Climate litigation predicted to increase

LSE says just transition and social climate plans could attract legal battles and finance firms may be under fire

Legal cases over climate change are expected to increase as a result of recent and ongoing European legislation, according to researchers at the London School of Economics (LSE).

In a policy report, Climate change law in Europe: What do new EU climate laws mean for the courts?, the researchers recommend bringing stakeholders together in the development of legislation to minimise legal conflict.

Europe is undergoing an unprecedented shift in the scale and ambition of climate policy following the announcement of the European Green Deal and the passage of the European Climate Law.

There is, the LSE researchers point out, a significant history in Europe of climate litigation being used as a lever to influence the outcomes and ambition of climate policy. 

“Over the past three decades a broad array of litigants has used European legislation in a range of climate change cases,” their report said.

“Some of the cases can be understood as examples of strategic litigation: where the litigants are not exclusively concerned with their own rights or interests but rather seek to advance a broader social goal,” it added. 

In particular, the researchers expect “significant litigation” is likely following the introduction of the ‘Fit for 55’ package, the European Union’s flagship decarbonisation measures. 

“Much of this litigation is likely to involve challenges to government action or inaction. It may include both strategic and non-strategic cases,” the report said. 

Climate change legal action

The LSE research highlights a number of possible legal cases that could emerge.

Litigation focused on the extension of the European Union Emissions Trading System (EU ETS), is one example, building on a history of litigation following previous reforms. This may seek to prevent or delay the implementation of new rules that impose new costs  and obligations on the private sector.

‘Government framework’ litigation, focused on the overall ambition and implementation of new climate policies and legislation by the EU and its Member States, is also flagged in the research.

Such cases may be grounded in human or constitutional rights and argue that governments are not taking sufficiently ambitious action to protect these rights, or in domestic climate change framework laws, arguing government actors are failing to comply with relevant duties established under these laws.

‘Just transition’ litigation over the distribution of benefits and burdens of climate action, and over decision-making processes at the Member State and EU level, is another area that could attract legal battles.

This is likely to be particularly relevant in the context of new requirements for Member States to create ‘social climate plans’ to access the Social Climate Fund created by the new legislation.

Finally, disputes could arise over what constitutes ‘renewable energy’, particularly regarding bioenergy.

“We also anticipate disputes over permitting for both renewable and fossil fuel projects to remain a focus of litigation,” the researchers said.

Litigation against financial institutions

At the same time, the researchers predict measures aimed at ensuring the EU’s climate goals translate into activities in the real economy may well give rise to litigation against companies and financial institutions. 

This is because in addition to extending existing obligations under the EU ETS, several new measures are focused on corporate governance.

Many of these measures focus on the collection and disclosure of information, with a goal of influencing the choices made by consumers and investors. 

Reforms to the governance of corporations and corporate value chains, for example, the extent of which are unclear in current legislative proposals, and which are likely to remain the subject of disputes even once the legislation is passed.

Likewise reforms regarding the provision and use of sustainability information in financial transactions and by financial service providers.

Also reforms to consumer protection legislation, which may be invoked in the context of a recent wave of ‘climate-washing’ litigation across Europe.

The LSE researchers pointed out: “It is critical that governments and legislators, businesses, lawyers, and civil society groups understand the bigger picture of how climate change law in Europe is changing. 

“This includes a need to understand legislative developments holistically, rather than focusing on individual measures in isolation.”