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Looking through the liability lens: who’s in the line of sight?
Lawsuits for contribution to climate change are being launched on the basis of public/private nuisance, negligence – and increasingly – product liability. Such claims allege probably the biggest causal chain that has ever been argued. Importantly, claims are being made for future, as well as current, losses, for instance, from cities and one state claiming for lost tax revenue or the cost of strengthening infrastructure. When it comes to fiduciary duties, Ned Kirk, Partner in Clyde & Co’s New York office pointed to the high-profile claims against ExxonMobil in the US, where it has been alleged that directors and officers made false and misleading statements around climate change, as an example of the types of claims we might start to see more of. Moreover the point was made: “Duty of care is not static. Claims could be viewed very differently in hindsight to the way they are now.” In terms of liability risk, again, jurisdiction is an important factor. As Neil Beresford put it: “For insurers and underwriters, it’s worth noting that not all sectors are born equal: some are higher risk than others. The same is true for different jurisdictions: some have less restrictive rules oncausationormoredeveloped litigation funding markets, more vocal activists or a wider base of heavy industries.”
To highlight how fast the legal landscape is evolving as policymakers strive to meet the ambitious targets set out by the Paris Agreement, Jacinta Studdert, Partner in Clyde & Co’s Sydney office, pointed out that there are now over 1,500 climate-related laws in force around the world. Two decades ago there were 70. Not only are these becoming more ambitious as governments start to adopt more stringent emissions targets, enforcement of existing standards is also becoming tougher. In Australia,requirementsforcompaniestocarry insurance to cover environmental damage are increasingly a condition of operating licenses, while in China, “polluter-pays” laws and their enforcement by authorities have been strengthened. “Clearly, this poses major challenges for businesses, particularly global ones with cross-jurisdictional operations,” Jacinta said. Answering the stark question: “Who’s going to get sued?”, Neil Beresford, Partner at Clyde & Co in London warned: “A variety of businesses and individuals could be in the frame, and not just the oil majors. Climate change litigation arises in curious places. For instance we’re seeing the first negligence allegations against auditors signing off on accounts that don’t make provision for climate risks. And although the US actions by municipalities against oil majors are very much the ‘poster boys’ of climate change litigation, this is a worldwide phenomenon.”
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