James Thornton on using lawsuits to save the planet - The Economist

AS A YOUNG man, I wondered how I could help save life on Earth. I recall watching as the first Earth Day celebration began in 1970. Marching in the streets seemed emotional, not strategic. Politics seemed a waste of time. The most powerful tool I could identify was law. Only law levels the playing field between the individual and the largest forces in society, namely countries and companies. If you master the skills of law and deploy them strategically, you can rewrite the rules of the game in legislatures, then enforce the new rules in court.

And it has worked. Today, citizens around the world are using the legal system to hold governments and businesses to account.

Start with countries. Courts in the Netherlands have accepted citizens’ arguments that their government’s climate plan was not good enough and have ordered more stringent emissions reductions. In 2019 the country’s supreme court upheld that ruling, in a case brought by Urgenda, an environmental charity. Other cases have been won by citizens in France, Germany and Ireland. ClientEarth, the green legal-activism organisation I lead, is supporting a group of citizens who are suing Poland in a case on similar grounds of the state’s climate plan being too weak.

Courts in America, though, have so far demurred. In 2015 a group of young people sued government officials, on the grounds that their failure to tackle climate change denied the plaintiffs their due process rights of life, liberty and property, among other things. In the case, known as Juliana, the court acknowledged the dangers of climate change, such as flooding, and accepted that the young plaintiffs had documented they would be injured by climate change. But then it failed to act. The court stated there was no remedy in their power and left it to the politicians.

Turning to companies, coal has been an area of successful litigation. Utilities that burn coal are like dinosaurs blocking the capitalist road that newer firms want to travel with renewable energy. Around the world, plans were made by governments and companies to build so many coal plants in the next few years that meeting the Paris agreement targets would have been a distant dream. Some governments, such as Poland’s and China’s, did not seem interested in challenging the energy incumbents and young companies were not set up to do so.

Unless citizens used litigation to block the plants, a higher-carbon future would have been locked in. In America, the work of the Sierra Club and Earthjustice, and in Europe, the work of ClientEarth and its many partners, has blocked a new generation of coal plants in the courts over the past 15 years. In Asia, as of last year, some 600 new coal plants were still planned.

Yet countries are beginning to change their view. In a significant shift that ClientEarth and others worked to support, China’s leader, Xi Jinping, announced at the UN General Assembly in September that China would not build or finance any new coal plants in countries that are part of its Belt and Road initiative.

Full court press

However, progress has been patchy. Financing in particular remains a major concern, as capital continues to flow into fossil fuels. Over the past five years, ClientEarth has built a unique team of corporate and finance lawyers to follow the money—and staunch it.

In Poland, when the government and Enea, a state-owned energy company, decided to build what may have been among the last new coal plants in Europe, ClientEarth brought a corporate-law case. We bought shares, and then commissioned an independent financial analysis showing that the plant was a bad investment. When the company announced it would go ahead, we answered with a case against the directors. We argued they were making a bad investment, violating their basic duty of care to shareholders. We won the case. Enea’s share price jumped 3% on the news.

Despite hosting the UN climate meeting COP26, Britain is considering the development of the Cambo oil field in the North Sea. Seventeen banks are preparing to finance or advise on the project, which is led by Shell and Siccar Point Energy, an investment firm. ClientEarth recently wrote to the banks, pointing out that such financing could violate the directors’ fiduciary duties, and expose the banks to a variety of legal risks, including shareholder litigation.

Sadly, when the private sector isn’t splashing money at carbon-coated companies, the public sector is. In many places, government subsidies still support fossil fuels. This acts as a brake on the transition to green energy that’s needed to lower emissions. Though the area is less litigated, it offers potentially long levers. Consider the European Union. It responded to the risk of a recession due to covid-19 lockdowns with a programme of quantitative easing of some €2trn ($2.3trn). Part of the funds would go to buy corporate bonds in the market, the purchases delegated to six member-state banks.
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Read more:
• Gernot Wagner on how individual actions can combat climate change
• Tariq Fancy on the failure of green investing and the need for state action
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The Grantham Research Institute at the London School of Economics analysed such bond purchases and concluded more than 60% are from the carbon-intensive electricity, gas and manufacturing sectors—in effect a huge subsidy. ClientEarth sued the central bank of Belgium, arguing such purchases violate EU treaties and the requirement of consistency between the European Central Bank’s monetary policy and the EU’s climate policy, such as the Green Deal and Climate Law. The case was heard on November 15th and a ruling may come as soon as the end of 2021.

The suits force compliance with green goals when there are victories in the courtroom. But they also serve as a warning to other firms through the financial penalties that the courts can impose. After all, if fossil-fuel companies contributed to climate change, often knowingly, shouldn’t they be liable for monetary damages? The parallel is to the cases against cigarette manufacturers in America, where in 1998 tobacco companies settled for more than $200bn.

There are a number of climate-damage cases in the courts in America. San Francisco and Oakland, California, for example, have sued a group of oil majors. The cities say they will have to spend billions to adapt to climate change, and the oil companies should contribute a fair portion. This is a familiar argument in tort law, when more than one defendant contributes to a harm.

Courting change

So far, these cases have not settled or produced a judgment with damages. In time they may. Judges, like everyone else, see climate-induced fires and floods. A moment may come when a judge will say that ExxonMobil is liable for part of the harm to Oakland. The judge will have to get over her concern that such a judgment would open ExxonMobil to liability for damages to every coastal city in the world—though that may well be a just outcome. Its deep pockets would empty, and planet Earth would be better for it. It would send a message to big oil that it needs to come clean and go green.

Behind the legal activity is a philosophy. It gets back to my ambition as a young man. Society agrees laws to bind its conduct, so if you can deploy law, you can require countries and companies to act better. You can make them act as if they had deeper ethics and wiser morals. This power of the law is now more important than ever. We have a decade to fundamentally change our conduct as a society. Governments are moving too slowly, as COP26 demonstrated. Companies will never move fast enough voluntarily. Citizens using the law can require faster, better and more responsible action from countries and companies. Citizens “taking the law into their own hands”, so to speak, is the most powerful force for saving civilisation that I know of.

Of course, citizens’ use of the law, by itself, cannot solve the climate crisis. Governments, businesses, shareholders, voters and campaigners must all join in. Laws to implement emissions reductions in line with the Paris agreement are needed in every country, as are laws to impose reductions on companies.

And once the laws are in place, they are not self-executing. Governments ignore them. Companies flout them. So citizen litigation is required. It can lead courts to order reductions. The law can work wonders—but we need to move further, faster.■
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James Thornton is the founder and chief executive of ClientEarth, which uses litigation to force governments and companies to reduce carbon emissions and uphold environmental values.

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