Environmental litigation in national courts is increasingly pointing the way toward novel approaches that can be useful in challenging the status quo on behalf of people and the planet. In formulating strategy, activists should consider the factors driving the litigation outcomes, the characteristics of the emerging legal landscape, and the contours of appropriate government regulation and corporate compliance frameworks, taking into account these developments. Although in this blog we focus on lessons from lawsuits in Australia, Germany, the Netherlands, and the United States, lawsuits in the Global South are also instructive strategically.
In this blog, CAL Advisor and former Innovation Fellow Zobaida Khan surveys environmental litigation from around the world, summarizing recent cases and identifying key trends and substantive developments. The blog highlights useful takeaways for activists and provides guidance for government regulation and corporate compliance frameworks to actively ensure supply chains free from human rights and environmental harms.
Recent Cases
Reflecting the impact of environmental activism, approximately 1800 climate lawsuits have been filed over the last few decades, and 1000 climate lawsuits have been filed just since 2015. Importantly, some of these cases have focused on scrutinizing governmental climate commitments. For example, the Supreme Court of the Netherlands recently upheld a ruling requiring the Dutch government to take specific and targeted actions to lower greenhouse gas emissions. Similarly, the German Constitutional Court demanded specific plans and/or targets from the German government to effectuate climate commitments, and the Federal Court of Australia declared that the Australian government owes a duty of care to all of the children of Australia in regard to climate change.
Separately, there has been a substantial amount of litigation over carbon emissions targets for transnational corporations. In Milieudefensie et al v Royal Dutch Shell, a district court of The Hague in the Netherlands ordered Royal Dutch Shell (RDS), a British-Dutch multinational with headquarters in The Hague, to reduce its carbon emissions level by 45 percent from its 2019 emission level, by 2030. This ground-breaking decision is the first in which a corporation has been required by a court to align its policies with the obligations of the 2015 Paris Agreement. The petitioners were the Friends of the Earth, six other organizations, and 17,000 Dutch citizens. The question for the court was not whether the company was complying with local emission laws, but rather whether the company was following international standards. The ruling can be appealed.
A number of lawsuits in the United States and Australia have raised the issue of liability for harms caused by corporate policies contributing to climate risk. In the United States, one such case centered on the failure of corporate directors to disclose climate risks, while another dealt with whether carbon emissions were causing financial harm to an industry. In Australia, the failure of a corporate board to assess, monitor, report, and disclose climate-related risks was the subject of a groundbreaking lawsuit (which settled), while a pending lawsuit alleges that the defendant company’s board of directors breached fiduciary duties and disclosure obligations with respect to climate risk.
Finally, in a landmark environmental decision, the Dutch Court of Appeals ordered Shell Nigeria to pay damages for oil spills in the Niger Delta. The Dutch court declared that the parent company, RDS, failed to exercise its common law duty of care to foreign claimants through its subsidiary’s delayed and faulty maintenance of oil pipelines. Friends of the Earth and four local farmers, who brought the suit against RDS and its subsidiary in Nigeria, claimed that the oil spill caused harm contrary to the right to a clean environment and a viable livelihood by contaminating farmlands and fishing water.
Key Factors Driving Change
Although some of these lawsuits began many years ago, the key factor driving the recent proliferation of cases is the activism of young citizens, non-profits, and start-ups aiming at corporate accountability. Established non-profits and start-ups have offered resources and networks, along with lawyers, advice, training, and other support, to the activists who are challenging harmful corporate practices. Relatedly, courts in Australia, Germany, the Netherlands, and the UK are becoming more generous in defining the “parties” to these causes of action. A defendant could be a national government, a company possessing sufficient ties with the host jurisdiction, and/or a parent company having sufficient connection with people or communities harmed by its subsidiary. The applicant/plaintiff could be a citizen, an environmental activist group, “children in other nations,” and even “future generations.”
The willingness of the courts to expand the ability to file suit enables much greater scrutiny of corporate conduct. In addition, the easy availability of research and analysis identifying how a company can “rewire” its organizational purposes and governance mechanisms, and integrate all of the relevant risks into its business model, is causing traditional social audits to be viewed with a considerable degree of skepticism. A forward-looking, holistic compliance framework needs to focus on shared prosperity, a fair and inclusive society, and across-the-board advancement of human and planetary wellbeing.
Substantive Impact
Incorporation of international standards into domestic law and extra-territorial jurisdiction: An important question illuminated by recent litigation is whether international human rights standards will be given weight when national courts are applying domestic law. National courts have repeatedly used non-binding international standards in interpreting domestic law, including in determining the rights of private parties. Thus, the UN Guiding Principles of Business and Human Rights, Principles of Responsible Business, and the UN Human Rights Council’s recent recognition of the “right to a safe, clean, healthy and sustainable environment” are becoming important reference points in domestic litigation.
In addition, mandatory due diligence laws in some European countries, such as the Norwegian Transparency Act and the German Supply Chain Due Diligence Act, are explicitly extra-territorial in that they can apply to human rights violations occurring outside of the country, particularly those violations that have an impact on the supply chains of the companies covered by the due diligence obligation.
Expanded duty of care: In cases where the applicable law is common law, failure to exercise the appropriate standard of care can trigger liability not only for states, but also for companies that possess a legally sufficient connection with the host jurisdiction. In some of the recent lawsuits, plaintiffs have based their claims of human rights violations on this kind of common law theory.
