Climate litigation and diverse causes of action in England and Wales

Climate litigation and diverse causes of action in England and Wales

While there is no universal definition of ‘climate litigation’, the Sabin Centre for Climate Change Law at Columbia Law School uses the narrow definition of cases before judicial and quasi-judicial bodies that involve material issues of climate change science, policy, or law1. The increase in climate litigation has grown exponentially since the Paris Agreement 2015, with more than 2,666 cases filed globally2; this growth has also been replicated in the UK with 139 filed cases3. This trajectory is expected to continue, even if it slows, as climate litigants opt for more strategic claims with greater chances of success.

Public law claims in England

In the earlier cases, the findings of the English Courts were not in favour of the claimants. This was evident in Preston4 where the Respondents issued a decision to allow exploratory wells and associated monitoring to determine the feasibility of the commercial extraction of shale gas in Lancashire. One of the Appellants claimed that the Secretary of State failed to follow Directive 2011/92/EU, requiring Environmental Impact Assessments to analyse the climate related impacts of fracking and that the Secretary of State had failed to require an assessment of greenhouse gas emissions (“GHGs”) arising from the testing phase. The Court of Appeal rejected the appeals and held that the GHG emissions were fully assessed and that the Secretary of State had acted reasonably when determining whether fracking would help transition to a low-carbon future.

Despite the unsuccessful outcomes of early climate related cases, claimants were not deterred, and public law claims shifted from specific challenges to broader policy challenges to achieve wider impact. This can be seen in the judicial review cases from Friends of the Earth in relation to the government’s Net Zero Strategy review5 6. While not all cases have been successful, such as ClientEarth’s application for judicial review of the FCA’s decision to approve a prospectus of Ithaca, an oil and gas exploration company7, there was a successful decision recently where the Supreme Court held that it will be mandatory to take into consideration scope 3 emissions in environmental impact assessments, where there is a direct link between the impact project and the creation of the project8

It is expected that this mixed trajectory of legal success will continue. The next case to be determined will be the claim brought by FOE in July 2024, in which it will bring a further case against the Government for failure to adapt to climate change based on the argument that the current National Adaptation Programme (NAP3)9 is deficient and fails to meet the required obligations.

Private law claims in England

There has also been an increase in private sector cases focussed on “climate accountability”. Various private law mechanisms are being used, to varying levels of legal success, but to arguably high standards of indirect success due to the attention and impact that they are generating beyond the courtroom.

a) Financial disclosures

In May 2024, a claim was filed against Boohoo Group plc on behalf of institutional investors who claim to have suffered loss because of Boohoo’s alleged breaches of s.90 and s.90A of the Financial Services and Markets Act 2000 which enable investors to claim compensations for losses resulting from untrue or misleading statements, a dishonest delay in disclosing information and a failure to disclose information. The case is the first of its kind to be brought in the English court.

b) Competition law opt-out claims

A CPO hearing in September 2024 will take place in relation to a claim issued on behalf of over 20 million waterboard customers in claims totalling £20 million10. The claims before the Competition Appeal Tribunal are the first to focus on the abuse of a dominant position in relation to breaches of environmental laws. The claims focus on the failure of six water companies to adequately and accurately report the number of times that they caused polluting incidents by discharging or spilling raw waste into waterways in breach of legislation. As consumer prices are linked to performance objectives for each of the water companies, the PCR alleges that their failure to accurately report these incidents resulted in avoidance of penalties from OfWat, and increased consumer bills amounting to the abuse of a monopolistic position. As the bar to certification is low, it is likely the claim will proceed to a substantive hearing.

c) Directors’ Duties claims

Under s.172(1)(d) Companies Act 2006 directors have a duty to act in a way that would be most likely to promote the success of the company for the benefit of members while having regard to the impact of the company’s actions on the community and the environment. Although the case of ClientEarth v Shell11 failed to convince the Court that it should be able to proceed with its derivative action claim, there is a view that a similar case would succeed learning from the criticisms given in Justice Trower’s judgment. Lord Carnwarth has written extra-judicially on the topic critiquing the decision12

Despite the lack of success, in a legal opinion commissioned by Pollination counsel determined that nature-related risks are also relevant to directors’ duties under s.172 and s.174 of the Companies Act 2006 and that the decision by Justice Trower in the ClientEarth case should not be read as a general bar to derivative action claims in relation to nature-related risks being brought in the future.

Conclusion

The field of climate litigation is continuing to grow year on year, with more strategic causes of action developing. Cases will continue no matter what the courtroom success rate is as litigants seek to hold governments, companies, and financial institutions accountable for their impacts on the environment and their contribution to the global climate crisis. 

Riley Associate,Forson

Litigation and Dispute Resolution Macfarlanes LLP

Alesha Shah

Paralegal, Macfarlanes LLP

 

1 Sabin Centre For Climate Change Law - Global Climate Change Litigation - Climate 

   Change Litigation (climatecasechart.com) 

2 Global Trends in Climate Change Litigation: 2024 Snapshot, Joana Setzer and 

   Catherine Higham, Grantham Research Institute on Climate Change and the 

   Environment, Columbia Law School, Climate Change Laws (2024). 

3 Ibid.

4 Preston New Road Action Group (Through Mrs Susan Holliday) v (1) Secretary of 

   State for Communities and Local Government and (2) Cuadrilla Bowland Ltd [2018] 

   EWCA Civ 9

5  R (on the application of Friends of the Earth) v Secretary of State for Business Energy 

   and Industrial Strategy [2022] EWHC 1841

6  (1) Friends of the Earth; (2) ClientEarth; and (3) Good Law Project v Secretary of State  

    for Energy, Security and Net Zero [2024] EWHC 995 (Admin)

7  R (on the application of ClientEarth) v Financial Conduct Authority [2023] EWHC 

    3301 (Admin)

8  R (on the application of Finch on behalf of the Weald Action Group) v Surrey County 

   Council and Others [2024] UKSC 20. 

9 R (Friends of the Earth Ltd, Mr Kevin Jordan and Mr Doug Paulley) v Secretary 

   of State for Environment, Food and Rural Affairs (challenge to the Third National 

   Adaptation Programme) (pending)

10 Professor Roberts v Severn Trent Water Limited [16037/7/23]; United Utilities Water 

    Limited [1628/7/7/23; Yorkshire Water Services Limited [1629/7/7/23]; Northumbrian 

    Water Limited [1630/7/7/23]; Anglian Water Services Limited [1631/7/7/23]; and 

    Thames Water Utilities Limited [1635/7/7/24]

11 ClientEarth v  Shell [2023] EWHC 1897

12 ClientEarth-v-Shell-what-future-for-derivative-claims.pdf (lse.ac.uk)