27 February 2020

Climate change litigation – what is it and what to expect?

This article was written by Daisy Mallett and Sati Nagra.

After the United States, Australia has the highest number of climate change disputes globally.  This alert explores the global and Australian litigation trends, and discusses our predictions for how these issues will evolve in Australia to produce increased litigation against companies and government, and greater challenges to Australian companies’ project approvals.

Climate change litigation - what is it?

Climate change litigation is an umbrella term encompassing disputes that relate to climate change (such as mitigation and adaptation measures), as well as litigation to catalyse legal, policy and social change on the issue of climate change.  There is a global trend of increasing litigation in this space, and that litigation is increasingly targeting corporations and governments. 

Global trends

The United States is the home of climate change litigation, with over 1000 cases having been filed – more than three quarters of the world’s cases.[1]  Historically these claims were largely initiated by non-governmental organisations (NGOs), but we are currently seeing new categories of claimants, such as activist shareholders, investors, cities and states.  Litigation is increasingly strategically deployed to influence policy outcomes and corporate behaviour, rather than simply for the purpose of obtaining damages. 

While in many cases claimants are not currently succeeding in imposing liability through these actions, the claims nevertheless increase pressure on the parties against which they are brought to take action.  Increasing success in this area is likely with advances in attribution science (i.e. as experts can increasingly assess specific influences on climate change), and as views expressed by the judiciary, regulators and administrative law decision-makers increasingly frame climate change impacts as reasonably foreseeable and therefore as a risk that companies and their directors are obliged to consider and address. 

Common types of claims and actions

The types of claims and causes of action underlying climate change litigation are diverse, including:

  • Constitutional law: these disputes rely upon constitutional obligations owed by a State to its citizens. For example, the Urgenda[2] claim was brought against the Dutch Government for a breach of its constitutional duty to protect its citizens from climate change. In a world first, recently upheld by the Supreme Court, the Dutch Government was ordered to reduce its greenhouse gas emissions by at least 25% by the end of 2020 (compared to 1990 levels).

  • Administrative law: these actions generally involve judicial or merits review of administrative decision-making by federal, state or local government, often in relation to permitting and licensing approvals granted to high-emissions projects under environmental or planning laws. For example, following a challenge by an environmental NGO in R (ClientEarth (No 3)) v Secretary of State for Environment, Food and Rural Affairs,[3] the UK Government’s Air Quality Plan 2017 was declared unlawful. The Administrative Court ordered the UK Government to produce a supplementary plan to reduce nitrogen dioxide concentrations across the country.

  • Private law: these disputes include causes of action such as negligence, nuisance, trespass, public trust and unjust enrichment. For example, in the US case of Rhode Island v Chevron Corp,[4] the State of Rhode Island sued 21 fossil fuel companies for sustained and future climate change harm, on grounds including negligence, public nuisance, and trespass.  Rhode Island alleged that the fossil fuel companies’ promotion and marketing of fossil fuel products, alongside alleged concealment of known hazards and alleged ‘anti-science campaigns’, resulted in harm to the State.  

  • Fraud and consumer protection: these disputes typically involve fraud and misrepresentation claims against companies for ‘green’ advertising, or a failure to warn of the risks associated with the use of their products. For example, in Germany, a class action was brought against Volkwagen by the Federation of German Consumer Organisations on behalf of car owners seeking redress over emissions test cheating.[5] Similar cases are being run in other jurisdictions, including Australia.  

  • Human rights law: these claims rely upon domestic or international human rights law instruments and typically connect the impacts of climate change with the violation of human rights’ protections. For example, the Philippine Commission on Human Rights recently held that the world’s largest fossil fuel companies could be held liable for violating the human rights of its citizens due to their contributions to climate change.

 Australian trends

Australia is the second most active jurisdiction for climate change litigation after the United States, with almost 200 cases having been filed.[6]  To date, Australian climate change related litigation has largely focused on administrative law challenges to approvals for high-emissions projects and adaptation measures – including litigation concerning property impacted by sea level rise.  Currently, there is an increasing shift towards litigation that aims to hold corporations directly accountable for the climate change impact of their activities, and that targets government on the suitability of policy positions around current and future greenhouse gas emissions.

