France

Two new setbacks for NGOs in their actions based on the duty of vigilance for procedural reasons (Veolia/Suez and TotalEnergies)

The French courts have handed down two judgments dismissing actions based on the duty of vigilance, against Veolia and TotalEnergies.

In the case of Veolia, a subsidiary of the Suez group (now merged with Veolia) had been at the centre of a health crisis in Chile. Several NGOs took the French group to court in France on the basis of the duty of vigilance law. Their action was declared inadmissible for procedural reasons: firstly, the Paris Judicial Court considered that the company named in the summons was not the author of the vigilance plan and, secondly and more importantly, as in the previous TotalEnergies case (see our blog post for more details), the Court considered that the summons must refer to the same vigilance plan as the formal notice (which is a prerequisite for initiating proceedings based on the duty of vigilance).

In the case of TotalEnergies, several NGOs, as well as local authorities, took TotalEnergies to court, in January 2020, also on the basis of the duty of vigilance law. The plaintiffs did not target a specific project or event, but had requested TotalEnergies to be ordered to publish a new vigilance plan, which would affect its strategy as whole (e.g. a drastic reduction in production and cessation of exploration). On 6 July 2023, the Paris Judicial Court dismissed the claims for procedural reasons similar to those in the Veolia case.

TotalEnergies sued again for its megaproject in Uganda

In October 2019, six NGOs initiated interim proceedings against TotalEnergies, under the duty of vigilance, to suspend its megaproject of petroleum installations in Uganda and Tanzania. This action was dismissed on 23 February 2023 by the Paris Judicial Court for procedural reasons (see our blog post on this matter).

On 28 June 2023, 26 Ugandan farmers, and several NGOs, initiated a new procedure, again based on the duty of vigilance law, but this time on the merits, to obtain compensation for their damage.

TotalEnergies targeted by criminal complaint for its role in climate change

On 22 September 2023, a criminal complaint was lodged against TotalEnergies with the Nanterre judicial court. The complaint, initiated by four NGOs, is based on the offence of "failing to combat a disaster". In essence, the NGOs are criticising TotalEnergies for continuing to develop new oil and gas infrastructure, thereby allegedly contributing to the worsening of the climate crisis that is endangering a large proportion of the world's population, who are victims of climatic disasters.

First French judgment on the merits relating to the duty of vigilance to be handed down (La Poste)

In 2021, the French postal group, La Poste, was sued before the Paris Judicial Court for alleged breach of its duty of vigilance. The trade union behind this action denounced the work conditions of La Poste’s subsidiaries, Chronopost and DPD France, in relation to undocumented workers. It asked La Poste to publish a mapping of "risks and serious infringements of human rights, fundamental freedoms and the health and safety of individuals", an exhaustive list of its suppliers and subcontractors, the assessment procedures adapted to the risks, and to take "appropriate measures to prevent concealed work".

The pleading hearing took place on 19 September 2023 and the judgment is due on 5 December 2023. This will be the first time that a French court will rule on the merits of a case based on the duty of vigilance (all previous judgments concerned procedural issues).

Germany

Car manufacturer prevails in climate protection case again in second instance

As reported in our March 2023 Bulletin, Deutsche Umwelthilfe (an environmental NGO) filed a lawsuit against car manufacturers BMW for insufficient climate protection and lost at first instance in the Regional Court of Munich. The plaintiff has now also lost at second instance in October 2023. The Munich Higher Regional Court did not see any obligation on BMW's part to stop selling CO2-emitting vehicles by 2030 and dismissed the plaintiff's appeal. According to a court spokesman, an appeal to the Federal Court of Justice was not allowed.

Italy

Defamation allegations in relation to first Italian climate litigation against a private corporation

ENI S.p.A. v. Greenpeace, ReCommon

As reported in our July 2023 Bulletin, in May 2023 two NGOs (Greenpeace and ReCommon) filed a lawsuit against ENI S.p.A (“ENI”), alleging a violation of the Paris Agreement (“La Guista Causa”). This is the first Italian climate litigation against a private corporation.

On 26 July 2023, ReCommon and Greenpeace published press releases asserting that ENI had started legal action against them seeking damages for defamation as a consequence of the media campaign linked to the launch of the NGOs’ lawsuit. The NGOs allege that this action is a SLAPP (Strategic Lawsuit Against Public Participation). 