Evolution of common law duty of care
In common law, the law of tort imposes a duty of reasonable care on individuals to avoid foreseeable physical or proprietary harms to others. The standard duty of care becomes more stringent where the defendant has superior decision-making capacity or superior bargaining power. When applied to climate litigation, this notion of duty of care has been given a far-reaching interpretation: first, courts have broadened the class of beneficiaries/recipients to whom duty of care is owed by referring to international standards, and second, they have expanded the duty of care itself when the plaintiff has made a minimal (or negative) contribution to the risk(s).
In 2021, the Federal Court of Australia issued a declaration–which is under appeal–that prior to the approval of extension of a coal mine, the Minister of Environment owed a duty to take reasonable care to avoid causing personal injury or death arising from emissions of carbon dioxide into the Earth’s atmosphere. According to the court, this duty extended not only to the applicants, but also to all young people who were under the age of 18 and residing in Australia (expanding the duty of care intergenerationally). In reaching the decision, the court considered the seriousness of the risks, the special vulnerability of the children, and the innocence and negative contribution of children for the “unparalleled predicament” which they faced.
Parent company’s duty of care for subsidiary’s action/inaction
In a different context, the Dutch court in Shell Nigeria explained how an expanded standard of care can make the parent company liable for the negligence of its subsidiary. The court held that citizens or communities residing in the subsidiary company’s host state can bring a claim against the parent company if imposition of the duty is “fair, just and reasonable,” based on actual knowledge of, or intervention by, the parent company or the parent company being in sufficient proximity to the persons/communities harmed by its subsidiary’s operations.
Lessons for Activists
These developments suggest that activists should consider complex, innovative strategies that place the responsibility for preventing and rectifying social harms squarely on corporate actors. First, it might be worthwhile to pursue hybrid litigation/regulation/public relations approaches to maximize pressure for corporate accountability. Second, we should pay close attention to the evolution of the regulatory environment and the common law duty of care around the world, because trends in some parts of the world can create leverage for change in other parts of the world. Third, there is no substitute for broad public participation in the formulation and implementation of regulations and corporate compliance programs, which should be transparent and open to periodic improvement. Finally, we should not assume progress is going to be self-sustaining. Without monitoring and continued involvement on behalf of rights holders, stasis or even backsliding may well follow initial gains.
Guidelines for Regulation and Corporate Compliance
Corporations bear the ultimate responsibility for ensuring that their supply chains are free of human rights violations and environmental risks; mere compliance with government regulation may or may not discharge that responsibility. Recent developments, however, offer guidance for government regulation and corporate compliance frameworks, with the caveat that determining the appropriate standard of care, and how to apply it, is a nuanced and context-based process.
An expanded duty of care can be incorporated into government regulation and corporate compliance frameworks. If an expanded duty of care applies, corporations, including parent corporations in some specific situations, might be required to a) adopt transparent, detailed, effective, and auditable compliance mechanisms in order to address and monitor direct, indirect, and emergent risks, b) disclose relevant information to affected parties, and c) investigate potential human rights violations and determine appropriate responses when violations are found.
Recently, CEOs of 200 US corporations committed to “repurposing” business and investment activities towards protection of people and planet and addressing the concerns of all stakeholders, not just shareholders. Given this trend, it is increasingly questionable for companies to ignore human rights risks and challenges by adopting misleading, checking-the-box type social audits and/or green-washing techniques.
A recent KPMG report classified direct and indirect risks for investors. The report also identified how risks are multidimensional, not limited to a single issue and not necessarily visible at the time of doing business/investing. Reports on endemic human rights abuses in extractive industries (oil, gas, natural resource and mining industries) underscore the multifaceted and interconnected nature of social and environmental risks. Government regulation should be formulated to require companies to adopt policies and practices that take into account this complexity as well as the need to consult with stakeholders and affected communities.
In situations where exit from the business/investment is the only option, prevention of harm is the golden rule. However, where harm has already occurred, corporate mitigation and remediation measures must be taken.
Considerations for Companies Seeking to Implement Expanded Duty of Care
The following are useful considerations for companies seeking to implement an expanded duty of care:
Is a particular risk assessment tool appropriate for the company based on the nature and location of its business/investment, the commercial context (sourcing or investment relationship), and the type of legal and potential risks? For example, businesses dealing with high-risk agricultural commodities might benefit from the “Bio-diversity Impact Metric” for assessing their impact on biodiversity.
Has the company’s exercise of human rights due diligence included making investment or sourcing decisions based in part on whether the investment target or the input supplier maintains transparent, and publicly available, social and environmental policies and is not a known violator of social and environmental standards?
Does the company embrace meaningful, informed stakeholder and community engagement, and does it take “specific vulnerabilities” into account?
Are fair and inclusive grievance mechanisms in place that address social and environmental impact? Similarly, are there mechanisms in place for risk remediation and mitigation, and do those mechanisms include policies for exit/disengagement, where appropriate, as well as public communication of risks and abuses?
Conclusion
National legal proceedings are lengthy, expensive, and complicated. At present, in the absence of effective national and international commitments, they often represent the most advantageous avenue for challenging harmful laws, policies, and projects. Recent outcomes of such proceedings in environmental cases can help activists as they formulate innovative strategies that are tailored to addressing threats to people and the planet, including advocating where appropriate for proactive government regulation and effective corporate compliance frameworks.
Zobaida Khan is a CAL Advisor and a former CAL Innovation Fellow.
