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Global Climate Litigation Report: 2020 Status Review — Can Your Company Be Sued in a Climate Change Proceedings and What You Can Do to Prevent It

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Litigation and Dispute Resolution and Environmental Bulletin

Last January, the United Nations Environment Programme released its Global Climate Litigation Report: 2020 Status Review[1] (the “Report”) aiming to show how “climate litigation is compelling governments and corporate actors to purse [sic] more ambitious climate change mitigation and adaptation goals.”[2]

According to the Report, climate litigation can fall into six different categories:

  • A. Climate rights
  • B. Domestic enforcement
  • C. Keeping fossil fuels – and carbon sinks – in the ground
  • D. Corporate liability and responsibility
  • E. Failure to adapt and impacts of adaptation
  • F. Climate disclosures and greenwashing

A. Climate rights

Lawsuits over insufficient action to mitigate climate change are usually filed against governments, and this has been the case in Canada as well.

In ENvironnement JEUnesse v. Canada (Procureur général), a class action was filed on behalf of citizens aged 35 and under. The class action was dismissed by the Superior Court of Québec[3] because the court ruled that the proposed class definition was arbitrary. The plaintiffs appealed. The hearing before the Court of Appeal took place on February 23, 2021, and judgment is pending.

A similar case, La Rose v. Canada, filed before the Federal Court of Canada, was met by a motion to dismiss by the Attorney General of Canada. The motion was granted on the ground that the plaintiffs had failed to state a reasonable cause of action.[4] In that case, the relief sought by the plaintiffs was expressed in very general and comprehensive terms. More particularly, they asked for:

“[12] (…)

a. an order declaring that the Defendants have a common law and constitutional obligation to act in a manner compatible with maintaining a Stable Climate System, i.e. one that is capable of sustaining human life and liberties, and to refrain from acting in a manner that disrupts a Stable Climate System;

b. an order declaring that, as a result of their Impugned Conduct, the Defendants have and continue to unjustifiably infringe the Plaintiffs’ rights under section 7 of the Charter and put at risk the section 7 rights of all children and youth now and in the future;

c. an order declaring that, as a result of their Impugned Conduct, the Defendants have and continue to unjustifiably infringe the Plaintiffs’ rights under section 15 of the Charter and put at risk the section 15 rights of all children and youth now and in the future;

d. an order declaring that, as a result of their Impugned Conduct, the Defendants have breached and continue to be in breach of their obligation to protect and preserve the integrity of public trust resources and have violated the right of the Plaintiffs and put at risk the rights of all children and youth now and in the future to access, use and enjoy public trust resources including navigable waters, the foreshores and the territorial sea, the air including the atmosphere, and the permafrost ("Public Trust Resources”);

e. an order requiring the Defendants to prepare an accurate and complete accounting of Canada's GHG emissions, including the GHG emissions released in Canada, the emissions caused by the consumption of fossil fuels extracted in Canada and consumed out of the country, and emissions embedded in the consumption of goods and services within Canada;

f. an order requiring the Defendants to develop and implement an enforceable climate recovery plan that is consistent with Canada’s fair share of the global carbon budget plan to achieve GHG emissions reductions compatible with the maintenance of a Stable Climate System, the protection of Public Trust Resources subject to federal jurisdiction and the Plaintiffs’ constitutional rights;

g. an order retaining jurisdiction over this action until the Defendants have fully complied with the orders of this Court and there is reasonable assurance that the Defendants will continue to comply in the future absent continuing jurisdiction; and

h. costs, including special costs and applicable taxes on those costs; and

i. such further and other relief as this Honourable Court deems just.”

The plaintiffs have filed a notice of appeal. The date for the hearing before the Federal Court of Appeal has not yet been set.

By way of contrast, in Mathur v. Ontario,[5] a similar case that focused on the remedies sought, the claim survived a motion to dismiss. More precisely, the plaintiffs sought a declaration that the new target set by the Province of Ontario to reduce greenhouse gas emissions was insufficiently ambitious and violated their rights under section 7 of the Canadian Charter of Rights and Freedoms[6].They submitted that they had a constitutional right to a stable climate system. The case is ongoing.

