Companies should brace themselves for an avalanche of climate lawsuits, lawyers say
London listed companies should brace themselves for an avalanche of climate related lawsuits, as shareholders and NGOs increasingly resort to litigation over climate related financial risks, lawyers have said.
Investors are increasingly suing companies for breaching their fiduciary duties, over their failures to limit their exposure to climate risks, Fiona Huntriss, a partner at London law firm Pallas Partners told Morning Wire
Shareholders are arguing that company directors are failing to act in the best interests of the firms they run – as they are obliged to do under English law – by exposing investors to huge losses in the future, due to the climate related risks including stranded assets and the possibility of major fines.
Non-profit organisations are also increasingly taking advantage of climate legislation, as well as international treaties such as the Paris Agreement, to sue fossil fuel producers and other carbon emitting companies, Huntriss said.
The comments come after a Dutch Court told Shell it must cut its carbon emissions by 45 per cent by 2030, after a coalition of climate activists won a landmark case against the Anglo-Dutch firm.
Almost 1,400 climate related lawsuits were filed in courts across the world between 2005 and 2019, research from the London School of Economics (LSE) and Columbia University shows.
Huntriss said we are currently seeing the first wave of litigation play out in the English courts, as she suggested others will follow suit.
Any additional climate legislation will also mean investors and NGOs will be better positioned to file lawsuits against companies over failures to act, as more companies are likely to be in breach of any more new, and more stringent, laws.