After COP - where next for climate litigation

In the run-up to COP27 I, and colleagues at Ashurst, ventured to predict what key themes would emerge from the Sharm El-Sheikh conference.

With the dust settling on the event, I thought I'd share some thoughts on the impact of the conference on climate litigation.

Why is COP27 relevant to climate litigation? Well, as we have seen in the past, ideas and themes which achieve prominence at COPs can find expression in arguments brought before courts in climate cases. 

1. Loss and damage: the issue of compensation

"Loss and damage" was a prominent phrase at COP27. It refers to the provision of funding to countries most affected by climate change to help them respond to climate disasters. While there is no internationally agreed definition of "loss and damage", it has existed in the legal ecosystem for years. A "Warsaw International Mechanism" to address loss and damage was established at COP18 and further elaborated at COP19 in 2013, and the Paris Climate Agreement recorded well-meaning intentions to cooperate further on this issue. (Albeit with a caveat that this "does not involve or provide a basis for any liability or compensation"). 

The biggest breakthrough of COP27 was the agreement on establishment of a loss and damage fund. But the details are still to be fleshed out and both the sources, and future recipients of funds, are unclear. The agreement is ground-breaking and welcome.  But, if the fund falls short, those affected by climate change may look to litigation as an alternative path to compensation.

In the sphere of climate litigation, compensation for climate related losses caused by emissions is controversial. The legal questions which the issue throws up are complicated: if a claimant considers herself harmed by climate change, how wide should the net of potential defendants be cast? Could it be: a state which permitted emissions to be produced; a company which extracted fossil fuels; a utility which burnt those fossil fuels to produce power; businesses which used this power to produce goods; some of these entities; or all of them?

There is then the challenge of linking particular emissions to specific harm caused to the potential claimant. The common law of torts has developed theories in particular contexts (such as industrial disease) to make it easier to argue causation where the author of a particular harm is hard to identify. But significant challenges remain. The flagship litigation in this space involving a Peruvian claimant and a German utility – Lliuya v RWE – has been working its way through the German courts since 2015 with no finding yet that a private company may be held liable for financial losses arising from climate change caused by emissions.

2. Enforcing ambition

The Paris Climate Agreement sought to hold the increase in global average temperatures to well below 2°C above pre-industrial levels, with an ambition of limiting such increase to 1.5°C. 

In the run up to COP27, gloomy forecasts by the UN Environment Programme indicated that policies currently in place were likely to lead to a temperature rise of 2.8°C by the end of the century, with pledges updated since COP26 in Glasgow, but not yet enacted as policies, still likely to lead to a 2.4 to 2.6°C temperature rise. 

The conference did not result in the abandonment of the 1.5°C target - as many had feared. But the lack of consensus on how to move away from fossil fuels consumption left many anxious that 1.5°C is unachievable. It will be for future COPs to grapple, again, with this most difficult of issues.

Where diplomats and policymakers fall short, expect claimants to head to the courts to seek to push governments to enact more ambitious measures. Successful claims of this nature have been seen across a range of European countries including Ireland, Germany, and France.

3. Greenwashing in the cross-hairs

 "Zero tolerance for greenwashing". "The sham must end". Not the text of a COP27 timed press release by an environmental NGO, but the words of António Guterres - Secretary-General of the United Nations. 

Mr Guterres was speaking at the launch of a report by the United Nations high-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities. The group, chaired by Canada's former Environment and Climate Change Minister, did not pull punches. The urgency of the situation, and the scale of changes required, are clearly outlined in the 42 page report. Its recommendations take aim at companies claiming to be net zero while continuing to invest in fossil fuels, acquiring cheap carbon credits while not cutting their own emissions, focusing on scopes 1 and 2 emissions, rather than the more challenging to abate scope 3 value chain omissions, and lobbying against ambitious climate policies. The report concludes with a call for regulation. The group seeks a level playing field so that large corporate emitters are required to provide assurance on net zero pledges and mandatory annual progress reporting.

Time will tell as to whether the recommended regulatory frameworks are put in place across major economies (the report proposes, ambitiously, a global approach – "a new Task Force on net zero Regulation that convenes a community of international regulators and experts to work together towards net zero"). But the report as it stands may provide a playbook for climate litigation claimants seeking to challenge corporates and institutions on their net zero credentials.

4.  Against the tide: litigation risk for being too pro climate?

Despite the controversies and differences in opinion and perspective running through COP27, it's easy to assume that there is broad consensus on the direction of travel towards net zero, and the need for the law to support this.

But COPs do not happen in a vacuum. The Democrats may have enjoyed a better than expected set of midterm United States elections earlier in the month, but Republicans are already making noises about investigating climate "collusion" across the finance and professional services sectors. 

The charge of "collusion" is not new. And its legal articulation – prohibitions in anti-trust and competition law across the world which could be argued to prevent coordinated action to fight climate challenge – has caused anxiety in a number of sectors, particularly for financial institutions.

The International Chamber of Commerce ("ICC") produced a helpful paper to coincide with COP27 entitled "When Chilling Contributes to Warming: How Competition Policy Acts as a Barrier to Climate Action". Its core demand: for governments and competition authorities "to do everything possible within their own legal systems to reduce or eliminate the disastrous inconsistency between the imperative of fighting climate change and competition law or policy. In some cases, this may mean a change in the law; in some cases more ambitious guidelines; and in others it means changes in the burden of proof and/or presumptions in favour of genuine efforts to fight climate change and meet the climate change goals to which governments have committed" is ambitious and multifaceted. Organisations like the Net Zero Lawyers Alliance have done similar work on climate collaboration. If acted upon, the ICC's proposals will reduce the scope for litigation – and politicians – to rely on competition law as a basis for legal challenges to pro climate activities.

5. Beyond climate: litigation and the triple planetary crisis

 The scale of the climate crisis is such that it's easy to forget that many experts see it as but one of a triad of environmental crises facing the planet. The so-called "triple planetary crises" of climate change, biodiversity loss and pollution are inter-related. Biodiversity was the subject of a number of sessions at COP 27, looking at how it relates to climate action. It also has its own conference of the parties – COP 15 under the Convention on Biological Diversity taking place in Montreal in December 2022. 

Will we be talking about biodiversity litigation in the same way that we talk about climate litigation in years to come? Quite possibly. Although biodiversity loss as a subject is in many ways even more complicated – and thus more challenging to fit into existing legal liability frameworks than climate liability, it's hard to overstate its importance. As this article (paywall), to which my colleague Eleanor Reeves contributed, makes clear, awareness of biodiversity litigation risk is approaching awareness of climate litigation risk amongst financial institutions and policy makers. There are many angles from supply chain liability to deforestation regulation to disclosure of nature-related risks which may give rise to claims. Claimants may pursue whatever avenues are available to them to advance the cause of preserving the planet's biodiversity – the so-called "library of life on Earth".