On the basis of such a small sample of cases, it is simply not possible to draw conclusions of any kind. One thing is clear, however – these cases illustrate some of the challenges of bringing forward these relatively novel claims. That said, each case provides insights into how plaintiffs may be able to better formulate the relief sought in future to better ground an actionable claim. It may be only a matter of time before plaintiffs figure out that puzzle.

B. Domestic enforcement

Domestic enforcement cases involve “corporate actors” that require government permits to develop a project and find themselves having to complete an environmental impact assessment. Opponents to such projects, most often projects involving the extractive or energy sectors, have sought to claim that the environmental impact assessments for these projects are flawed, that their scope is too limited, and that climate change issues are not sufficiently addressed.

A recent Canadian example is Sierra Club Canada Foundation v. Canada (Environment and Climate Change), in which four environmental groups filed an application for judicial review of the Report of the Regional Assessment Committee for the Regional Assessment Offshore Oil and Gas Exploratory Drilling East of Newfoundland and Labrador and they have also asked for an interim order prohibiting the Minister for Environment and Climate Change from making a regulation based on that report.[7] The interim order was denied, and it appears that the underlying application for review will go ahead, as the Attorney General of Canada was not successful in its motion to strike the application for judicial review. Four environmental organizations, Ecology Action Centre, the Sierra Club Canada Foundation, WWF Canada and Eco Justice, criticized the assessment because it did not, according to them, mitigate possible negative impacts on important species, habitats, and climate change targets.

With the coming into force of the federal Impact Assessment Act[8] in August 2019, a factor to be considered in the assessment of a designated project is the extent to which the effects of the project hinder or contribute to the Government of Canada’s ability to meet climate change commitments. The Government of Canada has released a document to help stakeholders meet their obligations in that respect: “Policy Context: Considering Environmental Obligations and Commitments in Respect of Climate Change under the Impact Assessment Act.”[9]

C. Keeping fossil fuels – and carbon sinks – in the ground

The authors of the Report say:

“Courts are considering cases that challenge specific resource-extraction and resource-dependent projects and that challenge environmental permitting and review processes that plaintiffs allege overlook the projects’ climate change implications. All of these cases cite both the long-term, global effect of investing in projects that will produce consumable fossil fuels and the local impacts on water, land use, and air quality associated with mining and drilling activities. Increasingly, these cases allege that proper consideration of a project’s impacts should include the extent to which the project facilitates fossil fuel consumption elsewhere in the world and for an extended period into the future.

(…)

Many of the cases in this category are partially or entirely premised on environmental impact assessment (EIA) and similar planning requirements. These cases often, but not always, challenge project permitting and approval decisions for failing to take climate impacts into account as part of required environmental reviews.” [10]

These excerpts will sound familiar to Canadians who followed the Trans Mountain Expansion Project and read the reasons for the Federal Court of Appeal’s decision in Tsleil-Waututh Nation v. Canada (Attorney General).[11] [12]

D. Corporate liability and responsibility

As the authors of the Report put it:

“Despite broad consensus about the nature, seriousness, and causes of climate change, defining the precise causal relationship between a particular source of emissions and individualized climate change harms remains a challenge for litigants.” [13]

In a New Zealand case cited by the authors, Smith v. Fonterra Co-Operative Group Limited,[14] the Court dismissed the plaintiffs’ claim that greenhouse gas emissions by the defendants amounted to a public nuisance, saying that the defendant’s collective emissions were minuscule in the context of the global greenhouse gas emissions that cause climate change, and that it is global greenhouse gas emissions that are the likely cause of damages.

