As world leaders met for the COP 27 summit this month, environmental issues have been at the top of the news agenda. Law firms have seized the moment to highlight their ESG (environmental, social and governance) credentials, for example by signing up to the Greener Litigation Pledge which now boasts more than 75 institutional signatories.
There is certainly much that law firms can do in the drive towards net zero; and this has been made much easier by the way that the courts have embraced technology since the pandemic. Electronic bundles have saved mountains of paper, while remote and hybrid hearings can save considerable transport emissions, especially where witnesses are based abroad. Meanwhile law firms are increasingly seeking to put their own carbon houses in order, reducing the use of paper, encouraging staff to use green transport or work remotely, using more renewable energy and putting pressure on their suppliers to do the same.
Such steps are encouraging, but their impact is limited – and law firms are capable of making a much bigger difference in the fight against climate change. How? Through litigation, of course.
Climate-related litigation has exploded in recent times. Columbia Law School in the US has identified more than 2,000 climate-related cases currently being brought globally (http://climatecasechart.com/).
Initially, ESG litigation was targeted at governments and states, which were sued over failures to take the necessary environment-related action. But then the target spread to large corporates – especially fossil fuel companies – with legal actions brought on behalf of people affected by environmental damage. A key issue here is whether powerful parent companies can be forced to take responsibility for the actions of their foreign subsidiaries. In a landmark ruling in the 2019 case of Vedanta Resources, the UK Supreme Court found that 1,826 Zambian villagers did have an arguable claim against the parent company, which could be brought in the English courts. The claim, over alleged toxic pollution from a copper mine, settled in 2021 (with no admission of liability).
Then last year, environmental campaigners won what was described as a ‘historic’ ruling against a fossil fuel giant, this time in the Dutch courts. Following an action by Friends of the Earth and others, the Courts ordered Royal Dutch Shell (as it was then called) to significantly cut its worldwide CO2 emissions in order to bring them into line with the Paris climate agreement. The ruling surprised many, and related to a special duty contained in Dutch law. Meanwhile another environmental group, ClientEarth, recently threatened to bring a claim against Shell’s board of directors over an alleged failure to prepare for net zero, in what would be the first legal action of its kind.
So where is environmental litigation now headed? The next frontier looks set to involve a marked rise in shareholder activism, which will see climate litigation move well beyond those energy companies and manufacturers that have a direct effect on the environment.
Under pressure from shareholders, public opinion and government policies, companies in many different sectors – and particularly the financial services industry – will increasingly be expected to make transparent commitments about how they will reduce environmental risk. Where their actions fail to live up to the rhetoric, litigation will be sure to follow.
November 21, 2022
Insights
