UK's courts become fertile ground for climate activists

In a feature by Irene Madongo for Law360, Hausfeld Partner Simon Bishop and others share their views about the shift towards bringing more climate change litigation in the UK. This follows a decisive judgment handed down last May which upended the UK government's strategy to cut greenhouse gas emissions, arguing that it would not reach its intended targets and was unlawfully adopted under British law.

The decision in Friends of the Earth and others v. Secretary of State for Energy Security and Net-Zero, filed by activists Friends of the Earth, ClientEarth and The Good Law Project, struck down the government’s climate change plan and shifts Britain’s litigation scene.

Charities, NGOs and not-for-profits working together make for a powerful combination. We list Simon’s answers in full below.

Are we expecting boom in Corporation Litigation?

“There will be an increase in climate change litigation in the U.K., but it is likely to be gradual. There was an explosion of expectation when climate related issues surfaced in a litigation context in Britain, but this has tempered in more recent months – which is typical for new legal phenomena where a new trend quickly draws attention, only to then reduce as client needs and the inherent complexities become clearer. However, I do think that whilst expectation in relation to climate disputes has, in recent years divided opinion and shown itself to be volatile, actual litigation will likely rise in a steady fashion over the coming years as issues connected to climate change impact all aspects of the economy, the political landscape, and our everyday lives.

“Disputes connected to climate change arise in a number of different legal disciplines. For example, there are public law cases involving parties challenging governments and state entities on issues ranging from commitments to net zero, to the consideration of scope 3 emissions in planning decision. These will likely increase towards 2030, which is key milestone for the UK Government in terms of reducing emissions and achieving net zero. I expect it to become more apparent, as we approach that milestone, that the measures put in place by the UK Government are not fit for the purposes of meeting its net zero commitments, and this will give claimants, including strategic litigants and those directly affected by Government failures, further grounds to sue on.

Litigation is also emerging through private and commercial legal mechanisms, including disputes between commercial operators and against companies, where stakeholders have suffered financial or other detriment.  There appears to be a degree of latency in relation to litigation under this umbrella; in many instances we are aware of misconduct in the form of misstatements and so-called “greenwashing” in e.g. the financial services and capital markets sectors but, absent a few specific examples in other jurisdictions, we have yet to see litigation in which financial recoveries are sought as a result of misconduct of this sort.  I expect this type of claim to increase very significantly in the short-to-medium term, as losses relating to this conduct begin to crystalise.

“Activist shareholders who seek to use litigation strategically to advance a climate-change agenda have and continue to use private law mechanisms, despite the challenges that are sometimes faced, and I expect that to continue. Such litigation is often characterised negatively by certain sectors of the legal and political community; I would tend to disagree with such a characterisation: in my view, in all the climate cases of this sort that we’ve seen in the U.K. and beyond, the claims have been properly brought and the organisations have been properly advised.  Ultimately, if a case isn't legally successful, it doesn't mean that it should not have been brought, nor that it has not highlighted the very serious problems surrounding climate change, and the outer boundaries of how the law can react to this crisis.”

Why hasn’t there been litigation so far despite there being the evidence of greenwashing in some instances?

“The primary powers available to the relevant Courts are to order financial remedies, and in many instances, the financial loss that has or will in the future be suffered as a result of greenwashing has yet to crystallise.  It is not uncommon for there to be a lag between the event of misconduct and any litigation arising out of it and, in relation to greenwashing, particularly in financial services and capital markets, it is likely that the misconduct has occurred (indeed the FCA, PRA, CMA, and ASA have all concluded that greenwashing is occurring), but that we are currently in that lag period.  We expect injured parties to seek legal redress as soon as the loss begins to be felt.”

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