Summary

Just transition litigation on the rise

Anna Triponel

July 12, 2024

The Business and Human Rights Resource Centre (BHRRC) released Unjust Transition on Trial: Communities and Workers Litigate to Shape Corporate Practice (July 2024), an analysis of 60 cases since 2011 documented in its Just Transition Litigation Tracking Tool.

Human Level’s Take: The signals keep getting stronger: companies and investors need to be prepared to face additional scrutiny for their involvement in projects that are not viewed as meeting the expectations of a just transition, including in the courtroom. The BHRRC’s Just Transition Litigation Tracking Tool shows a sharp rise in litigation over the last six years across a diverse range of jurisdictions. While lawsuits against transition minerals companies are still topping the list, projects like wind energy, hydropower and solar are facing more litigation than before. The challenge of taking companies and governments to court over transition projects is that they often pause or stop the projects altogether which slows down the energy transition and presents risks for companies and their shareholders. The solution—and what litigants are asking for—is not to stop developing renewable energy projects but to make sure those projects are designed and implemented equitably and in a rights-respecting manner, with stakeholder consultation, and with consent in the case of Indigenous Peoples. The BHRRC recommends that companies (with support of investors) create projects that deliver shared benefits to project-affected communities and workers while avoiding harm to people and the environment. They should also be conducting strong human rights due diligence (HRDD), including meaningful engagement with impacted stakeholders; ensuring access to remedy; and negotiating fairly with workers and communities to make shared value a reality.

Key points from the report:

  • An uptick in just transition-related litigation: Of all cases tracked since 2011, 73% have been brought in just the last six years, since 2018. Cases in the tracker have been brought against States and the private sector in transition minerals mining and three renewable energy sectors (solar, wind and hydropower). Litigation against the mining sector accounted for 66% of cases, but other sectors are increasingly becoming targets for lawsuits: nine cases were brought against wind projects, nine against hydropower projects and two against solar projects. Cases have been brought primarily by Indigenous Peoples, other communities and workers. They concern a variety of issues including environmental abuses (77% of tracked cases), water pollution and/or access to water (80%), and abuse of Indigenous Peoples’ rights (55%), especially the right to Free, Prior and Informed Consent (35%). Overall, almost 80% of cases aimed to temporarily or permanently stop the project in question because of adverse impacts on human rights and/or the environment. Often, the complaint is grounded in the failure of the government or project company to conduct meaningful consultation or obtain FPIC.
  • Risks for the energy transition and the private sector: The rise in just transition litigation is a signal to companies and investors that the status quo is quickly changing. BHRRC points out that “[c]ommunities are beginning to demand more from the development of energy transition projects on their lands and impacting their lives, through benefit sharing arrangements that provide decision-making power, benefits in kind and financial gain.” The increased empowerment and capacity for impacted people to bring these cases in courts across the globe is complemented by the a hardening legal landscape: mandatory human rights and environmental due diligence regulations (e.g., in the EU) and sector-specific legislation requiring community consent prior to permitting (e.g., in Sierra Leone, Kenya, Mexico, Canada and New Zealand). As a result, transition companies and investors face a risk of project delays or stoppages, with implications for project costs and shareholder returns. At the same time, delaying or stopping projects due to a lack of adequate consultation or mitigation of impacts risks slowing down the urgently-needed energy transition to meet global climate goals.
  • What companies and investors can do: For their part, companies should prioritise shared prosperity in projects, for example by designing projects that deliver shared benefits to local communities at the same time as avoiding harm. This relies on robust consultation and close partnership with project affected communities and workers. Companies can also uphold their duty of care for human rights by conducting strong human rights and environmental due diligence (HREDD) throughout the full lifecycle of the project and along the full value chain. They should also have policies in place to protect human rights defenders (HRDs) and mechanisms that ensure access to remedy for harms. Renewable energy companies in particular can adopt a public commitment to sourcing minerals responsibly. Companies can also advance fair negotiations with workers and with project-affected communities by putting in place continuous due diligence and engagement processes, and ensuring Indigenous Peoples can determine how and whether their FPIC is achieved. Meanwhile, investors should implement stewardship and responsible investment policies that prioritise engagement with portfolio companies on their HREDD, stakeholder engagement and FPIC, and HRD protections.

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