Earth Day 2022: "Invest in our planet"
The theme for this year’s Earth Day is “invest in our planet”. In a legal context, that chimes with the need for all businesses to invest time and resource in ensuring that their ESG credentials are substantive and genuine, and for law firms to invest legal skills in identifying and advancing strategic climate litigation.
Earth Day is an annual reminder to engage in sustained and sustainable initiatives to remediate the harms already done to our planet and to better protect what we have left for generations still to come. Litigation has a key part to play in that collective effort. The early signs are that, as we move through 2022 and beyond, climate litigation will play a central role in all legal practices – demanding that law firms invest time, energy, skill, and resource in our planet.
2022 so far
Notwithstanding the devastating war in Ukraine and the continued socio-economic impact of the pandemic, the first few months of 2022 have provided some promising indications that regulators, politicians, and litigators globally are stepping-up their investment in climate protective policies and litigation.
- In January 2022, the European Commission published new state aid guidelines that make climate impact a central criterion for companies operating in Europe to receive aid. The rules involve an alignment with the targets set out in the European Green Deal. Failure to comply substantively with those guidelines may well be a source of litigation going forward.
- In the same month, the UK Competition and Markets Authority (CMA) announced that they would be reviewing environmental claims made by the fashion retail sector to ensure that they comply with Consumer Protection Law. The review is part of the CMA’s stated commitment on sustainability claims made by businesses and follows the publication of the CMA’s “Green Claims Code” aimed at tackling so called “greenwashing” by businesses operating in the UK. The CMA’s investigations should increase pressure on all businesses to ensure that any green claims they make, are not misleading.
- In February 2022, Italy changed its constitution to elevate “protection of the environment for future generations” as a primary value for the country. What impact this has in terms of litigation remains to be seen, however, making environmental protection a constitutional right may well avoid the struggles to which some climate activists have been subjected, for example in the Australian Sharma action, in establishing the existence of a “duty of care” between the Government and the private citizen. It must be hoped that other Government’s follow this course of action.
- In March 2022, a coalition of 11 NGOs sued a large supermarket chain in France for violating France’s duty of law vigilance by supporting South American’s cattle industry, a major contributor to deforestation.
- In the same month, Client Earth commenced legal proceedings against the board of directors of Shell. Client Earth is a shareholder in Shell and is pursuing a derivative action pursuant to Part 11 (section 260) of the Companies Act 2006, arguing that Shell’s directors have breached their duties owed to the company by failing to properly prepare it for the transition to net zero.
2002 – a banner year for climate litigation
2022 has been described as a “banner year for climate litigation in Europe”. The analysis varies but the conclusions are similar in identifying a convergence of factors indicating that there will be a sharp upturn in climate litigation initiatives globally in the next 12 months.
Those factors include:
The undisputable urgency of the climate emergency, underscored by the report from the UN Intergovernmental Panel on Climate Change (IPCC) published earlier this month. The report makes grim reading and is replete with detailed analysis. The facts, however, speak for themselves - not least that in 2022, 3.5 billion people are highly vulnerable to climate impacts and one third of the world’s population are exposed to deadly heat stress. These effects are projected to increase by 50-75% by the end of the century.
The growing demand by low-income nations for “loss and damage” payments from rich nations for the destruction already being wreaked by the climate crisis within their own borders. This was a major theme at COP26 in Glasgow in November 2021, with a powerful group of 130 nations constituting 85% of the world’s population, demanding the creation of a ‘loss and damage facility’. The purpose of that facility would be to ensure that rich nations who have built their economies off the back of fossil fuels contribute payments to assist nations, such as Kenya and Tuvalu, which are now on the front line of the climate emergency. This redefinition of the relationship between rich and poor countries through the prism of the climate emergency has already begun to manifest itself in climate litigation, for example in the first climate class action in Australia, being pursued on behalf of Torres Straight islanders who face losing their homes, livelihoods and much of their cultural heritage.
Economic and regulatory forces favouring climate conscious policies, both at the micro (individual company) and macro level (inter-governmental agreements), such that “environmental, social and governance” (ESG) criteria, are moving from the “nice to have” to the “essentials” list with growing litigation risk for companies and states that fail to make or fail to honour climate protective commitments.
In the financial sector, litigation by investors against financial institutions that have failed to protect their investments in the context of the disruptions to be expected from climate change – and, across all companies, a closer check on “greenwashing” - are likely to constitute growing themes in climate litigation through 2022 and beyond.
We are only in April and yet there are reasons to be optimistic that predictions heralding 2022 as a “banner” year for climate litigation will be more than hyperbolic.
Earth Day is a time to reflect, consider, and re-commit to sustained investment in climate protective initiatives.