Climate change-related lawsuits are on the rise, and as litigation in this space continues to “evolve rapidly,” a new study predicts that the number of cases being filed against governments and companies, alike, will “carry on growing.” According to the “Global Trends in Climate Change Litigation” report released by researchers at the London School of Economics and Political Science, the amount of newly-filed lawsuits centering on climate and broader Environmental, Social, and Governance (“ESG”) issues has more than doubled since 2015, bringing the total number of cases to over 2,000, with roughly one-quarter of these cases filed since the start of 2020.
To date, most of the climate-centric cases have been waged against government entities, specifically challenging lawmakers and regulators’ “overall responses to climate change,” the Grantham Research Institute at the London School of Economics states in the recently-published report. However, cases against corporate actors are on the rise, as ESG lawsuits increasingly target players in the food and agriculture, transport, plastics, and finance sectors – as well as those in the apparel sector – in the United States, where the majority of cases (just upwards of 71 percent) were filed between May 2021 and May 2022.
Looking specifically at the nature of such suits, the report’s authors Joana Setzer and Catherine Higham assert that the bulk of the cases filed against both governments and companies seek to “enforce climate standards,” and thus, are challenging “sectoral policies, decisions around actions, multiple permits or individual projects, as well as specific aspects of companies’ supply chains.” A smaller – but growing – number of actions center on allegations of “climate-washing,” with Setzer and Higham noting that “climate-related greenwashing litigation or ‘climate-washing’ litigation,” in particular, is “gaining pace, with the aim of holding companies to account for various forms of climate misinformation before domestic courts and other bodies.”
These “climate-washing” cases can be separated into three categories, per accord, ones that challenge misleading communications regarding: (1) “corporate and governmental commitments,” (2) “product attributes,” and (3) “disclosure of climate investments, financial risks and harm caused by companies.”
At the same time, the report states that as “the policy debate around ways to reach net-zero gathers momentum, concerns have been raised about the possible over-reliance [by] companies,” including in the apparel and fashion arena, “on the ‘net’ part of the concept and insufficient attention to the ‘zero’ part.” These concerns – and the potential for cases accusing companies of relying too heavily on greenhouse gas removals or “negative emissions” technologies – are “particularly salient” when it comes to offsetting and carbon trading, in furtherance of which companies may “rely on the existence of projects and plans to reduce emissions or enhance carbon sinks elsewhere to justify continued investment in high-emitting activities.”
Again, while the researchers found that “cases challenging a wide array of climate-relevant government decisions continue to make up the bulk of climate cases,” litigants are increasingly looking to new approaches, including how to “maximize their potential for impact by focusing on key levers, such as finance and supply chains, and key constituencies, such as [companies’] directors and boards.” Against this background, climate cases are being filed against “an ever-wider range of corporate actors, increasingly based on concerns over climate-washing and misinformation.”
This presumably follows from the overarching rise in climate-related messaging that companies are touting in consumer-facing marketing, such as ad campaigns and product labeling language, as well as in investor-centric documentation – from initial public offering statements lodged with the U.S. Securities and Exchange Commission to companies’ annual investor reports.
In terms of consumer-focused marketing, Allbirds, for instance, was named in a false advertising lawsuit in June 2021, in which it was accused it of failing to live up to the claims that it makes in its marketing, including assertions about the carbon footprint of its popular footwear, and its “sustainable” and “responsible” manufacturing practices. Among other things, plaintiff Patricia Dwyer alleged that Allbirds’ life cycle assessment tool – which identifies the carbon footprint of each product – does not assess the environmental impact beyond the manufacturing of the shoes, themselves, such as the impact of “wool production, including on water, eutrophication, or land occupation,” and thus, “exclude[es] almost half of wool’s environmental impact.” At the same time, the plaintiff claimed that Allbirds’ carbon footprint figures “are based on ‘the most conservative assumption for each calculation, skewing the calculations in its own favor,’ so it can make more significant environmental claims.”
The sneaker-maker managed to escape the suit, with a New York federal judge granting its motion to dismiss in April, but the case seems to rather neatly fall in line with a growing number of suits that challenge companies when it comes to their marketing of corporate commitments and product attributes, alike.
Additionally, Setzer and Higham point to two noteworthy cases: Australasian Centre for Corporate Responsibility v. Santos, in which Australian natural gas company Santos’s “net zero” plan is coming under fire for not being clear or credible. Similarly, its claims that natural gas is a “clean fuel” are being challenged as misleading. A second case noted by the authors is that one that was filed against French oil company Total in the Judicial Tribunal of Paris, which makes similar claims, taking issue with Total’s overall claims about its commitments to carbon neutrality and specific claims about the role of both natural gas and biofuels in the energy transition. The case relies on “French national law implementing the European Union Unfair Commercial Practices Directive, and as such may provide a blueprint for future cases in the EU,” according to Setzer and Higham.
Going forward, the authors state that there are five areas to watch in the coming year: cases involving personal responsibility; cases challenging commitments that over-rely on greenhouse gas removals or “negative emissions” technologies; cases focused on short-lived climate pollutants; cases explicitly concerned with the climate and biodiversity nexus; and strategies exploring legal recourse for the “loss and damage” resulting from climate change.
Reflecting on the report’s findings, Osborne Clarke attorneys Jane Park-Weir and Michelle Radom state that in light of rising litigation in connection with climate claims, “There is no room for complacency: dishonest representations by companies and directors about sustainability will become obvious very quickly and will be actionable.” Even if greenwashing claims and claims based on the breach of directors’ duties “may be hard to establish,” they note that “the adverse publicity such a claim can bring carries with it the risk of serious reputational damage and a consequential loss of business and share value.” As such, they encourage companies to “consider their exposure to climate change-related litigation arising not just out of their own activities but also from the activities of those to which they are linked, including their subsidiaries, suppliers and customers.”