Members of the environmental group MilieuDefensie will celebrate the verdict in the case of the Dutch environmental organization against Royal Dutch Shell Plc on Wednesday, May 26, 2021 in front of the courthouse of the Palace of Justice in The Hague, Netherlands. Shell has been ordered by a Dutch court to lower its emissions harder and faster than planned, dealing a blow to the oil giant that could have far-reaching consequences for the rest of the global fossil fuel industry.
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LONDON – Big Oil is likely to face an exponential increase in climate lawsuits in the coming years, a trend that analysts believe is a reminder that activists are turning to the courts to condemn the tobacco industry.
The prospect of an increasing spate of climate litigation against high carbon companies comes shortly after a landmark courtroom defeat for Royal Dutch Shell.
The Hague District Court in May. 26 ordered the Anglo-Dutch oil giant to set more ambitious emissions reduction targets. Shell is also responsible for its own CO2 emissions and those of its suppliers, known as Scope 3 emissions. A Shell spokesman said at the time that the company expected to be able to appeal the court’s “disappointing” decision.
The ruling was the first time in history that a company was legally obliged to adapt its policies to the Paris Agreement, and it reflected a turning point in the climate fight.
“You will see that the Shell ruling is being used as a precedent to add new pressure,” Elizabeth Hypes, senior environment and climate change analyst at Risk Consulting, Verisk Maplecroft, told CNBC over the phone.
A report released by Verisk Maplesoft last month found that companies associated with oil and gas, coal and electricity utilities are currently most at risk from climate liability lawsuits. They described this result as “not surprising” as in 2018 83% of global greenhouse gas emissions came from fossil fuels.
On January 26, 2021, electricity pylons can be seen in front of the cooling towers of the coal-fired power station of the German energy giant RWE in Weisweiler.
INA FASSBENDER | AFP | Getty Images
More than 2,000 climate lawsuits have been filed since the turn of the century, a trend that is widely expected to have a global impact on carbon-intensive companies. The US and EU have accounted for 90% of climate-related lawsuits since 2000, but cases are starting to move into new territories – such as Argentina, South Africa and India, among others.
“I think the dynamics is definitely part of it and that we are actually seeing more successful cases, but I also think that you see a lot of cases that only encourage or motivate others to follow suit – even when they are unsuccessful . “Franca Wolf, Europe and Central Asia Analyst at Verisk Maplecroft, said on the same conference call.
“The media attention that many of these cases get is a great way to put pressure on governments and businesses [to change]”Said Wolf.
This year alone, according to Verisk Maplesoft, more than 70 climate action lawsuits were filed worldwide, significantly more than in the first six months of previous years.
“We’re seeing a lot more cases being picked up in jurisdictions outside the US and EU, and those numbers will only grow exponentially,” Hypes said, reflecting the fact that 60% of cases outside the US are too favorable for prosecutors.
Analysts believe this only scratches the surface of what to expect in the future – parallels to the so-called tobacco trials of the 1950s and 1960s.
Billions of dollars lost, it hit their profits, it changed regulation … It’s a good guide to what could happen in the US
Senior Environmental and Climate Change Analyst at Verisk Maplecroft
Decades before the oil and gas industry wanted to sow doubts about the need for climate action, tobacco companies sought to undermine the emerging links between smoking and lung cancer.
Politicians at the time were reluctant to take action against the tobacco industry, and legal challenges remained unsuccessful for years. It did so until a landmark 2006 ruling found US tobacco companies guilty of fraudulently misrepresenting health risks related to smoking.
“Ultimately, I think it’s most important to draw that parallel because it started slowly, with some cases here and some there … and then over time it really built momentum into these massive attempts that really changed the landscape for tobacco companies . “, Said Wolf.
Hypes agreed. “The impact of that has been significant. Billions of dollars lost, it hit profits, it changed regulation,” she said. “It’s a good proxy for what could happen in the US”
Gas pumps at an Exxon gas station in Charlotte, North Carolina, are empty on May 12, 2021.
LOGAN CYRUS | AFP | Getty Images
In addition to lawsuits against CO2-intensive companies, governments are also tasked with increasing the regulatory burden on companies in order to protect the rights of future generations.
Guyana’s government is being sued by two citizens who are pushing back plans by US oil giant ExxonMobil to boost fossil fuel production off the coast of the South American country. The case filed last month said that enlargement violated the right of Guyana citizens to a healthy environment. The lawsuit is the first in the Caribbean to challenge fossil fuel extraction on constitutional grounds.
In Europe, climate activists and environmental NGOs have called on the European Court of Human Rights to rule against Norway’s plans to drill more oil in the Arctic. The case argues it is robbing young people of their future.
Nonetheless, it is said that the Dutch court ruling against Shell has encouraged climate activists to take direct action against companies.
The risks of an increasing number of climate proceedings for companies include a changing regulatory environment, significant reputational damage and the expansion of lawsuits.
It takes place in the midst of a crucial decade for climate change, as policy makers and business leaders are under increasing pressure to deliver on the promises made under the Paris Agreement.
Analysts say new areas of climate litigation risk include fraud and consumer liability, planning and licensing laws, and environmental performance. Some in the legal community are also calling for “ecocide” to be recognized as an international crime. This umbrella term covers all forms of mass damage to ecosystems, from industrial pollution to the release of microplastics into the oceans.
A man paddles on a boat while plastic bags float on the surface of the water of the Buriganga River in Dhaka on January 21, 2020.
MUNIR UZ ZAMAN | AFP | Getty Images
A panel convened by the Stop Ecocide Foundation released a legal definition of ecocide on Tuesday to pave the way for environmental degradation to be included in the mandate of the International Criminal Court. In The Hague, ecocide could be established alongside war crimes, genocide and crimes against humanity.
Jojo Mehta, co-founder of the Stop Ecocide campaign, told CNBC that she expected the crime of ecocide to be found in the ICC within five years.