NGO wins right to access university records regarding academic partnership activities with an oil and gas corporation

Greenpeace v. Politecnico di Torino, ENI S.p.A

In parallel litigation, Greenpeace sought access to all documents held by a public university (the Polytechnic University of Turin) relating to its relationship with ENI, including any financial relationships. The NGOs assert that ENI finances research and teaching at the university.

The university denied the request on the basis that such documents did not concern “environmental information” under the Italian law implementing Directive 2003/4/EC on public access to environmental information. The Administrative Court of Piemonte held that they were “environmental information” and ordered the university to disclose the documents. On appeal by ENI and the university, the Italian Council of State confirmed the Administrative Court’s decision, granting Greenpeace access to the documents.

Spain

Greenpeace v Spain: Spain’s Supreme Court dismisses claim against state for inaction on climate policy

In September 2020, Greenpeace and other NGOs sued the Spanish government for failing to take adequate action on climate change and breaching its obligations under Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action. The claimants argued that the Spanish government should have approved a National Energy and Climate Plan (“PNIEC”) with climate goals for 2030 and a Long Term Strategy with goals for 2050. Although the government approved a PNIEC in March 2021 setting a target of 23% reduction on GHG emissions by 2030 (relative to 1990), the claimants argued this was far from the 55% reduction proposed under the Paris Agreement.

In July 2023, the Supreme Court dismissed the claim, stating that the PNIEC did not violate any law nor create a situation contrary to legal order and that the Paris Agreement leaves the scope of the individual effort necessary to reach such goals at each signatory party’s discretion. Moreover, the Supreme Court stated that the PNIEC was aligned with Spain’s commitments under Regulation (EU) 2018/842 which was adopted to meet member states’ commitments under the Paris Agreement. The judgment is available in Spanish here.

United Kingdom

High Court denies ClientEarth permission to revive its derivative action claim against Shell plc’s Board and awards costs

Earlier this year, the High Court ruled that ClientEarth’s proposed derivative action against the Board of Shell plc (“Shell”) in relation to its management of climate risk would not be permitted to proceed. As reported in our July 2023 Bulletin, the decision was reached on the papers and the Court granted ClientEarth’s request for an oral hearing for the Court to reconsider its decision, which took place on 12 July 2023.

On 24 July 2023, the Court handed down its decision, once again rejecting ClientEarth’s claim and finding that its case against Shell was “inherently vague”. The Court emphasised that it is for directors and not the courts to make decisions on complex commercial issues. See our blog post here.

Following a hearing on costs, the Court ordered ClientEarth to pay Shell’s costs in connection with all aspects of the action, including Shell’s costs during the prima facie stage of the application for permission.

Claim served on London Bullion Market Association (LBMA) following alleged human rights abuses at Tanzanian gold mine

As reported in our December 2022 Bulletin, the families of two artisanal miners who were killed at the North Mara Gold Mine in Tanzania in 2019 filed a claim against the London Bullion Market Association in the High Court in December 2022, claiming that the accreditation body is indirectly responsible for the killings.

The claim has now been served and alleges that the LBMA wrongly certified gold from the mine as “Good Delivery” gold under its “Responsible Gold” standard despite human rights abuses. The claimants argue that removing certification would have forced the mine to stop human rights abuses and prevented the deaths of the two miners. The LBMA have indicated an intention to challenge whether English courts are right forum for the case to be heard.

New proceedings relating to water companies

This quarter saw several important developments in proceedings concerning the environmental obligations of water companies.

• In an enforcement context, in July 2023 a £3.3 million fine was imposed on a water company following an Environment Agency investigation into the leak of raw sewage into two rivers near Gatwick in 2017.

• In a public law context, in September 2023 the Administrative Court rejected an application to judicially review DEFRA’s Storm Overflow Discharge Reduction Plan. Notably, the Court declined to extend the public trust doctrine or the public right to navigate and fish in tidal waters to address such water pollution. The judgement can be accessed here.

