Member Article

The courts have always dealt with big issues and complex questions. But are the courts the right place to tackle perhaps the biggest issue of all?

In recent times there have been a number of high profile court actions relating to climate change, leaving courts in various parts of the world grappling with this complex and difficult issue.

Friends of the Earth Netherlands sues Shell

Perhaps the most striking is the decision in the case brought by Friends of the Earth Netherlands and others. In 2019, oil major Shell was sued on the grounds that its contributions to climate change allegedly violated its duty of care under Dutch law and human rights obligations. Several other organisations joined Friends of the Earth as plaintiffs, along with more than 17,000 citizens. The plaintiffs sought a ruling from the court that Shell must reduce its carbon dioxide (CO2) emissions by 45% by 2030 compared to 2010 levels, and to zero by 2050, in line with the Paris Climate Agreement.

The case was based on a duty of care argument under Article 6:162 of the Dutch Civil Code and Articles 2 and 8 of the European Convention on Human Rights (ECHR), which guarantee rights to life and rights to a private life and family life. The argument was that Shell’s long knowledge of climate change, misleading statements on climate change, and inadequate action to reduce climate change demonstrated a breach of their duty of care.

In 2021, the Hague District Court ordered Shell to reduce its emissions by 45% by 2030, relative to 2019 levels, across all activities including both its own emissions and end-use emissions. While the decision is being appealed, the order is provisionally binding pending an appeal.

The case builds on the judgment of the Dutch Supreme Court in State of the Netherlands v Urgenda. The Supreme Court held that on the basis of the ECHR the Netherlands has a positive obligation to take measures for the prevention of climate change and that it had to reduce its greenhouse gas emissions by at least 25% by the end of 2020, compared to 1990 levels.

Climate activism in the UK courts

Similar litigation has been initiated around the world and cases are bring tracked by the website Climate Case Chart. In the United Kingdom, the well-known activist group ClientEarth has raised proceedings against the UK Government arguing that its current policies will not reduce emissions enough to meet its legally binding carbon budgets – targets that limit the total amount of greenhouse gases that the UK can emit over five-year periods on the journey to net zero. ClientEarth claims that the UK Government has breached its legal duties under the 2008 Climate Change Act.

While these cases grab the headlines, on a day-to-day level companies are getting into trouble with, for example, the Advertising Standards Authority. In 2019 Ryanair ran a series of UK ads i boasting of its “low CO2 emissions” and being the "lowest emissions airline”, at 66g CO2 per passenger-kilometers flown. The ASA ruled that this was misleading, in particular because there was insufficient information to justify the claim. 

Shell was also on the receiving end of a complaint arguing Shell’s statement that the loyalty scheme allowed customers to “drive carbon-neutral” was misleading. Shell's advertisement did not mention that Shell Go+ was a loyalty scheme. The ASA concluded that the advertisement was misleading, as consumers were likely to think that Shell Go+ was a carbon-neutral fuel rather than a carbon offsetting loyalty scheme, based on the "drive-carbon neutral" claims made by Shell in the advertisement. ClientEarth is an organisation dedicated to tackling environmental challenges, and claims to have 168 active cases around the world. But it is not the only organisation using the courts to try to drive change. Aristata Capital was founded in 2018 and claims to be the first litigation funder dedicated to driving positive social and environmental change, as well as a financial return. It has two key objectives: funding litigation in order to achieve measurable social and environmental impact; and using private capital to drive systemic change at scale.

So for those who want to use the court to drive change, and perhaps attempt to recover compensation for alleged wrongs, there are court processes that can be used (such as group litigation) and funds are available to support and insure the claimants. 

How will climate activism impact businesses?

For those that might be targeted by activist litigation there are reasons for concern. Litigation of this scale can take up very significant amounts of time and money, and can distract from the core purpose of the business. The challenge is that litigation tends to lead to polarisation and delay. Cases can often take many years to resolve, and these are years the scientists tell us we simply do not have to spare.

What, then, if one of the strategic aims of that business is to achieve net zero? What if large scale litigation distracts from the very thing that the activists are trying to achieve? Is there a better way? Is there some compromise solution that could be negotiated?

The answer may be no. Sometimes an issue is too big, and too important, to tolerate a compromise solution. Some will say that only the threat or fact of litigation is what is needed to get things moving.

Perhaps what is needed is a radical change in the way in which these global problems are addressed. Mediation is often used by lawyers as a way of resolving seemingly intractable problems. Mediation is a consensual process where the parties seek to understand the other party’s perspective and find a solution that benefits both parties. This can be difficult in a direct negotiation, which is why a mediator is employed to help.

One-to-one mediation works well as it provides the time and focus needed to actually listen to the other party. The issues in play also tend to be fairly discrete. With climate change there are many different and interlocked issues and forces that have brought us to where we are now. Whether it is carbon footprint reduction and a just energy transition; sourcing food locally and food prices; the pollution caused by plastic and the benefits of plastic – the issues are immense. On the face of it the conversation needed is too big, and the world is not well placed, at the moment, for that conversation or mediation to take place.

The result may be that litigation is seen as a first resort. If the government, or business, is not seen to be acting then activists may go to the courts first. As courts around the world have shown a willingness to engage on these issues, governments and corporations need to be ahead of the activists in terms of implementing change, or be ready for litigation.

For more information, please contact John MacKenzie, Partner in our commercial disputes team and member of the firm’s ESG Advisory Group, at [email protected].

A version of this article first appeared in The Herald.