The end of last year was marked by the headline-grabbing COP21 agreement in Paris. Amongst the maelstrom of news reports, it would have been easy to miss the news that the Commission on Human Rights in the Philippines agreed to hear a landmark legal case that ties climate impacts directly to the behaviour of high-emitting companies.
The case was brought on behalf of typhoon victims, who argue that fossil fuel companies violated their human rights by driving climate change. Members of the Commission confess that the case faces an uphill climb to succeed, but it does open up the possibility of further litigation being brought in the future.
Alyssa Johl, a senior lawyer at the Center for International and Environmental Law, believes that the Philippines case will not be the last. “These cases are coming. There are many in the pipeline.” She told Reuters last year.
The case is important because it rests on an emerging field of climate science that attributes emissions to climate impacts. This field of science is establishing clear linkages between climate change impacts and individual emitters, and is being driven by some of the most prestigious research institutes around the world including Oxford University in the UK.
Speaking to the development website Devex last month Johl said, “As climate science gets more precise, our ability to identify the plaintiffs and defendants is growing,”
“The next generation of lawsuits coming to life will be able to trace emissions science to companies to establish culpability.”
The reality is that there is still some way to go before we can be certain that this area of science can be relied upon in court, but it is certainly an area of law that companies should be aware of and prepare for.
There are, however, many other areas of climate change law that also have the potential to open businesses up to litigation. One such area, which has received attention on the Acclimatise Network in the past, involves groups of investors suing companies for not disclosing their climate risks to their operations.
As climate risks are now foreseeable, companies that fail to take reasonable steps to increase their resilience are putting shareholder value at risk. The legal basis for this is actually relatively solid, as it relies on existing laws and provisions that have been tested in courts in many jurisdictions for decades.
Businesses already have a legal obligation to take steps to protect their shareholders from weather-related risks, with the exception of those that fall into the category of ‘force majeure’ events or ‘acts of God’. In the past these extreme events have been deemed to be sufficiently rare to fall outside businesses’ contingency plans. However, climate change is shifting the goalposts: what were once extreme events are becoming the norm.
Companies who do not take reasonable steps to protect themselves could also face difficulty from insurance companies. Major insurers are the ones who will be left with the bill, if companies operations are affected by climate impacts. As such they may begin to refuse to pay out on future claims or refuse insurance entirely for those businesses that have sat on their hands over climate risk.
Fortunately for business directors there is a clear path to protect themselves from legal exposure over climate risk: take action to understand the climate risk to their operations and integrate it into their existing risk management planning processes. So long as companies can show that they are taking reasonable action to adapt to climate risks their liability will be significantly reduced.
Post written by Will Bugler | 15th June 2016
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