 47 climate cases in Latin America and the Caribbean, 28 in the Asia Pacific region, and 13 cases in Africa. These 88 cases are a substantial increase from the 58 identified last year, demonstrating that cases continue to be filed at a steady rate and that data collection methods are improving.
Climate change cases are mostly brought by NGOs, interested individuals, companies and trade associations against two broadly defined categories of defendant: governments (the most frequent) and corporations. The approach of claimants in each case comes, in part, down to their respective litigation strategies:
National governments remain the most frequent target of climate change litigation, with subnational governments beginning to be caught in the crosshairs. For instance, in Germany, 13 complaints were filed against federal states over the past year for their failure to introduce sufficiently ambitious emissions reduction legislation.
Climate cases brought against corporate entities have become more diverse. Historically, there has been a focus on the so-called ‘Carbon Majors’, with these cases brought primarily in the US. However, a growing number of cases have been brought against the Carbon Majors outside of the US (13 in recent years against EU-domiciled entities) and against a more diverse range of corporate actors.
In 2021, out of 38 cases filed against corporations, 22 were against defendants outside the fossil fuel sector, including companies involved in food and agriculture, transport, plastics, and finance. An underlying trend identified by the Report is the link between the public debate on individuals’ consumer habits and the contribution that companies make via new products, advertising, and corporate climate action. As such, litigants are increasingly likely to target high-emitting industries that have so far avoided public scrutiny, such as in textiles, shipping, and aviation.
Following the landmark UN Human Rights Council resolution recognising the right to a healthy environment passed on 8 October 2021, climate change actions against corporates have accompanied a growing recognition of human rights responsibilities. Analysis of corporate human rights abuses and climate impacts is now a matter for corporate due diligence, with the latter now known as ‘climate due diligence’, consisting of a consolidated standard of conduct and business processes. The Report identifies the Proposal for a Directive on Corporate Sustainability Due Diligence, issued by the European Commission in February 2022, as an example of what climate-related standards of care could look like.
In May 2021 a Dutch court in Milieudefensie v Royal Dutch Shell found that Shell has a corporate duty of care towards inhabitants of the Netherlands and due diligence obligations under Dutch tort law and required it to reduce CO2 emissions from its global operations by at least 45% by 2030, compared to 2019, and to use its best endeavours to reduce its customers’ emissions by the same percentage. The judgment was grounded in duties enshrined in EU and international law to uphold human rights.
A crucial aspect of the diversification of climate cases against corporate actors is the emergence of lawsuits based on shareholders’ rights or directors’ duties. The Report predicts that these cases will develop significantly in coming years. A recent example that confirms this trend, and perhaps the first ever case seeking to hold directors personally liable for a company’s net zero failures, is ClientEarth v Board of Directors of Shell. In March 2022, ClientEarth, in its capacity as shareholder, sent a pre-action letter to Shell’s 13 executive and non-executive directors. ClientEarth argues that the Board’s failure to adopt and implement a climate strategy that truly aligns with the Paris Agreement is a breach of director’s duties under the UK Companies Act. Allegedly, Shell’s Board failed to act in a way that promotes the company’s success and in exercising reasonable care, skill and diligence. Currently, ClientEarth is awaiting the Board’s response before formally filing the claim in the High Court of England and Wales.
Undoubtedly, this case will set an important precedent for derivative actions against a company’s board for failing to properly divert efforts towards achieving net zero. Additionally, directors may need to consider a broader application of their duties in light of climate-based requirements.
Litigation against climate-related greenwashing seeks to hold companies liable for climate misinformation. Broadly speaking, these cases challenge misleading communications under three categories:
The case of Australasian Centre for Corporate Responsibility v Santos illustrates the first and second categories above. In August 2021, the Australasian Centre for Corporate Responsibility (ACCR), a shareholder advocacy NGO, brought a claim against the Australian oil and gas company Santos over claims that it provides “clean energy” natural gas and its plans for reaching net zero by 2040. ACCR argues that Santos’s plan is not credible due to its intentions to expand natural gas operations accompanied by undisclosed assumptions on the effectiveness of carbon capture efforts. Further, the provision of “clean energy” natural gas is misleading and masks the true effect of natural gas on the climate, including substantial CO2 and methane emissions during extraction and burning. This claim is subject to Australian consumer protection and company laws.
The Report observes that this form of litigation is gaining pace. Companies, especially those in the fossil fuel sector, will need to pay attention to their PR strategies and tone down over-bold climate statements.
Climate change litigation is an expanding and evolving field of law. Case numbers continue to rise, but more importantly, the range of claimants and defendants as well as the subjects of their disputes continue to diversify.
Emerging trends include litigation focused on personal responsibility, such as criminal actions against the directors of polluting entities, as well as international litigation directed at attempting to gain redress for the “loss and damage” caused by climate change.
Further trends include litigation targeted at ensuring governments and major corporate emitters comply with the legally binding targets they have set themselves for reducing greenhouse gas emissions, for instance by challenging plans that rely too heavily on unproven or even non-existent emission removal technologies. Indeed, a developing understanding of corporate and governmental greenwashing is predicted to lead to further cases challenging entities that act inconsistently with commitments and targets, or that mislead the public and interested parties about their products and actions.
As the world develops a growing understanding of devastating biodiversity loss caused and exacerbated by climate change, the nexus between the two is also recognised by the Report as a key area for future litigation. Indeed, climate litigation continues to grow in dialogue with climate science. For instance, gases like methane, also called short-lived climate pollutants, which are often more potent than carbon dioxide in terms of their short-term warming potential, will require the most drastic short-term reductions and are thus likely be the focus of the most urgent upcoming litigation. Finally, non-CO2 warming impacts of certain industries may come to be targeted under the same logic soon.
These trends will not remain in the future for long. On 21 June 2022, what may well be the first ever climate-biodiversity nexus case was reported to have been filed in Australia, invoking protections for the Great Barrier Reef available under Australian federal law. Earlier in May 2022, a new case alleging greenwashing was threatened against the airline KLM in the Netherlands, focusing on (among other things) the aviation industry’s warming impacts beyond its CO2 emissions.
For more on biodiversity liability, please see Clyde & Co’s March 2022 "Biodiversity Liability and Value Chain Risk Report".
For a more detailed analysis of the past year’s climate litigation trends, including statistical analysis and links to more detailed reports and case law, please see the Grantham Research Institute’s June 2022 "Global Trends in Climate Change Litigation: 2022 Snapshot".
 According to the Report, this is a term, along with ‘Global North’, favoured by scholars and policymakers based on economic inequalities. Crucially, ‘Global South’ is not a homogeneous group of countries.
 E.g. – Africa Climate Alliance et. al. v Minister of Mineral Resources & Energy et. al. (#CancelCoal case).
 Climate-washing, or climate-related greenwashing, is the use of unsubstantiated or misleading claims about climate or environmental credentials, or the selective disclosure of climate performance. E.g. – The first net zero emissions claims case: Australasian Centre for Corporate Responsibility v Santos.
 ‘Carbon Majors’ refers to a list of energy and cement companies identified by the Climate Accountability Institute here: https://climateaccountability.org/carbonmajors.html.
 United Nations Human Rights Council, The Human right to clean, healthy and sustainable environment, A/HRC/RES/48/13.
 European Commission, Proposal for a Directive of the European Parliament of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937, COM(2022) 71 final.
 ACF to challenge Woodside’s Scarborough gas project, Australian Conservation Foundation (22 June 2022).
 Climate group sues Dutch airline KLM over ‘greenwashing’ adverts, the Guardian (24 May 2022).