Recent Australian cases

Recent Australian cases are indicative of the trends outlined above. Examples include:

  • Gloucester Resources Limited v Minister for Planning:[7] the NSW Land and Environment Court denied approval for a new open-cut coal mine in NSW, citing that the mine was contrary to the public interest, the principles of ecologically sustainable development, and in an Australian first – also acknowledged Australia’s obligations under the Paris Agreement.

  • McVeigh v Retail Employee Superannuation Pty Ltd:[8] a member of an industry superannuation fund is suing for alleged breach by the superannuation fund of its trustee duties to appropriately identify, assess and disclose the climate change risks to its investments.

  • Friends of the Earth Australia v ANZ:[9] Australian bushfire victims and Friends of the Earth Australia filed a complaint against ANZ under the OECD Guidelines for Multinational Enterprises in January 2020. The complaint centres upon ANZ’s alleged failure to be fully transparent about its indirect emissions resulting from its business lending and failing to conduct adequate climate risk assessments in its operations.

What’s on the horizon for Australia?

Australian climate change litigation is likely to increase in volume, and is likely to more frequently target corporations and government.

Leading Australian legal figures have forecast an escalation in domestic climate change litigation and highlighted duties of Australian company directors to consider climate change risks. Former Chief Justice of the High Court Robert French recently commented that “the zeitgeist is changing in Australia…we are in the realm of a frightening new bushfire paradigm”, predicting an increase in landmark legal cases.[10]  Fellow former judge of the High Court of Australia Kenneth Hayne also recently remarked that “directors have a duty to respond to climate‑related risks and that the continuing work of Taskforce on Climate-related Financial Disclosures shows directors what they should do”.[11] In addition, Noel Hutley SC and Sebastian Hartford Davis have published influential legal opinions concluding that Australian law requires company directors to consider, disclose and respond to the foreseeable risks of climate change. Adding to these influential voices are the positions of regulators such as ASIC and APRA which are increasingly aligned in their guidance on the financial and economic significance of climate change risk.   

With public pressure to mitigate climate change having heightened following a destructive bushfire season, we expect to see more claims being initiated by activist shareholders and better resourced NGOs, as well as increasing pressure on Australian Government to pass legislation committing to action on climate change. 

 


[1]     As recorded by the LSE Grantham Research Institute and Columbia University Sabin Center for Climate Change. 

[2]     State of the Netherlands (Ministry of Economic Affairs and Climate Policy) v Stichting Urgenda (Supreme Court of the Netherlands, No. 19/00135, 20 December 2019).

[3]     R(ClientEarth (No 3)) v (1) Secretary of State for Environment, Food And Rural Affairs (2) The Secretary of State for Transport and (3) Welsh Ministers [2018] EWHC 315 (Admin) (England and Wales).

[4]     State of Rhode Island v Shell Oil Prods. Co., et al (US 1st Cir. No. 19-1818).

[5]     See http://www.musterfeststellungsklagen.de/vw.

[6]     As recorded by the University of Melbourne Centre for Resources, Energy and Environmental Law.

[7]     Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7.

[8]     McVeigh v Retail Employees Superannuation Pty Ltd [2019] FCA 14.

[9]     Friends of the Earth Australia v Australian and New Zealand Banking Group Limited (Complaint to the Australian National Contact Point, lodged 30 Jan 2020)

[10]    See https://www.afr.com/politics/federal/judge-warns-of-tide-of-climate-cases-20200204-p53xlt

[11]    See https://cpd.org.au/2019/12/full-text-of-kenneth-hayne-ac-qc-remarks-to-cpd-climate-roundtable/

KWM Belt & Road Center for International Cooperation and Facilitation

In March 2019, King & Wood Mallesons (KWM) established the Belt & Road Center for International Cooperation and Facilitation (BRCICF).

Belt and Road
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