Trends in Climate Litigation

Climate litigation has attracted significant media attention in recent years, with the number of cases globally continuing to grow markedly. Such cases broadly fall into two categories: claims for compensation related to historic activity, and claims seeking to change or influence current or proposed activity or policy. Indeed, the use of litigation as a tool to effect change in the area of carbon emissions is evident across many jurisdictions, with representatives of every member state of the Intergovernmental Panel on Climate Change approving a 2022 report recognizing the role of litigation in affecting “the outcome and ambition of climate governance”. However, it’s not all one-way traffic; there is an emerging trend of claims against governments relating to losses suffered as a result of restrictions on the production and use of hydrocarbons.

Recent Developments in England

In England and elsewhere, recent developments may aid the bringing of such claims. Procedurally, the growth of group litigation orders, to enable ‘class action’ lawsuits where a large number of people are affected by the same issue, allow the costs of litigation to be spread between claimants in cases where an individual’s losses would make legal action uneconomical, but when grouped, can be pursued cost effectively. For example, the NOx Emissions Group Litigation currently proceeding in the English courts, has an estimated number of claimants of over one million.¹  Additionally, developing alternative fee arrangements, such as damages based or conditional fee agreements, allow individuals to initiate claims without having to make a significant initial outlay to fund litigation which might previously have deterred them. This is bolstered by the developing market in commercial third-party litigation funding, which can front capital to under-resourced individuals or groups to meet solicitors’ costs, as well as adverse costs orders or cross-undertakings as to damages.

For example, in October of 2024, the High Court trial began of group litigation brought by over 600,000 Brazilians against Australian mining company BHP Group Ltd over the 2015 Samarco Fundão (Mariana) dam failure that released toxic mud and caused extensive environmental damage. The claim is for £36 billion in damages and is considered to be the largest group litigation in English legal history. It is reported that the case is being financed (at least in part) by Gramercy Funds Management, which has provided a $552.5 million loan.²

The broad direction of travel of substantive English law is also facilitating the bringing of climate change litigation. For example, recent decisions of the Supreme Court have confirmed that U.K. parent companies may owe duties of care to those affected by the activities of their subsidiaries, whether in the U.K. or elsewhere. In the case of Vedanta,³  a group of almost 2,000 Zambian citizens succeeded on jurisdictional issues to be granted permission to bring a claim against Vedanta Resources PLC, a London-listed parent (incorporated and domiciled in the U.K.) for harm suffered from toxic emissions from the Nchana Copper Mine, owned and operated by a Vedanta subsidiary. Similarly, in Okpabi,⁴  approximately 42,000 Nigerians succeeded on similar issues of jurisdiction to bring a claim against Royal Dutch Shell Plc (“Shell”), concerning widespread environmental damage caused by oil spills of a Shell subsidiary.

English Litigation Concerning Historic Activity

Claims for compensation for historic activity face difficulties in establishing the existence of a duty of care by the defendant to the claimants, breach of that duty and that such breach caused loss to those claimants. These challenges are illustrated in cases concerning pollution and environmental damage. In the Scottish case of Scott v Scottish Water,⁵  cattle were alleged to have died as a result of sewage overflow, and the Sheriff Appeal Court held that even if causation could be established, there could be no liability because the defendant water company had acted responsibly at all times. In the Privy Council case of Petroleum Co of Trinidad and Tobago Ltd v Ryan,⁶  the claimant alleged that hydrocarbon emissions from a disused oil well had caused respiratory diseases in himself and his daughter, and the Privy Council found that there was insufficient medical evidence to demonstrate causation of the illness from the hydrocarbon emissions, and rejected the claim. These obstacles may explain why no compensation claims for greenhouse gas emissions have yet been brought in England, though in light of recent case law from New Zealand (examined below), it may only be a matter of time before they are.

English Litigation Seeking to Change Policy or Current Activity

In contrast, there have been more cases seeking to change current or future activity or policy.

Some claims have been brought as shareholder ‘derivative actions’ against company directors for breach of duty by failing adequately to take into account environmental factors in decision-making—for example, McGaughey v Universities Superannuation Scheme Ltd⁷  and ClientEarth v Shell.⁸  Both claims, however, failed at the permission stage—in the case of Universities Superannuation Scheme, this was because there was no economic loss established, and in the case of Shell, because there was no established standard of managing climate risk to which the directors should be held. The court instead opted to “respect the autonomy” of the directors. It appears the courts will be reluctant to intervene in the absence of clear misconduct or negligence by directors. Following the decision in Shell, one commentator opined that “derivative litigation challenging strategy on climate risk may still not be worth powder in shot”.⁹  However, a purely legal analysis arguably misses the point: the fact of derivative claims against individual directors may influence board decision-making, regardless whether those claims succeed before the courts. Indeed, in some instances, issues of public relations may be more important than legal liability.