• In a competition context, in August 2023, the first opt-out competition damages claims was issued against a water company. Professor Carolyn Roberts, represented by Leigh Day, is bringing a collective action on behalf of bill-paying customers. The novel claim alleges the water company has breached competition law by misleading the Environment Agency and Ofwat as to the number of pollution incidents (discharges of spills of untreated sewage into waterways causing environmental damage) which have occurred. This is a factor in determining the price water companies can ultimately charge for their services. Further claims are expected to be issued against other water companies in future.

High Court of Northern Ireland dismisses judicial review challenge to gas storage project

In No Gas Caverns Ltd [2023] NIKB 84, the High Court of Northern Ireland dismissed a challenge by NGOs to the lawfulness of DEFRA’s decision to approve a gas storage project. As reported in our July 2023 Bulletin, the project will consist of marine storage caverns for natural gas off the coast of Country Antrim.

The NGOs raised concerns about the impact of the project on protected species, the seabed and the marine environment as well as GHG emissions. The Court emphasised the difficulty of navigating a safe course between the energy crisis resulting from the full-scale invasion of Ukraine on one hand and climate change on the other, and that such interactions are quintessentially a matter for policy makers not the courts. Our blog post on the decision is here.

High Court rejects judicial review challenge to expansion of the ULEZ zone

In R (Hillingdon LBC) v Mayor of London (available here), five local councils challenged the Mayor of London’s decision to expand the Ultra Low Emission Zone to cover all London boroughs from 29 August 2023. Drivers of non-compliant vehicles in the ULEZ are subject to a daily charge. The purpose of the scheme is to reduce air pollution.

The councils argued that the Mayor of London acted unlawfully in expanding ULEZ by way of an amendment to an existing scheme, rather than by creating a new scheme. This Court dismissed the challenge, finding that the changes did not go beyond what could be properly considered as a variation of the existing scheme.

NGO applies for judicial review relating to UK-Australia Free Trade Agreement

Feedback, a food and environmental NGO, has applied for permission to bring judicial review proceedings against the UK government alleging its Impact Assessment of the environmental impacts of the UK-Australia Free Trade Agreement was inadequate. The FTA gives Australian meat and dairy products significant access to the UK market. Feedback asserts that the emissions intensity of Australian beef is higher than that from the UK. It argues that the government’s Impact Assessment erred in concluding that it was not possible to assess the “carbon leakage” resulting from the FTA.

Feedback also argues that the UK government breached its obligations to take biodiversity and emissions reductions into account when deciding trade policies.

Forced labour claim by migrant workers in Malaysia against UK companies in Dyson group blocked in English courts

In May 2022, migrant workers in Malaysia working for a contractor to a major appliance group (“Dyson Group”) lodged proceedings in the English courts making forced labour allegations against two English companies and one Malaysian company within the Dyson Group. The defendants contested jurisdiction and argued Malaysia was the proper forum.

On 20 October 2023, the High Court stayed the claims against the two English companies and set aside the order for service of the claim against the Malaysian company, finding that Malaysia was a more appropriate forum and that there was no real risk the claimants would be unable to obtain legal representation and funding in Malaysia. Our blog post on the decision is here.

High Court dismisses application for judicial review of North Sea oil and gas licences

As reported in our July 2023 Bulletin, Greenpeace sought to judicially review the British government’s invitation last year to oil and gas explorers to apply for licences in the North Sea. Greenpeace alleges that (inter alia) the government failed to take into account the environmental effects of consuming oil and gas (i.e. scope 3 emissions) in this new licensing round, which involved fossil fuel companies submitting over 100 licences.

On 19 October 2023, the High Court dismissed the claim for judicial review. The Court held it was matter of judgement for the Secretary of State as to whether there was an appropriate test for taking scope 3 emissions into account when considering whether to support a new licensing round, and his actions in that respect were not irrational or tainted by an error of law.

NGO applies for judicial review of the UK government’s latest climate adaptation plan

On 17 October 2023, Friends of the Earth (an environmental NGO) and others filed a legal challenge seeking to judicially review the UK government’s Third National Adaptation Programme (“NAP3”), which is produced every five years under the Climate Change Act 2008. Other claimants include a person whose home is affected by coastal erosion and a person whose health conditions are exacerbated by high summer temperatures.

