Our key takeaway: Just as we kick off our first instalment of our ‘Be Human Rights Confident for Lawyers’ series, highlighting how lawyers would feel better prepared for the laws that are coming if they take a step back and understand the soft law that is driving them, we have a new report out from The Grantham Research Institute on Climate Change and the Environment underscoring the link between the EU’s ‘Fit for 55’ package and laws that apply to companies - and corresponding litigation risk. In short, the authors find that the decarbonisation measures proposed by the EU is likely to open the floodgates on climate litigation, ranging from cases against governments grounded on human rights, to just transition lawsuits, to lawsuits related to permitting for both renewable and fossil fuel projects. Companies will be impacted by many of these lawsuits indirectly, and will increasingly be the subject of these climate lawsuits themselves. The measures that apply to companies related to climate are just starting - with ongoing discussions related to extending corporate due diligence obligations to climate change, reforms to the governance of companies and their value chains, reforms regarding sustainability information, and reforms to consumer protection legislation. The upshot for companies? Do the work internally to be ready for the litigation ahead, which in turn will minimize litigation risk.
The Grantham Research Institute on Climate Change and the Environment as well as the Centre for Climate Change Economics and Policy, London School of Economics and Political Science - and its authors Catherine Higham, Joana Setzer, Harj Narulla and Emily Bradeen have published: ‘Climate change law in Europe: what do new EU climate laws mean for the courts?' (March 2023):
- Increase in climate litigation cases ahead: The authors predict “an increase in climate litigation cases as a result of recent and ongoing legislative efforts at the EU level. In particular, significant litigation is likely following the introduction of the ‘Fit for 55’ package, the European Union’s flagship decarbonisation measures.” For instance, there could be lawsuits on the extension of the European Union Emissions Trading System (EU ETS) that will impose new costs and obligations on the private sector. There could be lawsuits on “the overall ambition and implementation of new climate policies and legislation by the EU and its Member States”, including cases grounded in human rights - arguing “that governments are not taking sufficiently ambitious action to protect these rights.” There could be lawsuits on ‘just transition’ “over the distribution of benefits and burdens of climate action, and over decision-making processes at the Member State and EU level.” This is likely to be particularly relevant in the context of the ‘Social Climate Plans’ that EU governments will be putting together to benefit vulnerable households, micro-enterprises and transport users particularly affected by energy and transport poverty. There could be lawsuits on what constitutes ‘renewable energy’, as well as permitting for both renewable and fossil fuel projects.
- Litigation against companies and financial institutions: The authors make the link between measures “aimed at ensuring that the EU’s climate goals translate into activities in the real economy” and litigation against companies and financial institutions. In addition to the extension of the European Union Emissions Trading System (EU ETS), several new measures are being discussed that will increase litigation risk for private sector entities. These include extending corporate due diligence obligations to climate change, reforms to the governance of corporations and corporate value chains, reforms regarding providing and using sustainability information, and reforms to consumer protection legislation.
- Understanding the bigger picture: In light of these developments, the authors argue that “[i]t is critical that governments and legislators, businesses, lawyers, and civil society groups understand the bigger picture of how climate change law in Europe is changing. This includes a need to understand legislative developments holistically, rather than focusing on individual measures in isolation.” The authors underscore the importance of “anticipat[ing] the ways in which litigation may be used by a wide range of actors in the coming years” and call on businesses and their professional advisors to reform their internal practices, in light of the growth in litigation risk.