Another legal route taken by activists is to challenge U.K. government policy and decision-making through judicial review on grounds that climate impacts and obligations have not been properly taken into account. Such claims have met with some success. Friends of the Earth sought to challenge the decision by the U.K. Secretary of State for Transport to approve the development of a third runway at Heathrow Airport on grounds that it was said he had not sufficiently taken into account the U.K.’s international obligations under the Paris Agreement and under other relevant domestic legislation.¹⁰  This claim was ultimately rejected by the Supreme Court, which found he had sufficiently taken into account those matters. The Supreme Court further noted, in particular, that the concept of ‘sustainability’ under the relevant statute included consideration of economic and social factors, and with the need for increased airport capacity in South East England having been identified, the new runway was no more environmentally harmful than any of the other proposed development options.

A more successful action was brought by Friends of the Earth (together with ClientEarth and the Good Law Project) against the U.K. Secretary of State for Business Energy and Industrial Strategy in 2022. The Administrative Court found that, in preparing a ‘carbon budget’ for 2033-2037, the Secretary of State had not met obligations under the Climate Change Act 2008 (the “CCA”) to achieve the U.K.’s 2050 net-zero targets.¹¹  The court allowed the claim in part, finding that the relevant sections of the CCA had not been met, because the Secretary of State had not been provided with sufficiently detailed quantitative information to make his decisions on the carbon budget, and because a sufficiently detailed plan was therefore not put before Parliament. The same three claimants again challenged by way of judicial review the U.K. government’s 2023 Carbon Budget Delivery Plan at a 3-day High Court hearing in February 2024, arguing that this Plan is also vague, uncertain, and insufficiently detailed, and that the necessary emissions cuts under the CCA will not be achieved. This action similarly succeeded on four of five grounds, on the basis that it was flawed for the Secretary of State to assume that the proposed climate policies would be delivered in full, and that the real risk of non-delivery was not properly considered.¹²

A more recent example of successful judicial review in the U.K. is R (Finch on behalf of the Weald Action Group) v Surrey County Council. Surrey County Council, in September 2019, granted planning permission for the retention and expansion of an oil & gas production facility in Horley, Surrey, including permission for the drilling of four new wells for production of hydrocarbons over a period of 25 years. As part of the planning application, an environmental impact assessment was prepared, but it did not consider greenhouse gas emissions elsewhere from combustion or other use of crude oil produced at that site.

Whilst the claim was originally rejected in both the High Court and Court of Appeal, the Supreme Court ultimately found by a 3:2 majority that the downstream greenhouse gas emissions were an “effect” of the project, and therefore the decision of Surrey County Council to grant planning permission was unlawful for failing to take them into account.¹³

Similarly, in Scotland, the Court of Session began hearing judicial reviews brought by Greenpeace and Uplift on 12 November 2024. These concern the unlawful approval of the development of the Jackdaw gas field and Rosebank oil field, off the coast of Aberdeen and Shetland respectively. If these challenges are successful, operators would be required to resubmit environmental impact assessments for approval before drilling could commence, as previous assessments did not consider the impact of downstream emissions.¹⁴

Rising Tide of Climate Litigation Globally

As at the end of 2022, it has been reported that 2,180 climate cases have been filed in 65 jurisdictions, of which 1,522 were in the U.S., 127 in Australia, 79 in the UK, and 62 in the EU.¹⁵  In 2023, at least 230 new climate cases were filed worldwide.¹⁶

Whilst ClientEarth v Shell might not have succeeded in the English courts, equivalent proceedings in the Netherlands were initially successful—in a 2021 case brought by the Dutch limb of Friends of the Earth, the Hague District Court ordered Shell to reduce emissions by 45% from 2019 levels by 2030, in line with the Paris Agreement.¹⁷  This decision was overturned in November 2024 by the Hague Court of Appeal, finding that Shell does not have an “absolute reduction” obligation of any particular percentage for its emissions. However, the court did find that companies have a legal obligation under Dutch law to contribute to global climate mitigation efforts, aligning with the Paris Agreement – and that Shell as an oil major has a “special responsibility” to reduce its greenhouse gas emissions. The court decided that companies “are free to choose their own approach to reducing their emissions in the – mandatory – climate transition plan as long as it is consistent with the Paris Agreement’s climate targets”. This decision is therefore significant in confirming corporate obligations to mitigate emissions consistent with the Paris Agreement. The ruling has broad implications for future climate litigation and corporate sustainability strategies.