E. Failure to adapt and impacts of adaptation

The authors state that:

“Although some governments and private parties are undertaking a variety of measures to adapt to the increasingly severe effects of climate change, others are aware of those changes and the foreseeable extreme weather events that climate change will bring but have not taken steps to prepare. Courts are seeing cases challenging each—seeking compensation for adaptation efforts that caused harm or damaged property and seeking injunctive relief for failing to adapt in the face of known climate risks.”[15]

The authors go on to review cases against governments and also address cases against private parties, saying that:

“cases against private parties similarly hinge on whether the defendant knew or should have known that climate change increased the risk that the defendant’s actions would harm others.”[16]

The authors add that:

“In addition to cases challenging private parties’ inaction on physical risk, courts have seen several cases seeking to hold companies or asset managers liable, alleging that those managers’ failures to adapt their investment strategies caused financial harms.”[17]

There are no Canadian cases cited in the Report.

F. Climate disclosures and greenwashing[18]

The authors say:

“As public information about the nature, causes, and impacts of climate change has become increasingly available and well understood, plaintiffs have brought actions challenging what they allege are misleading corporate statements about climate change. These actions involve plaintiffs bringing suits claiming they relied on those statements to make financial decisions, as well as cases brought by governments enforcing securities disclosure and consumer protection laws, and NGOs challenging alleged “greenwashing” campaigns.”[19]

They add that:

“In several instances investors have filed suit alleging that public disclosures relating to climate risk were misleading or fraudulent, both in relation to the risk that a transition away from fossil fuels poses to their business or investment assets and the risk of physical impacts to infrastructure, operations and supply chains associated with climate change.”[20]

They cite, among others, O’Donnell v. Commonwealth of Australia, in which a student and investor in Exchange-Traded Australian Government Bonds that mature in 2050, filed a representative action on behalf of a class of all holders and investors against the Australian government, alleging it failed to disclose physical risks such as droughts and transition risks, such as the risk of stranded assets, that impact the value of the bonds.[21] The case is still pending.

A similar Australian case, McVeigh v. Retail Employees Superannuation Trust, was settled when the defendant agreed to implement a Net Zero 2050 goal for the fund, and to measure, monitor and report climate progress in line with the Recommendations of the Task Force on Climate-related Financial Disclosures.[22]

G. Future Trends

The authors also examine probable future trends, which include more cases of consumer and investor fraud claims, pre- and post-disaster claims (raising the problem of attribution or causality) and increasing use of international adjudicatory bodies.

Conclusion

The new U.S. Administration and the Canadian government appear to share views on how to address the issue of climate change, and this will most likely lead to new rules and regulations, which in turn may lead to more litigation. Environmental laws are to a large extent “processual” laws, and following them in text and in spirit is a key part of a compliance program. That might not be enough to protect against litigation, however, as it may still take some time before there is enough clarity from the courts on climate change liability risks for parties to have a clear view of what is required at law.



[2]     Page 2 of the Report.

[3]     ENvironnement JEUnesse c. Procureur général du Canada, 2019 QCCS 2885.

[4]     La Rose c. Canada, 2020 FC 1008.

[5]     Mathur v. Ontario, 2020 ONSC 6918.

[6]     Section 7 of the Canadian Charter of Rights and Freedoms read as follows:

Life, liberty and security of person

7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.

[7]     Sierra Club Canada Foundation v. Canada (Environment and Climate Change), 2020 FC 663.

[8]     S.C. 2019, c. 28, s. 1.

[10]    Page 20 of the Report.

[11]    Tsleil-Waututh Nation v. Canada (Attorney General), 2018 FCA 153.

[12]    Read our bulletin: “Chronicling the Trans Mountain Expansion Project’s Path to Legal Certainty” for an example of how the  environmental assessment process has worked in this case: https://www.fasken.com/en/knowledge/2020/07/13-trans-mountain-expansion-projects-path-to-legal-certainty/

[13]    Page 22 of the Report.

[14]    [2020] NZHC 419.

[15]    Page 23 of the Report.

[16]    Page 25 of the Report.

[17]    Ibid.

[18]    For a more thorough discussion of this issue in Canada, see the bulletin prepared by our partner Stephen Erlichman available here: https://www.fasken.com/en/knowledge/2021/02/esg-disclosure-in-canada-legal-requirements-voluntary-disclosure-and-potential-liability/

[19]    Page 26 of the Report.

[20]    Ibid.

[21]    O’Donnell v. Commonwealth of Australia, VID 482/2020, Concise Statement of Facts.

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