The claimants argue that NAP3 fails to set out lawful “adaptation objectives” and is unlawful because of a failure to consider and publish an assessment of the risks to delivery of the plans and policies it includes. In what may be the first case of its kind in the UK, they also ask the Court to rule that the deficiencies in NAP3 breach the human rights of the co-claimants by failing to protect their lives, homes and property from foreseeable impacts of climate change.

OECD Guidelines updated to strengthen NCP grievance mechanism

The OECD’s recently revised Guidelines for Multinational Enterprises on Responsible Business Conduct (“Guidelines”) strengthen the mandate of the Guidelines’ non-judicial grievance mechanism (National Contact Points (“NCPs”)) and signal a move toward NCPs acting in a manner more similar to courts. Along with expanding the scope of the Guidelines, the changes mean NCPs will have strengthened authority to make findings and there will be clearer consequences for parties who choose not to engage. See our blog post on the key changes here.

Asia-Pacific

Japan

Injunction filed against the discharge of treated water from Fukushima Daiichi nuclear power plant

On 8 September 2023, approximately 150 residents of Fukushima and Miyagi prefectures filed suit before the Fukushima District Court against the Japanese government and TEPCO, seeking an injunction against the discharge of treated water from the Fukushima Daiichi nuclear power plant, and revocation of the Japanese Nuclear Regulation Authority’s approvals granted to: (i) TEPCO’s water discharge plan; and (ii) equipment to be used in the water discharge, following inspections by the Nuclear Regulation Authority. The plaintiffs alleged that discharging the treated water infringes on their rights to a peaceful life and harms the recovery of the fisheries industry.

A similar suit was filed against TEPCO by residents of Busan, South Korea, and environmental groups before the Busan District Court. The Busan District Court dismissed this action on 17 August 2023, on the basis that the Busan citizens have no standing to stop the actions of those in another country.

Korea 

Greenpeace seeking disclosure of climate change responses from listed companies

On 20 September 2023 Greenpeace reportedly filed a constitutional petition, seeking to require listed companies in Korea to disclose information on their response to climate change. In its petition, Greenpeace claims that the lack of climate-related disclosure obligations in Korea’s capital markets legislation infringes upon people’s environmental rights and investors’ property rights, due to the information asymmetry between people and investors on the one hand, and listed companies on the other.

Australia

Further ASIC 'greenwashing' enforcement proceedings

In the past quarter, regulatory enforcement activity in Australia against alleged greenwashing continued to gain momentum. Financial institutions, including superannuation and investment funds, have been the primary targets of the regulator's enforcement activity to date but other sectors are expected to be targeted.

• In July 2023, the Australian Securities & Investments Commission (“ASIC”) commenced civil penalty proceedings against Vanguard Investments Australia for allegedly making misleading statements about the application of certain ESG exclusionary screens in relation to investments by a Vanguard fund.

• In August 2023, similar enforcement proceedings were commenced against the superannuation fund Active Super for allegedly making misleading statements about the fund's restriction and elimination of its exposure to investments on environmental and social grounds.

Both of the above matters were civil penalty proceedings that follow ASIC's first court proceedings alleging greenwashing, which were commenced against Mercer Superannuation in February 2023.

Federal Court hands down judgment in ASIC “bluewashing” proceedings

Recent ASIC enforcement proceedings against ACBF Funeral Plan Pty Ltd (“ACBF”) concerned “bluewashing” issues (i.e. alleged misrepresentations concerning social issues) and Indigenous peoples' rights.

The Federal Court ordered an AUD1.2 million civil penalty against ACBF for misrepresenting the sale and promotion of a funeral expense insurance plan to Aboriginal people. ASIC alleged that ACBF had engaged in conduct which was likely to mislead or deceive, including representations that it was owned or managed by Aboriginal people; that the 'Aboriginal Funeral Community Plan' that it offered had Aboriginal community approval; and that it was more beneficial to Aboriginal consumers than other funeral insurance products.

While the court did not accept these aspects of ASIC's case, it did find that ACBF had misrepresented to holders of the funeral plan that they would receive a lump sum payment of their chosen benefit amount (when in fact they would only be reimbursed for proven funeral-related expenses up to that amount). ASIC has announced that it is appealing the Federal Court's finding that it was not satisfied that ACBF's representations that the company was owned or managed by Aboriginal persons were false.