Additionally, a question similar to that in R (Finch) was recently tried in the Norwegian District Court (currently under appeal), which found that the issuing of licences to produce petroleum in the South Barents Sea had been invalid, as there had been no assessment of the combustion emissions from the oil & gas which was to be produced.¹⁸

Another case in the Netherlands was brought in 2015 against the Dutch government by environmental group Urgenda Foundation, where the Hague District Court (later upheld by the Supreme Court of the Netherlands) ruled that the state had a duty to take action to mitigate climate change, and that in order to comply with Articles 2 and 8 (rights to life, health, and physical integrity) of the ECHR, the Dutch state must limit greenhouse gas emissions to 25% below 1990 levels by 2020.¹⁹  Similarly, in April 2024, a case brought against Switzerland before the European Court of Human Rights found that, by failing to meet climate targets, Switzerland had violated the Article 8 ECHR rights of more than 2,000 Swiss women, mostly over the age of 70, represented in proceedings by non-profit Verein KlimaSeniorinnen Schweiz.²⁰  However, the two other cases linked with and heard alongside Verein KlimaSeniorinnen were dismissed, highlighting the current limitations of relying on human rights grounds in climate litigation.²¹  A further case in South Korea, where 62 babies and young children, via their parental guardians, challenged the government of South Korea on its failure to protect their constitutional rights (to life and a healthy environment) against the threat of climate change, and a public hearing was held in April 2024.²²  The court found the climate law unconstitutional and that governmental climate targets were not strong enough to protect the constitutional rights of young people.

In New Zealand, a case currently proceeding may set important precedent for environmental liability claims. Māori leader Michael Smith brought claims against the seven largest producers of greenhouse gases, on grounds of public nuisance, negligence, and a new ‘climate duty’. His case is that the emissions produced will inevitably cause him harm through rising sea levels, damage to fisheries, and adverse health impacts. The defendants applied to strike out these claims, but the Supreme Court allowed them to continue, holding that Smith’s claims disclose a reasonably arguable cause of action.²³  Whilst he is not seeking damages, instead requesting declaratory relief and a requirement that emissions are reduced, the liability alleged against the polluters could be extrapolated to equivalent claims for damages in future cases, including in England & Wales, where New Zealand case law is persuasive (albeit not binding). Similarly, in Puerto Rico, local municipalities are currently bringing claims against several of the world’s largest coal, oil, and gas companies for damages suffered after tropical storms in 2017, on the grounds that they had been substantially caused by global greenhouse gas emissions since 1965, the consequences of which emissions the defendants had conspired to cover up.²⁴

In the U.S., the Supreme Court decision in Loper Bright Enterprises et al v Raimondo has widespread implications for indirect challenges into environmental regulations. The Supreme Court overturned the Chevron doctrine, which required courts to follow a federal agency’s interpretation of a statute (if reasonable and if Congress had not directly addressed a question in regards to that statute). Following this decision, courts will no longer have to follow agency guidance. Not only does this reduce the power of the U.S. Environmental Protection Agency, but it may encourage litigation seeking judicial interpretation of environmental regulation in the U.S.²⁵

Claims Against Governments’ Green Policies

In parallel with climate litigation to nudge governments to adopt green policies, there has been a notable trend of litigation against such policies, in particular in the U.S. For example, Minnesota Auto Dealers Association brought a case against the state’s imposition of emissions rules on constitutional grounds, albeit that case ultimately was rejected by the Minnesota Court of Appeal.²⁶

Perhaps of greater concern to governments, there is a growing number of investor-state arbitration cases seeking compensation from governments for losses suffered by fossil fuel investors as a result of policies to restrict hydrocarbon production and use. Historically, around 20% of investor-state arbitrations are thought to relate to fossil fuel projects and there is now an increasing trend for investors in such projects to bring claims on the basis of allegations that climate change related measures investors breach protections in applicable investment treaties. For example, the denial of permits for new fossil fuel extraction by Italy and Canada led to oil companies Rockhopper and Lone Pine Resources, respectively, claiming against those governments, with Rockhopper successfully obtaining an award of compensation in 2022.²⁷  In 2023 at least three further investor-state arbitrations were commenced on the same basis, and in 2021/22 three investor-state arbitrations were commenced in relation to government decisions to phase-out of existing fossil fuel-based electricity generation.

