Climate Change Litigation and international litigation trends

Articles Written by Samantha Daly (Partner), Robert Johnston (Partner), Lara Douvartzidis (Associate)

There has been a substantial uptick in novel climate change litigation in Australia, particularly in the Federal Court of Australia and the Land and Environment Court of NSW. Historically, litigation was brought in Australia by public interest groups seeking to better protect the environment from the impacts of climate change by relying on existing environmental, planning and biodiversity legislation. In more recent times, courts have grappled with major challenges in the approval process to major fossil fuel projects, particularly where a public interest group represented by a specialised climate change law firms intervene in this process for the purpose of compelling the court to consider what is in the ‘public interest’ (as it relates to project approvals). The term ‘public interest’ has been broadly interpreted to uphold elements of ecological sustainable development, including the precautionary principle and intergenerational equity. In recent times, it has been utilised in strategic litigation to read in human rights norms and leverage existing environmental and planning law considerations in order to achieve a positive finding in favour of greater protections and mechanisms to facilitate mitigation and adaptation to climate change.

Climate change related litigation in Australia

A watershed moment in climate change law occurred in 2019 when Chief Judge Preston of the Land and Environment Court of NSW, in performing the role of the consent authority of a development application for a proposed open-cut coal mine, found that the greenhouse gas emissions of the development and the associated impacts on climate change was a ground for refusal of the application: Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 (Rocky Hill). This decision marked a decisive shift in climate change litigation in Australia, with greater weight being applied by consent authorities to considerations of greenhouse gas emissions and any potential ‘causal link’ to climate change when determining planning approval applications.  

In the last five years Australia has been the breeding ground of novel legal actions brought by individuals and corporations (often with the support of specialised climate change law firms) in new and emerging areas. These strategic litigation windows are broadly categorised as follows:

  1. Cases against state of federal governments (including regulators) to limit the prevalence and intensity of emissions intensive projects due to its impact on climate change. These cases predominantly rely on environment and planning law, as well as administrative and constitutional law, and increasingly rely on climate attribution science to demonstrate increasing risk of harm to humans and the climate due to climate change.
  2. Actions against ASX listed companies and banks using corporations and competition law (including soft law developed by prudential authorities such as ASIC), particularly in relation to issues of continuous disclosure, transparency for shareholders, and other climate-related representations made by a company to the market related to emissions reductions targets.

The following list demonstrates a snapshot of key cases (either filed or handed down) in the last two years:

  • O’Donnell v Commonwealth FCA VID 482/2020: A class action against the Australian government in allegedly failing to disclose the impacts of climate change for investors in sovereign bonds. This matter is ongoing with a final determination yet to be handed down.
  • McVeigh v REST [2020]: An action against REST superannuation fund in failing to disclose climate risks in its disclosure statements. This case settled out of court, with REST publishing new commitments in relation to climate change and disclosure for the benefit of its members.
  • Youth Verdict v Waratah Coal [2020]: A legal challenge in respect of the approval of a coal mine due in part to provisions in human rights law. This is the first case in Australia where the development approval process has been challenged on human rights grounds, particularly the ‘Right to Life’, which is the most robust and unequivocal human rights norm. Globally, strategic litigation has increasingly utilised this particular right in order to challenge activities that would increase the risks associated with climate change, including using the ‘carbon budget’ approach that emissions from coal contributes to climate change and therefore threaten the life of the individual due to the impacts of climate change, such as flooding, bushfires, hurricanes etc. This legal challenge is limited to the jurisdiction of Queensland because of a lack of a national human rights framework in Australia.
  • Sharma by her legal representative Sister Marie Brigid Arthur v Minister for the Environment (No 2) [2021] FCA 560 and FCA 774: A successful class action against the Minister for the Environment, finding that the Minister owed Australian children a duty of care when exercising her power in granting approvals a particular resource project under the EPBC Act. This judgment was a world first and recognised a novel duty in the tort of negligence for the foreseeable harm of climate change, however the court overturned the primary judge’s decision on appeal. As at 29 March 2022, no further appeal has been filed.
  • Bushfire Survivors v NSW EPA [2021] NSWLEC 92: A successful action against the NSW Environment Protection Agency in failing to perform its duties under the relevant legislative scheme by not having adequate policies to deal with the consequences of climate change. Recent mandamus orders have compelled this government agency to introduce instruments to better protect the state from the effects of climate change. Interestingly, the same case has just been brought against the Victorian EPA. It may be the case that lawsuits will be brought against every state based EPA as a way to introduce climate change policies in Australia at a state and territory level in lieu of federal regulation (noting that unlike the UK, who has a Climate Change Act 2008, there is no climate act in Australia).
  • ACCR v Santos [2021]: An action filed on 25 August 2021 against Santos by the Australasian Centre for Corporate Responsibility over alleged misleading and deceptive conduct due to false representations that natural gas is a “clean fuel”. This phenomenon is often termed “greenwashing”. This novel claim challenges the commitments of net zero emissions targets and the environmental impacts of blue hydrogen. As at 29 March 2022 this case is ongoing.
  • Abrahams v Commonwealth Bank of Australia [2017] and [2021]: Shareholder action against a major bank for the purpose of ensuring compliance with the Paris Agreement. This case was originally brought in 2017 however the case was withdrawn after CBA released its 2017 Annual Report, acknowledging the risks of climate change and outlining certain pledges to undertake scenario analysis to properly asses the risks of climate change to CBA’s business. Shareholders are seeking to access the bank’s financial records with respect to investment in fossil fuel projects. On 26 August 2021 a second application was filed in the Federal Court of Australia seeking access to documents under the Corporations Act 2001 (Cth) (Corporations Act), including information of particular resource projects in the US and Queensland, and the bank’s Environmental and Social Framework and Policy. These bank documents require CBA to assess whether the environmental, social and economic impacts are in line with the commitments made under the Paris Agreement. On 4 November 2021 orders were made in favour of the Applicant (Abrahams) granting his legal team confidential access to a myriad of documents including board room minutes, on a confidential basis, in order to assess the representations made by CBA. This creative avenue demonstrates a growing appetite of shareholders attempting to hold a company to account for environmental commitments by scrutinising the assessment process of natural and coal seam gas projects against the greenhouse gas emissions targets. This is known as a “books and records” case. This matter is ongoing.
  • Pabai Pabai v Commonwealth of Australia [2021]: A statement of claim was filed on 22 October 2021 bringing representative proceedings on behalf of all Torres Strait Islander persons from 1985 onwards who have suffered loss or damage as a result of the government’s conduct in failing to mitigate and adapt to climate change and to reduce emissions. This claim relies on the ‘best available science’ in order to establish a duty of care, which will likely involve adducing expert evidence from the field of event attribution science (the same expertise used in Rocky Hill and Sharma).

Australian regulators on the move

These cases should be viewed against the shift in stance of key corporate and financial regulators (including ASIC, APRA and the Reserve Bank of Australia). Over the last five years there has been a new wave of market guidance issued by these regulators, demanding greater disclosure from companies around climate change risks and calling for the “stress testing” of assets and investments. There can be no doubt that as the market evolves, the standard of care to be exercised by directors in the ESG space continues to rise, particularly with respect to climate change.

One key method in which to achieve this is by engaging in the framework developed by the TCFD. In his widely published third opinion, Hutley SC opined that “these recommendations appear to have transitioned from “best practice” to industry standard.”  This framework calls for greater understanding of climatic impacts of climate change, such as rising sea levels, floods, storms, drought and bushfires, and form the basis of mandatory TCFD-aligned disclosures in countries around the world (including the UK and New Zealand). Under the TCFD, “climate risks” are divided as follows:

  • Transition risks: transitioning to a lower-carbon economy may entail extensive policy, legal, technology and market changes to address mitigation and adaption requirements related to climate change.
  • Physical risks: physical risks associated from climate change, which can be acute or chronic.

As Hutley SC observes, many of the jurisdictions taking such steps are countries where Australian firms have subsidiaries and are major two-way trade and investment partners.

Additionally, shallow commitments in the form of future representations concerning climate risk and risk-mitigation may also lead to adverse action, predominantly in the form of misleading and deceptive conduct. This type of claim has been dubbed “greenwashing” and will become more popular in the months and years that follow COP26. “Greenwashing” may even be too simple a term – companies should expect that any representation purporting to improve or neutralize emissions will be scrutinized by investors and civil society, and any company within an industry can be targeted as the “example”. Companies and directors must carefully examine the express and implied representations contained within any climate or ESG-related commitment, and in particular net zero commitments, prior to going to market. Additionally, companies should critically examine how its future business outlook and operations align with the commitments made by states under the Paris Agreement, a country’s NDC and additional pledges at COP26 (such as reversing deforestation by 2030 and phasing out coal by 2030). If there is a misalignment, it is reasonable to expect, based on the strategic litigation examples examined, that its consumer base or investors will take steps to bring this to the company’s attention, which may include adverse action.

