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