ESG

Climate Change Litigation: An Emerging Frontier in ESG Law

Climate change is an urgent global challenge that requires comprehensive and immediate action. The consequences of climate change, including rising sea levels, more frequent natural disasters, and extreme weather events, have significant implications for our planet’s health and our society’s well-being. As the world’s leaders and stakeholders seek to address the issue of climate change, one area that has been gaining traction in recent years is Climate Change Litigation (CCL).

It involves legal actions that seek to hold corporations, governments, and other entities accountable for their contributions to climate change and their failure to address its effects. This emerging field of law is becoming increasingly important as more individuals and organizations recognize the need to take action to combat climate change.

In addition, climate change litigation is closely linked to the field of Environmental, Social, and Governance (ESG) law, which refers to the legal framework that governs the social and environmental impact of business activities. As companies and investors focus on sustainable practices, ESG law is becoming more prominent in discussions around corporate responsibility and accountability.

This blog will explore the emergence of climate change litigation and its relationship with ESG law. We will examine the different types of CCL, highlight examples of notable cases from around the world, and discuss the legal challenges that climate change litigation faces. Ultimately, we will argue that climate change litigation is an essential component of the fight against climate change, and ESG law has a critical role to play in this emerging legal frontier.

The Emergence of Climate Change Litigation

• Historical Overview: It has its roots in the 1980s in India when public interest litigation emerged as a tool to enforce environmental laws. However, it was not until the early 2000s that climate change litigation gained traction in India. One of the early cases was the Vellore Citizens’ Welfare Forum v. Union of India, where the Supreme Court of India issued guidelines to control pollution in the country. Another significant case was the MC Mehta v. Union of India, where the court ordered the closure of hazardous industries in Delhi.
• Recent Developments: In recent years, CCL in India has focused on holding the government accountable for its role in addressing climate change. One notable case is the Centre for Policy Research v. Union of India, where the Delhi High Court directed the government to take action to reduce air pollution in Delhi. Another significant case is the Uttarakhand Forest Fire Case, where the National Green Tribunal directed the government to take steps to prevent forest fires in the state.

Moreover, the landmark judgment in the M.C. Mehta v. Union of India case in November 2021 by the Supreme Court of India has opened up a new horizon for environmental justice. The court upheld the principle of polluter pays and extended the liability of compensation to the parent companies for environmental degradation caused by their subsidiaries in India.

ESG and Climate Change Litigation

Environmental, Social, and Governance (ESG) is a framework used by investors and companies to evaluate the social and environmental impact of business activities. The ESG framework considers the company’s performance in three main areas: environmental, social, and governance. Environmental criteria evaluate the company’s impact on the environment, social criteria assess the company’s impact on society, and governance criteria assess the company’s management structure and practices.

• How ESG relates to Climate Change Litigation: ESG and CCL are closely linked. ESG factors are becoming increasingly important in climate change litigation as plaintiffs seek to hold companies and governments accountable for their social and environmental impact. Companies that fail to address their environmental impact and are not proactive in reducing greenhouse gas emissions face greater risk of CCL. The ESG framework can be used to evaluate a company’s readiness to deal with climate change and can help investors assess the risks associated with CCL.
• Importance of ESG in Climate Change Litigation: ESG is essential in because it provides a framework for evaluating a company’s impact on the environment and society. ESG factors can be used to evaluate a company’s readiness to deal with the impact of climate change and can help investors assess the risks associated with climate change litigation. Companies that integrate ESG factors into their business practices are more likely to be proactive in reducing greenhouse gas emissions and addressing the impact of climate change on society. This proactive approach can help companies avoid CCL and can also lead to long-term benefits, including improved financial performance and increased stakeholder trust.