Companies in Australia face the difficult task of balancing the demands of net zero commitments and sustainable planning against a lack of a comprehensive legal structure in order to genuinely fulfil such a commitment. Notwithstanding this, a failure to examine the structures that sit behind such commitments will increase the likelihood of adverse action against a corporation in one or more of the litigation windows listed above.

In addressing reasonable foreseeability and liability in climate change litigation, extreme weather events have been increasingly examined by the courts by way of scientific expert evidence when assessing issues of causality in the climate change space. In many cases in Australia, the same few scientists are used by boutique environmental litigators. In building precedent in this space, it is clear that the courts are increasingly reliant on climate change attribution science as new school of expert evidence to inform its decisions in relation to endorsing findings of harm suffered by individuals due to a failure to act in accordance with the Paris Agreement or other legislative obligations related to climate change. It is likely that this field of expert evidence will be even more compelling following the Sixth Assessment Report by the International Panel on Climate Change which was released in August 2021, particularly where a court is asked to recognize another novel duty of care owed by the government to a defined group. This will likely be tested in the upcoming case brought by plaintiff Torres Strait Islanders in Pabai Pabai.

In addition, and following the wave of global advocacy around the divestment of fossil fuels, there has been a steady stream of major companies such as banks and insurers that have made public commitments to cease financing future thermal coal and other such projects over the coming decades. Such divestment of assets were a direct result of shareholder pressure and threats of legal action against corporations, paired with an increased presence by ASIC and other financial regulators in considering enforcement actions should there be serious disclosure failures.

Global snapshot

The seeds of litigation are planted globally, and there is a global exchange of litigation windows across the world. Climate change litigators are increasingly drawing upon successful claims in national and international jurisdictions and successfully transplanting them into Australia. The greatest example of this is the Sharma case in Australia. The Dutch Urgenda case (spanning 2015 – 2020) posed similar novel questions to the Australian Sharma case, namely: whether the Dutch State was obliged to formulate and take specific actions to reduce, by the end of 2020, the emission of greenhouse gases originating from Dutch soil by at least 25 per cent compared to 1990, and whether courts can order the state to do so. The Hague Court of Appeal handed down the Urgenda decision in early 2020, ruling that the Dutch State did owe a duty of care to protect the human rights of its citizens, and therefore did have to take appropriate action to mitigate the existential threat of climate change. Sharma and Shell demonstrate a growing acceptance by the courts of climate-change expert evidence in the context of the future projections of harm caused by fossil-fuel businesses, as well as a willingness by the courts to intervene by endorsing novel common law claims in an attempt to stop or mitigate climate-change effects arising from those businesses’ operations.

Additionally, while the use of judicial intervention in the area of human rights may seem novel in Australia, it is a tried and tested mechanism for those in national jurisdictions and will increasingly be utilised in Australia. Clients would do well to understand such cases in order to pre-emptively consider and calculate the risk of certain operations and forensic business decisions moving forward.

Below is a list of recent cases that have gained international attention:

