When it comes to the issue of ESG (environmental, social and governance) litigation, there seems to be plenty to report. However, while developments show little sign of slowing down, the future may well depend on a number of factors.
We are certainly seeing more courts worldwide issuing judgments in favour of protecting the climate. The recent example of Verein KlimaSeniorinnen Schweiz saw the European Court of Human Rights hold that the right to a private life imposes a positive obligation on states to ensure effective protection against the adverse effects of climate change. It was the first time an international court had definitively ruled on the intersection between climate and human rights.
In addition, Friends of the Earth, Client Earth and Good Law Project vs Secretary of State for Energy, Security and Net Zero saw the UK High Court rule that the UK government’s climate strategy was not fit-for-purpose and so was in breach of the UK Climate Change Act. We have also seen the US case of Held v Montana, in which the court found in favour of protecting the constitutional right to a healthy environment, and the French ruling, in Notre Affaire à Tous and Others v France, that the state needs to take immediate action to comply with commitments to reduce emissions under the Paris Agreement; the international treaty on climate change that was adopted in 2015.
Then there’s the Supreme Court of India’s ground-breaking ruling that recognised a right to be free from the adverse effects of climate change, and South Korea’s constitutional court currently hearing the country's first major climate litigation. There is certainly a move to the courts when it comes to the environment.
The future of ESG litigation is an intriguing proposition. The International Tribunal for the Law of the Sea recently confirmed that states are under a legal obligation to protect our oceans and seas from climate change. This includes a commitment to restore habitats and ecosystems where they have been damaged due to anthropogenic (man-made) emissions, and where restoration is needed to regain ecological balance. States are even under an obligation to anticipate risks to the marine environment that may be created by climate change.
At present, the world is currently awaiting the outcome of further requests for advisory opinions from the International Court of Justice and the Inter-American Court of Human Rights. These bodies’ interpretations of states’ climate change obligations will not be binding, in the same way as the International Tribunal for the Sea opinion was not binding. But their opinions on matters such as protection of the marine environment, human rights and the environment, and greenhouse gases will carry substantial legal weight. They may be decisive in defining the human rights obligations of states (and possibly corporations) regarding the climate crisis.
Against this backdrop, we can also expect an increase in climate-related litigation against non-financial institutions and a more diverse range of corporate actors. Cases based on the principle of polluter pays and citing the Paris Agreement could become more commonplace. Claims based on tort law, action brought under corporate due diligence legislation, use of consumer protection and competition law, and challenges to directors over breaches of fiduciary duties under company law are all viable options for those looking to hold to account companies or individuals.
But there are hurdles to be overcome by those looking to bring such cases. The most prominent of these is that rights enshrined in constitutions and regional conventions impose obligations on the state but not on private actors. In many jurisdictions, powerful constitutional rights, most notably the right to a healthy environment, can be asserted vertically against the State but not horizontally against private actors.
The issue of insufficient direct legal rights and procedural Issues is a serious challenge to those looking to bring ESG cases. This applies both to the aforementioned climate-related issues as well as to other matters such as greenwashing, modern slavery and poor health and safety in supply chains.
English law needs to adapt to the complexities of group litigation. The current arrangements can make bringing action an unbelievably challenging exercise in paperwork, while also giving scope to corporate defendants to do what they can to avoid having to answer for their actions. It is proposed that the UK needs a legal framework for human rights and environmental violations, modelled on the Bribery Act 2010 and Criminal Finances Act 2017; which contain failure to prevent offences.
There can be little argument that something needs to be done. Currently, applicants are usually the ones having to shoulder the burden of proof while up against corporates that can boast large legal teams who face few obligations to disclose information that could be crucial to the case. This has been why a number of claims have been unsuccessful. Added to this, the often slow pace of such proceedings can mean that the harm to people or the environment that is at the heart of the legal action can continue unchecked for long periods of time.
Applicants will often struggle to raise the funds to bring a legal action. Even if they do manage this, they then face the daunting prospect of having to keep finding funds to keep it going. All this has to be done while their opponent is likely to be a sizeable company that can find all the money that is necessary to thwart the case. It is a far from level playing field, which probably explains why the biggest UK group litigation – relating to the Mariana Dam disaster case – required third-party litigation financing.
As a result, many individuals have extremely limited access to justice, which can often only serve to perpetuate injustice. So while we can see signs of progress, much needs to be done to ensure such advances do not remain the exception rather than the rule.
