Can Fossil Fuel Companies be Sued for Climate Change?

Doug Mann

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Table of Contents
  1. United Nations Intergovernmental Panel on Climate Change
  2. Corporate Accountability for Climate Change in the U.S.
  3. International Developments
  4. Conclusion

At this point in time, there appears to be almost no scientific data disputing that the main cause of climate change is the burning of coal, oil, and natural gas, which are collectively known as “fossil fuels.” The causal mechanisms that connect them to greenhouse gas increases are now well understood. 

Global warming results in more extreme weather including drought, wildfires, and flooding from the rise of sea levels. 

What is also well known is that the companies that profit from extracting and selling fossil fuels have long understood this causal relationship, and yet have not stemmed the flow of emissions. 

In the face of these extreme weather impacts, many local communities are trying to rebuild their infrastructures against future damage. Baltimore, Maryland; Oakland, California; Boulder, Colorado, and New York City are now suing ExxonMobil, Chevron, British Petroleum, and other oil and gas companies for knowingly contributing to property damage, economic injuries, and impacts to public health caused by climate change and sea-level rise. 

Before turning to the legal issues of whether it’s possible to hold fossil fuel companies liable for the adverse effects of climate change, it’s important to dimension the global assessment.

United Nations Intergovernmental Panel on Climate Change

The United Nations’ Intergovernmental Panel on Climate Change (“IPCC”) is the entity within the United Nations that assesses the science related to climate change. It was created to provide global policymakers with regular scientific assessments on climate change, its implications, and potential future risks, as well as to put forward adaptation and mitigation options. Since 2015, the IPCC has released five assessment reports. 

The first installment of its Sixth Assessment Report was issued in August 2021, and the United Nations Secretary-General Antonio Gutteres said the Working Group’s report was nothing less than “a code red for humanity. The alarm bells are deafening, and the evidence is irrefutable.”

He noted that the internationally-agreed threshold of 1.5 degrees above pre-industrial levels of global heating was “perilously close. We are at imminent risk of hitting 1.5 degrees in the near term. The only way to prevent exceeding this threshold is by urgently stepping up our efforts and pursuing the most ambitious path.”

Corporate Accountability for Climate Change in the U.S.

The concept of corporate accountability for climate change is not new. Shortly after Hurricane Katrina in 2005, U.S. citizens whose property was destroyed sued some of the largest fossil fuel companies in the world, including ExxonMobil, Shell, BP, and Chevron. The basis for their lawsuit was that the greenhouse gases emitted by these companies contributed to climate change, causing greater harm than would have otherwise occurred.

In 2008, the Alaskan fishing community of Kivalina sued 24 of the largest greenhouse gas emitters in the U.S., which included oil and gas companies, power companies and utility companies, for the community’s forced relocation resulting from melting sea ice. The suit, based on the common law theory of nuisance, claimed monetary damages based on damage estimates of $95 million to $400 million as calculated by the U.S. Army Corps of Engineers and the Government Accounting Office.  

Both lawsuits were rejected by the federal courts, in part because the judges said the plaintiffs had not proved the defendants caused global warming. The courts also expressed concerns that the greenhouse emissions issues are political rather than legal, and need to be resolved by Congress and the Executive Branch. In Re: Katrina Canal Breaches Litigation v. United States of America, 673 F.3d 381 (CTA5 (2012)); Kivalina v. ExxonMobil Corp., No. 4:08-cv-01138 (N.D. Cal.).

In May 2021, the Supreme Court ruled on the Baltimore case but did not make a decision on the merits. Instead, the ruling focused on the narrow issue of whether the case should be considered in state or federal court. The Justices sent the case back to the Court of Appeals for the Fourth Circuit to decide that issue. The fossil fuel defendants prefer federal court, but the cities generally prefer state courts, believing the local venue is more sympathetic to their position.

International Developments

In July 2021, The London School of Economics Grantham Research Institute on Climate Change and the Environment published a report on global trends in climate change litigation. It found that climate change litigation around the world has markedly increased over the last several years. The report concludes that most cases have been brought against governments, typically by corporations, non-governmental organizations (NGOs), and individuals. There has been an upward trend in the number of cases brought by NGOs and individuals, particularly since 2017.

A quantitative review of the outcomes of 369 decided cases found that 58 percent were favorable to climate change action, 32 percent were unfavorable, and 10 percent had no obvious impact on climate policy.

Conclusion

Climate change is a rapidly emerging field of law. It’s not yet clear what the major legal paths will be, though several legal avenues are possible. At the current time, the majority of litigation in the U.S. alleges public nuisance, private nuisance, and negligence.

More and more lawsuits, particularly outside the U.S., are arguing that fossil fuel emitters and entities such as governments that fail to take action to mitigate climate change are violating human rights, particularly in the area of international law and policy. 

Another potential path against emitters is suing for “greenwashing,” which is when polluters engage in false advertising and deceptive trade practices, and make untrue claims about the environmental benefits of using their products. On April 22, 2021, Earth Day, New York City filed suit in the New York Supreme Court against Exxon, Shell, BP, and the American Petroleum Institute alleging this cause of action.

Experts in the field expect that the U.S. Securities and Exchange Commission will promulgate new regulations related to the mandatory disclosure by companies of their climate impacts, which may promote shareholder proposals or lawsuits on the companies’ polluting behavior. 

In addition, other experts believe that new laws and public policy will evolve to make clear that considering climate change in corporate decisions is a fiduciary responsibility of company officers and directors, and that litigation against irresponsible company leadership may be a successful path forward. 

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