  • United States: In November 2016 the District Court of Oregon handed down Juliana et al. v. United States of America, a case largely cited as introducing climate change class actions in North America. In this case, Our Children’s Trust, consisting of 21 child plaintiffs, represented by climatologist James Hansen, argued that US Government’s actions have caused climate change and violated their constitutional rights to life, liberty, property and public trust resources. The plaintiffs argued that the United States Government’s previous actions have caused climate change and violated their constitutional rights to life, liberty, property and public trust resources, because “a stable climate system is a prerequisite for enjoying many rights, including the right to life.” In January 2020, the United States Court of Appeals for the Ninth Circuit handed down a 2:1 decision, with the majority holding that “it is beyond the power of an Article III court to order, design, supervise, or implement the plaintiffs’ requested remedial plan”. While the appellate court accepted the expert evidence adduced in this case, the majority denied standing to the plaintiffs. In a dissenting opinion, her Honour Judge Staton found instead that a suit of this kind “cannot alone halt climate change [but that] does not mean that it presents no claim suitable for judicial resolution.”
  • Canada: In November 2018, ENvironnement JEUnesse (ENJEU) commenced a class action lawsuit against the government on behalf of all Québec residents ages 35 or younger. ENJEU is a Montreal-based non-profit organization committed to environmental advocacy. The challenge drew inspiration from Urgenda Foundation in being a creature of action against the government and using public law to launch human rights, constitutional and administrative law arguments. In addition to arguing that the Canadian Government had failed to set appropriate emission targets, challenges were also brought under section 7 (life, liberty and security of person) and section 15 (the right to equality) of the Canadian Charter of Rights and Freedoms, and Québec’s Charter of Human Rights and Freedoms. In this case, the Québec Superior Court found that while the issues under sections 7 and 15 were justiciable, a class action was ‘not the appropriate vehicle’ for an action of this kind because the declaration of a class (e.g. limiting it to individuals under 35) may be arbitrary. On appeal, the Quebec Court of Appeal denied certification of the proposed climate change class action on the basis that the matter ought to be determined by the legislative and executive branches of government. As at 29 March 2022, the matter is pending an application seeking leave to appeal to the Supreme Court of Canada.
  • Colombia: In early 2018, a group of 25 plaintiffs (all under the age of 30)  launched a raft of challenges against the Colombian government, municipalities and corporations, citing a denial of their right to life, health, food, water and a healthy environment under the Colombian Constitution (the likes of which had been rewritten in 1993). In a decision dated 5 April 2018, Demanda Generaciones Futuras v. Minambiente, the Supreme Court of Colombia acknowledged the adverse effects of climate change on human rights, which are dependent on the existence of a healthy environment and ecosystem (in particular, the Amazon), and ruled that states must prevent significant environmental harm. In this case, the Supreme Court of Colombia ordered that the Presidency of the Republic, the Ministry for the Environment and Sustainable Development, and the Ministry of Agriculture and Rural Development introduce short, medium and long term government responses within four months of the date of judgment, including the introduction of laws to offset the rate of deforestation in the Amazon. These responses must be in consultation with all relevant parties (including affected communities and persons seeking to participate in this process). The plan specifically has to consider the effects of climate change and early warnings of the Colombian Institute of Hydrology, Meteorology and Environmental Studies (IDEAM). Further orders included that an ‘Intergenerational Pact’ be drafted for the life of the Colombian rainforest.
  • Mexico: Greenpeace Mexico v. Ministry of Energy and Others (on the National Electric System policies) (Mexico: District Court in Administrative Matters): Greenpeace filed a lawsuit against the Mexican government on 25 May 2020 contesting the constitutionality of two electricity sector policies which would limit renewables and promote oil-based power generation. On 23 June 2020 the District Court issued a preliminary injunction suspending the effects of the contested policies. On 17 November 2020 the District Court held its main hearing and issued a judgment declaring that the policies were unlawfully modifying the rules of the energy market and violated the right to a healthy environment, a right owed to the people of Mexico. The Mexican government has appealed the decision and as at 29 March 2022 the appeal is pending.
  • European Union: On 8 May 2019 the European Court of Justice handed down the decision of Carvalho and Others v European Parliament and Council of the European Union. The group, consisting of Carvalho and others, sought the declaration that the legislative package regarding greenhouse gas emissions (including Directive (EU) 2018/410 and Decision (EU) 2015/1814) was unlawful, insofar as it permits the emission (between 2021 and 2030) of a quantity of greenhouse gases corresponding to 80% of 1990 levels in 2021, decreasing to 60% of 1990 levels in 2030.  The General Court found that the applicants had not established that the contested provisions of the legislative package infringe their fundamental rights, nor did the action distinguished them individually from all other natural or legal persons concerned by those provisions. The General Court ultimately dismissed the challenge on the grounds of admissibility. 
