5
justices declined to address the overarching arguments that climate torts against energy companies belong in federal court, this decision provides the energy companies with a possible (but not guaranteed) path to stay in federal court that did not exist before. Governments too continue to be held to account via administrative actions. The Constitutional Court in Germany is among the latest to find in favour of claimants, ruling in April that the country’s Federal Climate Protection Act was incompatible with citizens’ rights, due to insufficient greenhouse gas reduction targets (this immediately prompted the government to adopt more ambitious targets). In all, 37 cases challenging governments’ perceived lack of action or ambition on climate targets and policies, on the basis that controlling emissions is a state’s‘systemic’ responsibility, had been identified around the world by May 2021 8 . Meanwhile in France in September, the first ever legal action against a state for its alleged failure to protect biodiversity has been initiated by two NGOs, relating to the authorisation of pesticides. Although this is not a climate lawsuit per se, there are clear links between climate and biodiversity issues (as pointed out in a recent report co- authored by the Intergovernmental Panel on Climate Change 9 ), and distinct parallels in the litigation strategies adopted. This signals that a new type of litigation risk may be emerging, and demonstrates the growing importance of biodiversity alongside climate change as a critical issue when it comes to protecting our environment in the years ahead. TAKING RESPONSIBILITY AND DRIVING INNOVATION The growing focus on biodiversity and natural capital is echoed in the rising prominence of the newTaskforce on Nature- related Financial Disclosures (TNFD), which
is developing a framework for corporate reporting on nature-related risks. Launched earlier this year, its work is already supported by more than 100 organisations 10 . Its inception builds on the success of the Taskforce on Climate-related Financial Disclosures (TCFD), which in June received its most widespread endorsement yet, when G7 finance ministers and central bank governors agreed to make climate-related financial reporting mandatory, in line with TCFD recommendations. Shareholdersarealsoturningupthepressure on companies to improve their approach to, and performance on, environmental protection and sustainability issues. This summer, investors voted in favour of activists’ moves to compel US oil company Chevron to cut its carbon emissions, and for the first time ever voted new directors onto ExxonMobil’s Board against its wishes. Insurers too are signalling a clear direction of travel, with the launch of the Net-Zero Insurance Alliance (NZIA) at the G20 Climate Summit in July, in which eight major insurance and reinsurance companies pledged that their underwriting portfolios would be net zero by 2050 11 . In a similar vein, on 30 June 2021 a group of leading law firms including Clyde & Co. LLP launched the Net Zero Lawyers Alliance (NZLA), a coalition committed to accelerating transition to net zero emissions by 2050, both through their own policies and by assisting their respective clients’ paths to net zero. Regulators, activists and others remain on high alert for potential ‘greenwashing’, where organisations misrepresent their eco- friendly credentials in corporate statements or marketing activities. Over the summer, the International Organisation of Securities Commissions (IOSCO) published reports on climate-related sustainability disclosures in a bid to combat greenwashing, while the Australian Securities and Investments Commission (ASIC) is undertaking targeted surveillance of financial products to identify
misleading ESG statements 12 . In August, the world’s first court action challenging the credibility of a company’s clean energy claims and its net zero emissions targets was launched against Santos, an Australian oil and gas company by shareholder advocacy group the Australasian Centre for Corporate Responsibility 13 . However investors, and companies themselves, are also increasingly aware that as well as posing major risks, the global transition to net zero throws up significant opportunities to be grasped. In the energy sector, global corporates who previously focused their expertise on fossil- based systems of energy production are accelerating their move into the renewable energy sector, particularly offshore wind and solar. The significant increase of renewable energy in the energy supply mix, the continuing progress of electrification, improvements in energy storage systems, and the development of ‘new’ energy sources such as hydrogen are all key drivers of the energy transition. Substantial investment is required to develop and scale the disruptive new technologies that are required to achieve net zero. Corporates, start-ups, investors and funding agencies
are having be more pragmatic and creative to match ‘climate tech’ ideas to capital in new ways, enabling cutting-edge innovations to reach commercialisation and critical mass, as our recent Climate Tech Investment Report outlines. Time is of the essence in the fight against climate change. Though there have been significant developments since we published our Climate Change Risk & Liability Report 2021 , in the wake of the COP26 summit we will need to start seeing even more rapid and radical change. With the much delayed COP15, the UN’s equivalent biodiversity conference, finally due to take place in 2022, the impetus for governments and businesses to face up to a wide variety of environmental, social and governance obligations is growing. But so too is the chance for industry tobepart of the solution by developing innovative new products and services. This report is a vital tool to help companies build resilience and play their part in the orderly and just transition to net zero that is essential if we are to protect the planet and the people and ecosystems within it, while maintaining stability in the global economy.
8 Global trends in climate change litigation: 2021 snapshot, LSE, July 2021
12 Corporate governance update: climate change risk and disclosure, Australian Securities & Investment Commission, 14 October 2021
9 Biodiversity and climate change, June 2021
13 Greenwashing case against Santos shifts the dial on climate lawfare, Financial Review, 2 September 2021
10 Global businesses and financial firms join TNFD to tackle nature-related risks, Taskforce on Nature-related Financial Disclosures, 30 September 2021
11 Net-Zero Insurance Alliance (NZIA) launched at G20 Climate Summit: more insurers are joining, 12th July 2021
Made with FlippingBook. PDF to flipbook with ease