
Climate Change Litigation
The UN reported that Australia is the world’s most prolific country per capita for climate change litigation.
Since 2015, the number of global climate change-related cases has more than doubled, with more than 1,000 new cases presented in the past six years.
While the outcomes of these cases have been variable, each decision has contributed to shaping an evolving legal framework for addressing climate change issues. These developments are driven by the growing recognition that climate change poses an urgent risk to humanity, prompting a wave of climate change litigation globally, and in some cases, by youths.
In the Law:
Climate change litigation is broad and may not be primarily focused on climate change directly, but indirectly linked due to the interconnectedness of climate change issues across various legal domains. These legal proceedings are being pursued through several legal areas such as administrative law, tort law, consumer protection (particularly in relation to climate risk disclosures), and human rights.
A number of active cases involve the judicial review of administrative decision-making, particularly those where the decision-maker neglected to consider the implications of climate change adequately. These legal disputes concerning administrative law are often referred to as the ‘first wave’ of climate litigation and occupy a prominent position within the Australian climate change litigation landscape.
Academics have also provided various descriptions of subsequent waves of climate litigation. The industry has seen private litigation against corporates, legal proceedings based on human rights, and efforts to create or enforce obligations pertaining to climate change
In the Company Boardroom:
Climate change lawsuits are using a wider range of legal claims to establish liability. These claims not only encompass conventional claims concerning ESG disclosure obligations and directors’ duties but also novel claims addressing duty of care.
This means that companies may encounter increased public or governmental scrutiny of new initiatives and/or projects.
In the Investment Houses:
Alongside climate activists, it is anticipated that shareholders concerned with the financial impacts of climate change could also intensify legal action. As a subset of disclosure risk, claims may be leveled against financial advisors or asset managers alleged to be failing to consider or disclose climate change business risks.
This can be seen in a case against superannuation fund, REST. It was argued that REST, among other allegations, had failed to exercise its powers in the best interests of its beneficiaries by not providing adequate disclosure about the risk of climate change for its investments. Legal proceedings were settled shortly before trial, with the AU$57b superfund agreeing to make more detailed disclosures regarding climate change risks and align its portfolio to net zero by 2050.
Our View:
Climate change litigation is becoming more common as our climate crisis worsens and the gap grows between needed action and what governments and companies are actually delivering. We have seen how vocal the younger generations are and predict this will lead to more public and costly litigation events. This is now a very real threat to companies not pulling their weight.
Companies must be deliberate in their approach to understanding and mitigating climate risk. The disclosure of their approaches should also follow suit. Today we see the prevalence of climate change litigation; perhaps tomorrow, we will see cases of species-based litigation, psychosomatic litigation, or cost-of-living litigation… The pressure rises for companies and investment houses to understand their impact.
For additional information on this important topic or ESG assistance, contact us today at info@anabranchesg.com.au