  • The Netherlands: On 20 December 2019 the Dutch Supreme Court upheld a 2015 District Court ruling in Urgenda Foundation v Kingdom of the Netherlands, setting a new standard for government accountability in the Netherlands, In this case, the Dutch courts considered the duty of care exercisable to protect citizens from climate-related harm. The Supreme Court upheld the finding that the Dutch Government had a positive obligation to adequately reduce greenhouse gas emissions by at least 25% by the end of 2020 (compared to 1990 levels). We note that Urgenda was used by Preston CJ in Rocky Hill in finding the causal link between greenhouse gases and climate change, which led to the endorsement of the ‘carbon budget’ approach.  Since the Urgenda decision was upheld, national energy laws have been passed in the Netherlands in December 2019 and climate and energy policies introduced, forcing energy companies to close different coal plants as part of the Dutch strategy to cut greenhouse gas emissions 49% from 1990 levels by 2030. On 26 May 2021 (the day before the Sharma decision), the Hague District Court handed down Milieudefensie et al. v Royal Dutch Shell, ruling that Royal Dutch Shell must reduce its Scope 1, Scope 2, and Scope 3 emissions by 45 per cent by 2030 (relative to 2019 levels) due to an unwritten standard of care found in the Dutch Civil Code and in the protection of human rights under EU law. This reduction is to be achieved through Shell’s corporate policy and applies to the Shell Group’s entire energy portfolio. Included in this finding was a “significant best-effort obligation” owed by the Shell Group as a whole (and not just the entity subject to the proceeding) to take the necessary steps to remove or prevent the serious risks ensuing from the CO2 emissions it generates, and to use its influence to limit any lasting consequences as much as possible. This obligation is not removed or reduced by the individual responsibility of the business relations and end users of their own CO2 emissions. Although Shell has indicated in a public statement that it will appeal this decision, if the appeal process in Urgenda is anything to go by, the original decision may well stand.
  • United Kingdom: On 27 February 2020 the Court of Appeal hand down its decision in R v Secretary of State for Transport & Ors [2020] EWCA Civ 214. Lord Justice Lindblom, Lord Justice Singh and Lord Justice Haddon-Cave (per Curiam) found that the Secretary of State for Transport, when it published the Airports National Policy Standard (ANPS), had not taken into account its own firm policy commitments on climate change under the Paris Agreement, an error that fatally rendered the ANPS unlawful. The British Government’s planned expansion of Heathrow Airport was therefore unlawful in its proposed form. Loach et al v OGA ("Paid to Pollute case") (UK: High Court): Three plaintiffs filed judicial review proceedings on 12 May 2021 against the UK Oil and Gas Authority (OGA) and the Secretary of State for Business, Energy and Industrial Strategy over the new energy strategy set out by  the OGA. That strategy sets out plans to support ongoing efforts to exploit North Sea oil and gas reserves. On 18 January 2022, the High Court dismissed the claim, finding that the balance of objectives is a question for the regulator and not the court.
  • United Kingdom: Following the decision in Milieudefensie, on 15 March 2022 ClientEarth announced it had taken preliminary steps towards bringing a derivative action against the Board of Directors of Shell for alleged failures to properly manage climate risk in breach of its legal duties under the UK Companies Act 2006, and in particular its failure to adopt and implement a climate strategy that truly aligns with the Paris Agreement. As at 29 March 2022 Shell is considering its position on its case.
  • France: Envol Vert et al v Casino (France: Saint-Étienne Judicial Court): An international coalition of eleven NGOs filed proceedings on 3 February 2021 against the French supermarket chain Casino, stating that it had violated the French duty of vigilance law due to its involvement in and support for the cattle industry in Brazil and Colombia, causing deforestation and environmental and human rights harms through the destruction of carbon sinks essential for the regulation of climate change. The plaintiffs argue that “all agents in the production chain are responsible for environmental damaged caused with their consent.” The plaintiffs seek an order to compel the Casino group to comply with the duty of vigilance by way of publishing a detailed compliant vigilance plan to identify the risks associated with its activities. The plaintiffs also seek an order of compensation in favour of Brazilian Indigenous groups for loss of opportunity and moral damage flowing from the failure to comply with its duty of vigilance. As at 29 March 2022 the judgment is yet to be handed down.
  • Germany: Deutsche Umwelthilfe (DUH) v. Mercedes-Benz AG (Germany: Regional Court of Stuttgart): Deutsche Umwelthilfe (a German environmental organisation) filed an action against Mercedes-Benz on 20 September 2021 for refusing to tighten their carbon emissions targets and give up fossil fuel-emitting cars by 2030, in breach of the fundamental right to climate protection and in interference of the same rights of future generations. The claim relies on the Paris Agreement and the German Climate Protection Act, and relies on a “fair” carbon budget. The plaintiffs rely on a previous decision of the Federal Constitutional Court of Germany (Beubauer v Germany) where the Court held that per the Climate Change Act, Germany has a set total emissions budget of CO2 emissions at its disposal. The Plaintiffs have requested a number of rulings that would interfere with Mercedes from being able to produce internal combustion engine cars in circumstances where it cannot prove GHG neutrality by 31 October 2030 or for the CO2 emissions exceeding 511 million tonnes. Orders are also sought to restrict Mercedes from producing to market internal combustion engines after 31 October 2030 if carbon neutrality cannot be proved. As at 29 March 2022 the case is pending. Also see Deutsche Umwelthilfe (DUH) v. BMW (Germany: Regional Court of Munich): Filed 20 September 2021 bringing the same action. As at 29 March 2022 the case is pending.
  • South Korea: Korean Biomass Plaintiffs v. South Korea (South Korea: Constitutional Court): More than 60 solar power plant owners and residents filed group proceedings on 28 September 2020 in the South Korean Constitutional Court challenging the South Korean New and Renewable Energy Promotion Act, arguing that it wrongly treats biomass generation as renewable and low or zero carbon, making it eligible for significant subsidies. The plaintiffs argue that in fact, biomass generation leads to forest devastation, high emissions over and above coal, and air pollution (at a local level). The plaintiffs seek a finding that South Korea’s biomass policy violates environmental rights under the South Korean Constitution. In addition, the plaintiffs argue that the biomass policy infringes the property rights of solar power plant owners because the false classification of biomass as carbon neutral and renewable results in a diverting of subsidies from other resources that are in fact carbon neutral. As at 29 March 2022 the action is pending.