ASIC’s focus on “bluewashing” is expected to increase over time – see this article by Allens.

Climate change class action over Australian Government bonds settles

A novel class action against the Australian Government in relation to climate change risks associated with government bonds has settled. In 2020, the strategic litigation firm Equity Generation Lawyers commenced representative proceedings in the Federal Court on behalf of Australian sovereign bond investors over the disclosure of climate change risks by the Australian Government. The claimants sought declarations and injunctive relief against the Commonwealth for its allegedly misleading conduct and disclosures, arguing that investors in government bonds face risks due to climate change which should be disclosed.

The settlement was approved by the Federal Court in October 2023 and required the Government to publish a statement acknowledging (among other matters) that climate change is a 'systemic risk' which may affect the value of its government bonds. The statement also required the Government to outline what actions it is taking, including developing a package of sustainable finance reforms, publishing an Annual Climate Change Statement, and setting up a green bonds program.

Final Statement issued by the Australian NCP in OECD Guidelines complaint against Mallee Resources Ltd

Civil society groups are continuing to use the Australian NCP (“AusNCP”) established under the OECD Guidelines for Multinational Enterprises (“Guidelines”) to test companies on their commitments to human rights.

On 2 August 2023, the AusNCP issued its Final Statement in a complaint concerning Mallee Resources Ltd (“Mallee”) in relation to the company's divestment from a joint venture to develop a silver, lead and zinc mine in Myanmar. The complaint was brought on behalf of 245 civil society organisations and claimed that Mallee had not undertaken any human rights due diligence (“HRDD”) or meaningful stakeholder engagement on the divestment, or taken steps to prevent or mitigate alleged adverse human rights impacts associated with the divestment.

In the Final Statement, the AusNCP’s Independent Examiner found that Mallee had contravened the Guidelines, including by failing to have a human rights policy, failing to undertake adequate HRDD, and failing to meaningfully engage with stakeholders in respect of its divestment. The Independent Examiner also found that, as a result of not having undertaken HRDD, Mallee did not take steps to prevent or mitigate potential adverse human rights impacts.

Significantly, the Independent Examiner found that it was not sufficient for Mallee to have made a public commitment to operate in a manner respectful of the environment and with an intention to maximise the social, environmental and economic returns for the local community: Mallee needed to have developed and implemented a human rights policy as well.

United States of America

U.S. Climate Change Litigation

State and local governments continue to file lawsuits in response to climate change and environmental damage.

• In July 2023, twelve oil company defendants and an energy trade association filed a motion to dismiss a lawsuit brought by the City of Hoboken, New Jersey, which alleged that the companies’ business operations caused the acceleration of climate change. Specifically, the complaint alleged that the oil companies deceptively marketed and sold fossil fuels while obfuscating the disastrous consequences of climate change caused by burning fossil fuels for over 50 years.

• In September 2023, the State of California filed a similar lawsuit in California state court against five major oil companies for allegedly contributing to state-wide climate change-related harms by concealing the negative consequences of fossil fuel use for decades, which caused lawmakers to delay efforts and resources to combat climate change. The state seeks damages and equitable relief, including funds for abatement of public nuisance and natural disasters caused by the defendant companies.

In August 2023, a proposed class action suit was filed in Hawaii state court against a major Hawaii electric utility company, alleging that the defendant’s powerlines caused the fatal wildfires on the island of Maui. The complaint alleged that despite warnings of dangerous high winds issued by the National Weather Service, the power company negligently kept the power running. The plaintiffs seek damages and injunctive relief.

The same month, a shareholder filed a securities suit in California federal court against the same Hawaii electric company, alleging that the company made materially false and misleading statements and failed to disclose “material adverse facts about the company’s business, operations, and prospects.”

Also in August 2023, a Montana state judge issued a landmark decision in Held v. State, the first ever constitutional climate case in U.S. history to go to trial. The court ruled in favor of the sixteen youth plaintiffs, who argued that that the state’s pursuit of fossil fuel developments without consideration of the long-term environmental impacts violated their right to a “clean and healthful environment” as guaranteed by the state Constitution. Similar youth-led constitutional climate lawsuits are pending in Virginia, Utah, and Hawaii.

