Climate change has been in the news recently in the wake of the Bonn Climate Talks, which took place between November 6 and 17, 2017. One key take away from the Talks: energy companies must seriously consider potential lawsuits linking their business operations with human rights violations and climate change.
The Bonn Climate Talks brought together negotiators from close to 200 countries to discuss how to take concrete action to implement the terms of the Paris Agreement. The private sector also participated, focusing on the role of businesses in developing and perfecting clean energy technologies. Prominent companies pledged their commitment to sustainable technology. For example, several global companies pledged to join EV 100, a global initiative bringing together companies committed to transitioning to electric vehicles.
Climate change litigation also featured heavily in the discussion. Such suits are more prevalent than ever, as companies in several countries face suits in which the plaintiffs allege that business activities have caused climate change, impacting the human rights of individuals in certain locations (such as low-level coastal areas). A United Nations study found that, as of March 2017, there were almost 900 ongoing lawsuits related to climate change filed in 25 countries. In addition, the number of countries with climate-change cases has tripled since 2014.
Some trends are evident from these lawsuits. First, litigants may bring a lawsuit in a company’s home jurisdiction (where it is headquartered or incorporated) for climate change effects allegedly experienced elsewhere in the world. For example, a higher regional court in Germany is set to hear arguments brought by a Peruvian farmer against a German energy company alleging that the German company’s greenhouse gas emissions contributed to global warming which, in turn, had increased the likelihood of the collapse of two glaciers into Palcacocha Lake in Peru. The Glaciers’ collapse allegedly would impact the farmer’s home, which was located in the flood path of Palcacocha Lake. The farmer has asked the company to pay £14,250 to remediate its contribution to global warming, which would be invested in installing a glacial flood outburst early warning system, draining the Palcacocha Lake and building new dams or improving existing ones, in order to prevent the risk of flooding in the area. The lower German court dismissed the case in November 2016, ruling that there was no legal connection between the business activities of the German company and the situation in Peru. However, on November 13, 2017, the higher regional court held that the case could have merit. The appeal is still underway.
Second, litigants are bringing claims alleging that the business activity of energy companies causes climate change which, in turn, prevents affected communities from enjoying the full spectrum of human rights available to them under international law instruments. This includes the rights to life, water, food, sanitation, adequate housing and self-determination. For example, the Commission on Human Rights in the Philippines (the “CHR”) is currently hearing complaints filed in September 2015 alleging that the actions of 47 carbon majors had resulted in typhoons and other climate changes, which, in turn, had adversely impacted the human rights of communities living in low-level, coastal areas. The complaint, brought by typhoon survivors and civil society organizations, including Greenpeace Southeast Asia, appears to be the first of its kind in the world and was supported by more than 31,800 Filipinos (as well as a total of 128,000 global online supporters). At least 17 of the 47 named companies have filed written responses with the CHR. The proceedings are underway.
Third, litigants are bringing claims to prevent energy activity on the basis that such activity will impact the ability of local communities to enjoy human rights. For example, Greenpeace and an environmental group called Nature and Youth have filed a lawsuit against the Norwegian Ministry of Petroleum and Energy challenging licenses issued in 2015 that permitted international energy majors to drill for oil and gas in the artic. The litigants allege that such activity will cause climate change and violate Norway’s constitution, which guarantees the right of its citizens to a healthy environment. The Norwegian court heard oral arguments during the week of November 13, 2017.
Fourth, claims are being filed with the National Contact Point (“NCP”) that OECD Member States have set up pursuant to the OECD Guidelines for Multinational Enterprises issued initially by the OECD in 2000. For example, in May 2017, four NGOs based in the Netherlands filed a formal complaint against a global bank headquartered in the Netherlands with the Dutch NCP, accusing the bank of violating the OECD Guidelines. The NGO alleged that its research showed that the bank invested eight times more in fossil industries compared to loans made to sustainable energy companies, and that bank planned to finance four new coal power plants in countries such as Indonesia and the Dominican Republic. The NGOs alleged that such actions violated several articles of the OECD Guidelines, particularly those relating to disclosure of environmental harms, as the bank did not report about its indirect product emissions. The Dutch NCP is investigating the complaint.
Conclusion: Increasingly, litigants are filing claims before a variety of courts and tribunals (such as a NCP in an OECD Member State, a national Human Rights Commission, and, of course, national courts) seeking to hold energy companies and investors in the energy industry accountable for their business activities that have resulted in climate change that allegedly has adversely impacted the human rights of individuals and communities. These lawsuits contain rights-based claims, in which litigants allege that the activities of energy companies have brought about climate change that in turn has affected the enjoyment of their rights.
This is not a surprising development. Significant focus has been paid to the compliance of businesses with human rights since the Human Rights Council endorsed the UN Guiding Principles on Business and Human Rights in 2011. Energy companies must undertake adequate human rights due diligence into all aspects of business operations (pursuant to the UN Guiding Principles, the OECD Guidelines, and regional or national reporting laws). Failing to do so entails significant risk, both legal and reputational.