In addition to the global strategic litigation above, in 2015 an additional mandate for a new Special Rapporteur was issued by the Office of the High Commission of Human Rights, based in Geneva. The mandate of this new ‘Special Rapporteur on human rights and the environment’ includes to:

  • examine the human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment;
  • promote best practices of the use of human rights in environmental policymaking;
  • identify challenges and obstacles to the full realisation of human rights relating to the enjoyment of a healthy environment; and
  • conduct country visits and respond to human rights violations.

The Special Rapporteur (of which there are many, each assigned to a thematic issue) is responsible for issuing thematic reports, which are subsequently utilised by the judiciary and lawmakers the world over. Recent examples include:

The Right to a healthy and sustainable environment (A/73/188) which outlines obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment.

  • Safe climate (A/74/161) which illustrates the effects of the current global climate, and the role for human rights in catalysing action to address climate change.

Relevantly, on 8 October 2021 the United Nations Human Rights Council (UNHRC) voted to recognise the Human Right to a Safe, Clean, Healthy and Sustainable Environment (RTHE). It was adopted by a vote of 43 in favour, none against and 4 abstentions (from Russia, India, China and Japan). For the first time, the UNHRC has formally enshrined the RTHE, which encourages States to adopt policies for the enjoyment of said right as appropriate, including with respect to biodiversity and ecosystems. There can be no doubt that this newly formed human right will be utilised by litigators around the world by itself, but it will also be “read into” the Right to Life to bolster novel actions to protect consumers and the environment against climate change related impacts and poor management of resources. 

Paired with this “new” right is the outcome from COP26 of countries whereby states have pledged to reverse deforestation by 2030. Included in this agreement is Brazil, notoriously the most sever deforester (along with Indonesia) – it may be the case that strategic litigators bring similar actions against large states that fail to provide adequate protection to the environment or have inadequate laws to deal with deforestation, perhaps by adopting a similar methodology of the carbon budget approach, but in reverse – because forests are carbon sinks, and a loss of sinks impacts the total greenhouse gas emissions cap globally.

The precautionary principle (legislated in domestic environmental and planning law in Australia) enjoys a certain international environmental law status. This is partly because countries in the global south typically have more dynamic constitutions given many were redrafted at the turn of the last century. For example, in Colombia the RTHE is already constitutionally enshrined, and the Constitutional Court of Colombia has expressly held that the precautionary has constitutional status.[1] Resource companies who operate in Colombia as well as Australia should prepare for the mobilisation of legal actions in Colombia, due to the willingness of lawmakers in Colombia to utilise what is seen as an “Ecological Constitution”, to achieve environmental outcomes in favour of environmental and indigenous groups. Such actions would likely involve significant press in Australia as part of the global climate change movement, and may lead to investor pressures within Australia to take steps to distance from the investment in question. 