Greenwashing Litigation:

Greenwashing litigation continues to rise in the U.S.

• In July 2023, a putative class action suit was filed in the U.S. District Court for the Northern District of California against manufacturers of trash bags concerning their “Recycling” and “Designed for Municipal Use” labels. The complaint alleged that the defendants marketed and sold trash bags impermissibly labeled as “recyclable” and “designed for municipal use” in a “scheme to defraud environmentally conscious consumers.” The plaintiff seeks monetary damages and injunctive relief to prevent further deceptive labeling.
• Also in July 2023, a putative class action suit was filed in the U.S. District Court for the Eastern District of Virginia against the Dutch airline KLM, alleging that the airline’s public commitments to reduce its climate impact by 2030 were misleading. In particular, the complaint alleged that the airline’s use of carbon credits through reforestation is inadequate, and that the airline’s focus on “sustainable aviation fuels” (“SAFs”) is misleading because SAFs would have a “negligible effect” on reducing carbon dioxide emissions. The complaint further argues that the airline’s emission reduction goals are misleading because they are based on a “well below 2°C scenario” rather than the Paris Agreement’s prevention of world temperature rising above 1.5°C. The claims include breach of contract and unjust enrichment, as well as a consumer protection claim based on deceptive marketing. A similar lawsuit is pending against a major U.S. airline, which recently filed a motion to dismiss the action in August 2023. The complaint there alleged that the airline’s claim of carbon-neutrality is misleading because it is based on carbon offsets, rather than the use of sustainable fuels and carbon removals. For more information on this case, see July 2023 Bulletin.

• In August 2023, the State of California sued a state energy company based on its marketing claims that natural gas is “renewable.” Shortly after the lawsuit was filed, the parties reached a settlement agreement under which the energy company agreed to publish a corrective statement on its website and pay a total of $175,000 in civil penalties, of which 50% will be given to the California Environmental Protection Agency’s Environmental Justice Small Grants Program to fund a project focused on environmental justice.

Anti-ESG Litigation

Several courts have recently ruled to uphold various ESG policies, notwithstanding continued efforts by litigants to strike them down.

• In September 2023, the U.S. District Court for the Northern District of Texas granted summary judgment and thus dismissed a lawsuit brought by 25 states challenging the U.S. Department of Labor’s Final Rule on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (the “Final Rule”). Under the Final Rule, retirement advisers are allowed to consider climate and other ESG factors when selecting investments and exercising shareholder rights. The state plaintiffs argued, inter alia, that the Final Rule violated the Employment Retirement Income Security Act (“ERISA”) and was arbitrary and capricious. The court rejected this argument, holding that the Final Rule does not violate ERISA and granted summary judgment in favor of the DOL.
• Also in September 2023, the U.S. District Court for the Eastern District of Washington granted a motion to dismiss a shareholder derivative lawsuit against a major coffeehouse franchise. The complaint alleged that the company’s diversity, equity, and inclusion (“DEI”) policies violated state and federal civil rights laws by discriminating based on race and that the company’s board and executives violated their fiduciary duties by upholding the DEI initiatives. The court strongly rejected the plaintiff’s arguments, noting that the plaintiff is “pursuing its personal interests rather than those of the company” with the “clear goal of dismantling what it sees as destructive DEI and ESG initiatives in corporate America,” and that the complaint “resembles nothing more than a political platform.”

Following the U.S. Supreme Court’s decision striking down affirmative action in Harvard College’s and the University of North Carolina’s admissions programs (see our September 2023 ESG Newsletter for more details), anti-DEI lawsuits are on the rise, with private plaintiffs bringing claims in federal and state courts to challenge employment and corporate diversity policies.

• In August 2023, the conservative legal activist behind the lawsuits against Harvard and UNC filed suit against two national law firms in the Northern District of Texas and the Southern District of Florida to challenge the firms’ diversity fellowships.
• In September 2023, the same activist filed suit against a Black women-owned U.S. venture capital fund, alleging that a grant program for Black female entrepreneurs violated the Civil Rights Act of 1866. Shortly after, the U.S. Court of Appeals for the Eleventh Circuit issued a temporary injunction halting the grant program’s financing efforts.