The (litigation) road to net-zero

Governments & corporations worldwide are facing ever-increasing challenges relating to climate change, as David Greene explains in his latest article for the New Law Journal.

The development of climate change and environmental, social and governance (ESG) litigation across the world gathers pace but, as evidenced by recent UK decisions, there remain some basic hurdles for campaigners and litigants as they test fundaments of responsibility and liability at law.

Getting claims off the ground
As covered previously in NLJ the court in McGaughey and another v Universities Superannuation Scheme Ltd (USSL) and others [2022] EWHC 1233 (Ch) refused permission for members of the USSL pension scheme to pursue a derivative action against the investment policies of the trustees in relation to fossil fuels (see 172 NLJ 7994, pp9-10), They sought to bring a derivative claim through USSL, not under the procedure for shareholders governed by Pt 11 of the Companies Act 2006 (CA 2006), but at common law as non-shareholders. This will always be a challenge and the court set out in the judgment the very high hurdles to be overcome for a derivative claim of this nature to get off the ground.

More recently, ClientEarth issued derivative proceedings as shareholders in Shell PLC under Pt 11, CA 2006 seeking to claim for Shell PLC on a derivative basis against its directors for breaching their duties under CA 2006. The right to bring a derivative action under CA 2006 is hemmed in with many primary conditions, for which the court is the gatekeeper, and ClientEarth’s action fell at the first fence. On 12 May in ClientEarth v Shell plc and others [2023] EWHC 1137 (Ch), the High Court refused to allow ClientEarth to proceed with a substantive application for permission to continue the derivative action, holding that its application and evidence did not disclose a prima facie case for giving permission.

One of the foundations for this claim and that of others in various jurisdictions is the net-zero commitments of the Paris Climate Agreement adopted by 196 parties in 2015 at the UN Climate Change Conference (COP21)…

Read the full article on the NLJ website (subscription may be required).