Parallels between Dutch and Australian Case Law

It is clear that over the last five years, legal actions in the Netherlands have been transplanted into Australia, with high levels of success. Here are three examples of this, seen below:

The Right to Life: The applicants in the Shell case invoked the right to life, with the Hague District Court confirming that due to the precedent of the Urgenda decision in 2019, Article 2 offers protection against “the consequences of dangerous climate change due to CO2 emissions-induced global warming.” In Australia, a country without a national human-rights framework and with only limited state and territory legislation protecting human rights, considerations of the right to life (though not so expressed) came in Sharma via the tort of negligence and foreseeable harm and statutory construction of the EPBC Act. In coming to his decision, the judge directly contemplated the positive duty of a Minister to protect life in circumstances of alleged harm due to climate change. While not specifically expressed as a human right, in substance, the obligation can be said to be the same.

Collective action: Both the Australian and Dutch courts observed that because climate change is a worldwide problem, and because resource companies cannot solve the problem on their own, collective action is required. In interpreting the Dutch Code’s unwritten standard of care, the court in Shell adopted the UNGPs, including the duty of companies to respect human rights and operate with diligence. This demonstrates a trend within Europe of increased focus on ESG principles, including greater application of the UNGPs to businesses within a court setting. In the Australian decision of Rocky Hill in 2019, Chief Judge Preston’s finding accords with the Hague District Court’s approach in Urgenda to cooperative action between states and businesses in order to reduce peak emissions in line with the Paris Agreement through multiple local actions.

Reasonable foreseeability and recognition of a novel duty of care: Although Urgenda was not cited by Bromberg J in Sharma, parallels are clearly drawn given that the subject matter relates to an alleged breach of a novel duty of care and reliance on foreseeable harm of the effects of climate change on human health. In establishing this novel duty of care in the Netherlands, the Dutch court recognised and accepted (as was subsequently done in Sharma) that the existential threat of climate change (in particular, rising sea levels) would pose a threat to current and future citizens of the Netherlands and was reasonably foreseeable on the available scientific evidence. In the recent Shell case, the Hague court echoed this, observing that given that Shell publishes figures on emissions in its yearly reports, the threat was reasonably foreseeable to Shell and that it would be held accountable. Finally, it has been reported that the Dutch legal team responsible for the success in Urgenda have now begun working with the Australian legal team in a recently filed case against the Australian government, seeking a finding that it owes a duty of care to all Torres Strait Islander people to take reasonable steps to protect their culture and environment (synonymous) from the harms caused by climate change, specifically the rising sea levels and catastrophic weather events.

What’s next?

Looking forward, the Grantham Research Institute on Climate Change and the Environment predicts three key trends of strategic litigation, expected to make waves in the next year:

  • value chain litigation, where claimants seek to hold companies responsible for acts and omissions in their value chains and/or supply chains. This may involve a growing focus on upstream emissions and supply-side regulation of fossil fuels. 
  • cases of government support to high emitting industries, and particularly the fossil fuel industry (e.g. through subsidies or tax relief). These types of cases are distinguished from traditional environment and planning law climate chases that sought to challenge the approvals processes for new fossil fuel projects (such as Rocky Hill). In May 2021 a legal challenge was brought against UK state-owned Oil and Gas Authority’s new strategy to utilise North Sea oil and gas reserves. The case seeks to challenge the UK Government’s support for the project, alleging that it is irrational and inconsistent with the UK Government’s net zero target.
  • cases focused on the distribution of the burdens associated with action, which may be classed as ‘just transition’ cases. Actions of this kind would see workers, communities and countries bring actions to achieve outcomes to assist them in shifting to a low-carbon, resilient economy in order to ensure the burdens and benefits of climate action are distributed across society. However, such litigation may risk halting or significantly hampering state sanctioned climate change adaptation and or mitigation projects that have an impact on the environment and its local communities.

Corporations and its boards appreciate that climate related litigation is used as a tool by public interest groups to influence policy changes and corporate behaviour to be better aligned with good governance principles and climate sustainability – core pillars of ESG. These cases are increasingly forcing companies and investors to consider climate risks and disclosures as it applies to its own value chain and business operations. It also provides a window of redress to individuals and collective groups, often children (by way of intergenerational equity) and indigenous groups (due to the special connection to land and indigenous technical knowledge), to either compel certain climate action or prevent or remedy the loss of or impact on the surrounding environment due to climate change. Accepting this, and noting the developments in COP26 of a target to end coal and to reverse deforestation, companies should assess its commitments made to the market as well as investigate how its business operations align with the ever expanding national climate commitments because a failure to do so will open the company up to unknown levels of liability.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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