Climate change litigation trends: a key risk area for corporates and financial institutions

In June, the Grantham Research Institute on Climate Change and the Environment published its 2024 annual snapshot report on global trends in climate change litigation. The report highlights that climate litigation remains an important area of litigation risk for corporates and financial institutions. 

UK records second highest number of new climate litigation cases in 2023

The report observes that during 2023, climate litigation continued to spread and diversify across the globe, with at least 230 new climate cases filed that year and cases having been recorded in at least 55 countries since 2015. After the US, the UK had the second highest number of recorded cases filed (24) over the year (although most of these were against the UK Government and public bodies). NGOs and/or individuals were claimants in 70% of new cases in 2023, reflecting continued efforts by civil society actors to use the courts to influence climate policy and action. 

Strategic climate cases continue to be filed against companies, in a broader range of sectors

The report highlights that strategic climate cases continue to be filed against companies across the world. Since 2015, around 230 such cases have been brought against companies and trade associations, with more than two-thirds of these cases emerging since 2020. In 2023, corporates were defendants in 40% of cases brought outside of the US. Further, the report highlights that “[c]ompanies from many sectors are now at risk of being taken to court over the climate”. Whilst corporate climate litigation has traditionally focussed on the fossil fuel industry, more recently cases have also been brought against companies in other sectors. For example, claims have been brought against industries that enable the work of fossil fuel companies, such as financial and professional services, or sectors that use fossil fuels, such as airlines. Litigation has also expanded to sectors away from fossil fuels, such as the food and beverage industry. 

Claimants are continuing to adopt novel legal strategies to bring strategic climate litigation claims against corporates. Recent trends highlighted in the report include:

• ‘Climate-washing’ cases continue to grow and represent one of the most rapidly expanding areas of climate litigation. 47 such cases were filed in 2023, bringing the total since 2016 to over 140 cases. These types of claims are also achieving high rates of success with over 70% of completed cases having been decided in favour of the claimants. Recent examples include the Dutch case of Fossielvrij v KLM and a complaint by NGO Opportunity Green to the UK Advertising Standards Authority alleging misleading advertising of liquefied natural gas (LNG) as a ‘green’ fuel by the cruise industry.  
• Over 30 ‘polluter pays’ cases are on foot worldwide (although such claims have not yet been attempted in the UK). These cases seek compensation from companies for climate-related harms allegedly caused by companies’ contributions to greenhouse gas emissions. After early cases (brought in the US) failed, the outcome of a second generation of these claims, such as the German case of Lliuya v RWE, remains uncertain. 
• More ‘corporate framework’ cases have been brought. These cases seek to require companies to align their group-level policies and governance processes with climate goals. The report acknowledges that many of these cases have failed. However, several significant cases are still awaiting a final outcome. For example, the New Zealand Supreme Court has allowed one such case to proceed in Smith v Fonterra and the Dutch case of Milieudefensie v Shell is on appeal. 
• The report identifies a new category of ‘transition risk’ claims, which relate to cases filed against directors for their management of climate risks. Notwithstanding the failed attempt before the English courts in ClientEarth v Shell, the authors of the report anticipate “considerable growth” in this area in future.

Non-climate aligned litigation

The report reveals that over 20% of cases filed in 2023 concerned non-climate aligned objectives. These cases include ‘ESG backlash’ cases, which challenge the incorporation of climate risk in financial decision-making and have largely been a US phenomenon. Other examples identified in the report include: ‘strategic litigation against public participation’ cases (SLAPPs) against NGOs and activist shareholders in connection with their climate agendas, such as Exxon Mobil’s US legal action against shareholder activists; ‘just transition’ cases, which challenge the distributional impacts of climate policies; and ‘green v green’ cases concerning the trade-offs between climate and other environmental aims, such as biodiversity, which have arisen in the context of challenges to renewable energy projects, for example. 

A “significant year” for international cases could influence domestic climate cases

The report highlights recent developments in international climate litigation. It suggests that the European Court of Human Rights’ (ECtHR) decision in KlimaSeniorinnen v Switzerland in April is “likely” to lead to more cases being filed (a new ECtHR climate claim has been filed against Austria since the report was published). Cases before other international courts, such as the July 2024 advisory opinion issued by the International Tribunal on the Law of the Sea, which concerned states’ obligations to protect and preserve oceans from climate change, also have “significant potential” to influence domestic proceedings. As discussed in our post on KlimaSeniorinnen, although these cases do not directly concern companies’ climate obligations, they may embolden actors behind corporate climate litigation claims. 

Signs of a slowdown but risk remains

The report notes that the number of new cases filed each year may be stabilising, which the authors suggest could be due to “a consolidation and concentration of strategic litigation efforts in areas anticipated to have high impact”. That said, the report cautions that any slowdown may be “temporary” as case strategies continue to evolve and while many pending ‘corporate framework’ and ‘polluter pays’ cases against companies await determination. Further, the growing momentum behind ‘climate-washing’ claims and potential threat of ‘transition risk’ claims, as well as the increasing sophistication of claimants in this space mean that climate litigation remains a key area of litigation risk for corporates and financial institutions.  

With thanks to Knowledge Paralegal Anya Cook for her assistance with this post. Also see our post on the Grantham Research Institute's 2023 report.