In response to this trend, there are proposals that investment treaties should exclude protections for fossil fuel projects, or in some cases be terminated altogether. On 24 April 2024, the EU Parliament voted overwhelmingly to exit the Energy Charter Treaty (ECT), an investment treaty under which fossil fuel companies have sued several EU member states, including the Netherlands and Italy.²⁸  Even this, however, might not in the short-term protect governments from claims, due to lengthy ‘sunset’ provisions in the ECT (and other treaties) that maintain protections for existing investments for many years after termination.

Outlook

The use of litigation as an effective means to influence government policy and corporate behaviour is likely to continue to increase. However, at the same time legal proceedings will also continue to be used, at least in the short-term, to protect certain fossil fuel investors from some of the impacts of policies intended to promote the energy transition. 

^{1 Re NOx Emissions Group Litigation [2023] EWHC 3173 (KB).}

^{2 https://www.ft.com/content/0bc35108-4adb-4dd0-a049-59e0933dbc55}

^{3 Vedanta Resources PLC and another v Lungowe and others [2019] UKSC 20.}

^{4 Okpabi and others v Royal Dutch Shell Plc and another [2021] UKSC 3.}

^{5 Scott v Scottish Water [2022] SAC (Civ) 30.}

^{6 Petroleum Co of Trinidad and Tobago Ltd v Ryan [2017] UKPC 30.}

^{7 McGaughey v Universities Superannuation Scheme Ltd [2023] EWCA Civ 873.}

^{8 ClientEarth v Shell Plc [2023] EWHC 1897 (Ch).}

^{9 David Gibbs-Kneller, Corporate strategy on climate risk in the courtroom: not worth powder in shot, Environmental Law Review, Env. L. Rev. 2023, 25(4), 326-335.}

^{10 R (Friends of the Earth Ltd and others) v Heathrow Airport Ltd [2020] UKSC 52.}

^{11 R (Friends of the Earth Ltd) v Secretary of State for Business, Energy and Industrial Strategy [2022] EWHC 1841 (Admin).}

^{12 R (Friends of the Earth Ltd) v Secretary of State for Energy Security and Net Zero [2024] EWHC 995 (Admin).}

^{13 R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others [2024] UKSC 20.}

^{14 https://www.bbc.co.uk/news/articles/czd5rvgp830o}

^{15 Sabin Center ‘Global Climate Litigation Report: 2023 Status Review’.}

^{16 Grantham Research Institute on Climate Change and the Environment ‘Global trends in climate change litigation: 2024 snapshot’.}

^{17 Milieudefensie v Royal Dutch Shell ECLI:NL:RBDHA:2021:5337.}

^{18 Greenpeace Nordic v The State of Norway (represented by the Ministry of Petroleum and Energy), Case No 23-099330TVI-TOSL05.}

^{19 Urgenda Foundation v State of the Netherlands [2015] HAZA C/09/00456689.}

^{20 Verein Klimaseniorinnen Schweiz and others v. Switzerland [GC], no. 53600/20.}

^{21 Carême v. France (dec.) [GC], 7189/21, and Duarte Agostinho and Others v. Portugal and 32 other States, 39371/20.}

^{22 https://climatecasechart.com/non-us-case/woodpecker-et-al-v-south-korea/}

^{23 Smith v Fonterra and others [2024] NZSC5.}

^{24 https://climatecasechart.com/case/municipalities-of-puerto-rico-v-exxon-mobil-corp/}

^{25 Loper Bright Enterprises v. Raimondo, 603 U.S. (2024)}

^{26 Minnesota Automobile Dealers Association v Minnesota Pollution Control Agency A22-0796.}

^{27 Rockhopper Italia S.p.A. v Italy, ICSID Case No. ARB/17/14, Award (23 August 2022); Lone Pine Resources Inc v Canada, ICSID Case No. UNCT/15/2, Award (21 November 2022).}

^{28 Alice Hancock, EU votes to leave energy treaty as green rules pushed through, Financial Times, 24 April 2024}