Types

Climate change litigation can take several forms, depending on the legal system and jurisdiction. Here are some of the most common types:

1. Liability and Compensation Claims: Liability and compensation claims are a type of CCL where plaintiffs seek to hold companies and governments accountable for their contribution to climate change and the resulting damages. These claims can be brought by individuals, communities, or governments seeking compensation for the economic, environmental, and social costs associated with climate change.
2. Regulatory Litigation: Regulatory litigation involves challenging government regulations or policies that do not adequately address climate change or that violate environmental laws. For example, plaintiffs may challenge a government’s decision to issue permits for fossil fuel extraction or challenge the lack of regulations on greenhouse gas emissions.
3. Public Interest Litigation: Public interest litigation (PIL^[1]) is a type of CCL where individuals or groups file lawsuits on behalf of the broader public interest. PIL cases can focus on issues such as access to clean air or water, public health, or the protection of natural resources.
4. Other Types of Climate Change Litigation: In India, CCL has taken on a unique form. The country’s courts have been at the forefront of environmental protection and have issued several landmark judgments related to climate change. Some of the most notable cases in India include:

• The Vellore Citizens Welfare Forum case, where the Supreme Court of India ordered the closure of tanneries that were polluting the environment
• The MC Mehta case, where the court ordered the closure of polluting industries in Delhi

Examples

Climate change litigation is a global phenomenon, with lawsuits being filed in various countries. Here are some notable examples from different regions:

1. United States: The United States has been at the forefront of CCL, with several high-profile cases filed in recent years. One of the most significant cases is Juliana v. United States, where a group of young plaintiffs sued the U.S. government for its role in causing climate change and violating their constitutional rights. Another notable case is City of Oakland v. BP, where the city of Oakland and other California municipalities sued major oil companies for damages caused by climate change.
2. Europe: In Europe, climate change litigation has gained traction in recent years, with several landmark cases being filed. One of the most significant cases is Urgenda Foundation v. The State of the Netherlands, where the Dutch government was ordered to reduce greenhouse gas emissions by at least 25% by 2020. Another notable case is Friends of the Irish Environment v. The Government of Ireland, where the Irish Supreme Court ruled that the government’s National Mitigation Plan was inadequate.
3. India: In India, climate change litigation has been focused on protecting the environment and ensuring that the government takes action to address climate change. One of the most significant cases is the Vizhinjam International Seaport Ltd. v. Kerala Coastal Zone Management Authority, where the Kerala High Court canceled the environmental clearance granted to a port project due to the potential impact on the environment. Another notable case is the Ganga Pollution Case, where the Supreme Court of India ordered the central and state governments to take measures to clean up the Ganga river.

Legal Challenges in Climate Change Litigation in India

Climate change litigation in India faces several legal challenges that can make it difficult for plaintiffs to hold governments and corporations accountable. Here are some of the most common legal challenges in climate change litigation in India:

1. Standing: Standing is a legal principle that determines who has the right to bring a lawsuit. In India, the courts have been strict in applying the standing rule, which can be a significant obstacle for plaintiffs in CCL. For example, in the Subhash Kumar v. State of Bihar case, the Supreme Court of India held that only a person who has a direct injury or a legal right to protect can approach the court. This can make it difficult for plaintiffs to bring lawsuits on behalf of the broader public interest or future generations.
2. Causation: Proving causation in CCL can be challenging. Plaintiffs must demonstrate that the defendant’s actions or omissions contributed to climate change and caused the damages they are seeking to recover. This can be a complex and fact-intensive inquiry, especially in cases where multiple parties may have contributed to the harm.
3. Proving Damages: In CCL, plaintiffs must prove that they have suffered damages as a result of the defendant’s actions or omissions. However, establishing a causal link between the defendant’s conduct and the damages suffered can be challenging. Additionally, quantifying damages can be difficult, especially in cases where the harm is long-term and affects natural resources or future generations.
4. Other Challenges: Other legal challenges in climate change litigation in India include the lack of specialized judges and courts with expertise in environmental law, delays in the legal system, and the high cost of litigation. These challenges can make it challenging for plaintiffs to bring and win climate change lawsuits in India.

Conclusion

To sum up, CCL is a vital tool for holding governments and corporations accountable for their actions towards climate change. It is an emerging area in ESG law that has gained momentum globally in recent years. ESG factors have become increasingly important in climate change litigation, which can help identify risks and opportunities related to climate change for investors. Different types of CCL, including liability and compensation claims, regulatory litigation, and public interest litigation, can be used to enforce environmental laws and drive policy changes. Despite legal challenges, recent developments in climate change litigation in India have set a precedent for future cases, and it is expected that the field will continue to evolve and grow in the future.

Also Read:
What is the Role of Regulators in Promoting ESG Investments?
Future of Environmental, Social, and Governance (ESG): Emerging Trends and Opportunities for Investors