Juries have started to wonder who the real criminals are in the cutthroat arena of climate change politics, writes Professor Ceri Warnock.
Smart money is moving away from investing in climate-damaging activities and products, towards companies that offer solutions to the climate emergency. BlackRock chief executive Larry Fink points out that this transition is not attributable to environmental activism per se but to good old-fashioned capitalism: the investment risk is simply too great to do otherwise.
Investors are undoubtedly reacting to government action – many countries now have climate change policies and legislation that require emissions to be disclosed, priced or reduced – but increasingly the risk of court rulings Adverse events can play a role in investment decisions.
There are four trends in climate change litigation worth watching.
First, several successful cases have been presented around the world demanding corporate transparency from companies.
The cases have focused on greenhouse gas (GHG) “green laundering” activities through misleading advertising or failure to disclose material risks to the market. Some companies are backing away from litigation, for example the Commonwealth Bank of Australia and the Australian Retail Employees Superannuation Fund recently agreed to disclose climate change risks to investors, incorporate them into investment strategies and adopt a net zero policy. Other companies are doubling down. Exxon Mobil is currently trying to assert its First Amendment right to free speech in the Texas Supreme Court to say what it wants on climate change. But “kicking the road” will only work for so long.
Second, litigation is increasingly successful against companies for the damage they directly cause to the climate
In the landmark case Shell v Milieudefensie last year, the District Court in The Hague found that Royal Dutch Shell’s emissions-intensive activities endangered citizens, breached the duty of care under Dutch law and violated human rights obligations such as the right to life. contained in the European Convention on Human Rights.
The Court ordered Shell to reduce GHG emissions from all of its activities – that is, from its own emissions and the use of the oil it produces – by 45% by 2030 compared to 2019, and reduce them to net zero by 2050. Reductions applied to the entire Shell Group and its subsidiaries, globally. As a result, the Court noted that Shell would be required to forgo further investment in mining and/or limit its production.
The case is being appealed to higher courts, which can take years. However, the district court made the order provisionally binding, meaning Shell is bound to meet its obligations pending appeal. Shell will also be aware that the higher courts in the Netherlands have proven to be pioneers in climate law, upholding the remarkable case Urgenda v Netherlands in 2020.
A similar case against Total Oil is pending in the French courts.
In Germany, the courts ruled that there was no legal reason why RWE — a German electricity company and one of the largest transmitters in the world — could not be held liable for cross-border nuisances (i.e. that is, their actions caused damage or risk of damage to land abroad). The Court of Appeal ordered the test case Lliuya v RWE to go to trial. Mr Lliuya, a Peruvian farmer, sued, arguing that the glacial lake above his town was melting and that RWE had contributed 0.47% of global GHG emissions since the start of the industrial revolution , he should reimburse him, as well as the Peruvian authorities. proportion of flood defense costs.
Such cases are now possible due to the growing sophistication of attribution science and the willingness of courts to use research such as the “Carbon Majors” report to calculate proportionate liability. Given the international activities of the companies concerned, the effective global reach of these decisions is of particular importance.
Third (and in a slightly different category from points 1 and 2 above), juries are increasingly reluctant to find climate change protesters criminally liable for disrupting operations and damaging property. emissions-intensive companies.
Necessity defense based on the climate emergency is a trend that has been noted particularly in the UK. Some juries return “not guilty” verdicts when protesters have clearly broken the law and judges advise the jury to dismiss defenses of climate necessity as invalid at law – a phenomenon known as “jury nullification”.
Earlier this month, Christian Climate Action activists Reverend Sue Parfitt (79), Father Martin Newell (54) and former university professor Philip Kingston (85) were acquitted of hampered the rail network in London, arguing that they weren’t the real criminals here. They had climbed onto the trains and stuck to them during rush hour, causing massive disruption.
In 2021, Extinction Rebellion protesters who caused criminal damage to Shell’s London headquarters argued that their actions were necessary and proportionate in light of the climate change urgency. The jury acquitted them.
The cases are the latest in a series dating back to 2008, when British protesters were acquitted of spraying graffiti on a coal-fired power station. Juries of their peers have been reluctant to convict climate change activists, especially those taking direct action against emissions-intensive companies. In other countries, similar mitigation strategies against criminal convictions are also gaining traction (including in Australia where coal mine protesters have won clemency).
The practical result of jury nullification is that businesses targeted by protesters are less protected by criminal law. Ordinary people ask “who are the real criminals here?”. As the climate changes and social pressure increases, jury nullification will be an interesting development to watch.
Fourth, litigation forces companies to make formal and damaging admissions in court.
Seven of New Zealand’s largest issuers – Fonterra, Genesis, Dairy Holdings, Z Energy, NZ Steel, BT Mining and the NZ Refining Company – found themselves in this position after Smith vs. Fonterra. As the High Court judgment put it:
“Each admits the greenhouse gas emitting activities, or the provision of products, attributed to it… [e]ach widely agrees that climate change resulting from the global release of greenhouse gases into the atmosphere by human activities is causing further warming of the Earth’s surface and atmosphere… [a]I will accept that the IPCC reports record the current scientific consensus as to the nature, effects and mitigation requirements of global climate change.”
The case brought by Mr Smith (Ngapuhi, Ngati Kahu, and climate change spokesperson for the Iwi Presidents Forum), attempted to bring a nuisance claim against these major emitters in New Zealand. The case stumbled at the Court of Appeal stage but is progressing on appeal to the Supreme Court.
Regardless of what happens this time around, companies are making formal admissions that will be valuable when the time is right and the next wave of climate change litigation begins. While it seems inconceivable that any company could now claim ignorance, such admissions mark a clear legal line in the sand.
Companies should also be wary of taking solace in the relative conservatism of New Zealand’s justice system. This underestimates the synthetic power of legal developments, especially in areas with cross-border impact such as trade and environmental law.
For all of these reasons and more, it is clear that the litigation net is beginning to close in on emissions-intensive companies. Investors who have not yet factored climate change risk into their portfolios should take note.
Professor Ceri Warnock of the University of Otago Law School is a member of He Kaupapa Hononga: Otago Climate Change Research Network Advisory Group.