Why money matters when taking climate change to court

Climate change litigation is surging as environmental activists open a new front in the battle to reach net zero.

Money matters when it comes to climate lawsuits - from the funding to cover costs in often lengthy legal processes, to potential payouts that could reach into the billions of dollars. Image: Friends of the Earth International, CC BY-SA 3.0, via Flickr.

When Serge de Gheldere decided - along with a dozen other Belgian citizens - to take the government to court in 2014 alleging climate inaction, he didn’t imagine he would still be fighting the case in 2023 and with more than 70,000 co-plaintiffs.

“I thought we had a good chance of nailing this (quickly),” he told Context. “In the past, it has worked to use the law to bring about societal advances.”

The long-running “Klimaatzaak” or Climate Affair case, in which de Gheldere wants an appeals court to order Belgium to make deeper cuts in greenhouse gas emissions, is part of a rising tide of climate change litigation around the world.

The cumulative number of cases globally has more than doubled since 2015 to nearly 2,200, according to a database collected by the Sabin Center for Climate Change Law at New York’s Columbia University.

Many such cases are brought by non-profits or individuals frustrated with a lack of progress from governments in tackling the climate crisis, as the world suffers more severe heatwaves, floods, storms, droughts and wildfires.

Michael Burger, the Sabin Center’s director, said people resort to the courts “when other systems fail”.

“Rolling the dice on a judge’s decision - taking the time and resources that it takes to litigate - is not the most efficient way to get to solutions to this global crisis,” he said.

But more and more climate battles are reaching the court-room, pulling in activists young and old, farmers, scientists, fossil fuel firms and even litigation investors looking to make a profit from a cut of climate damages awarded to their clients.

Money matters when it comes to climate lawsuits - from the funding to cover costs in often lengthy legal processes, to potential payouts that could reach into the billions of dollars.

Crowdfunding climate justice

Environmental groups are leading the drive for climate justice, with nearly 90 per cent of non-US cases filed since June 2022 coming from NGOs or individuals, according to a report by the Grantham Research Institute at the London School of Economics.

Many arguments are based on human rights, and four such cases have been opened in Europe this year alone - with citizens from Belgium, France, Switzerland and Portugal arguing that states have violated their rights by not doing enough to prevent global warming.

And the NGOs sometimes succeed. The Dutch Supreme Court ruled in 2019 that the government was violating human rights by failing to do enough to fight climate change and should cut emissions by at least 25 per cent below 1990 levels by 2020.

Rolling the dice on a judge’s decision - taking the time and resources that it takes to litigate - is not the most efficient way to get to solutions to this global crisis.

Michael Burger, director, Sabin Centre

A shift from coal to generate electricity meant the goal was met, with a 25.5 per cent reduction, Statistics Netherlands said.

But testing legal arguments takes time and money. NGO-led human rights cases often have to rely on a combination of donations from philanthropic organisations and individuals, as well as crowdfunding and lawyers working pro bono.

“We had some rich supporters giving us money every month, we did fundraisers, concerts. It was a huge undertaking,” said de Gheldere of the Belgian case which had cost almost 2 million euros (US$2.11 million) by 2022.

One drawback is that such litigation demands a lot of unpaid work and citizen support, which can lead to some people or cases being excluded.

“Funding is a barrier in the sense that it limits the ability of any group of citizens to do it. You have to be well-connected and you have to be a great communicator,” said Francois de Borchgrave an investment specialist and co-plaintiff in the Belgian climate case.

Climate lawyers told Context that what makes these human-rights based cases stand out is they are seeking to force governments to do more to combat climate change, rather than win damages.

“You’re trying to change policy, so if you get that type of impact it doesn’t matter that you’re not getting financial compensation,” said Joana Setzer, assistant professorial research fellow at the Grantham Research Institute at the LSE.

Climate reparations

But if those cases fail to drive greater action to rein in global warming, losses linked to climate change are predicted to surge - and could stimulate climate reparations cases.

Under this relatively new and evolving area of law, individuals or groups seek compensation for climate-change related losses such as from wildfires and floods.

One case to watch, according to legal experts, is that of Saúl Luciano Lliuya, a Peruvian farmer who filed a lawsuit against German utility RWE, which ranks as one of Europe’s biggest polluters due to its coal-fired power stations.

Luciano Lliuya says RWE, founded in 1898, has emitted 0.5 per cent of humanity’s heat-trapping carbon dioxide. He says it is melting Andean glaciers, swelling a lake above his hometown and threatening him and 50,000 other residents with a deadly flood.

He is seeking about US$20,000 in damages, 0.5 per cent of a US$4-million local government scheme to prevent flooding from the lake - a symbolic sum, but potentially a big leap for climate litigation.

RWE says it cannot be blamed for the thaw of the Andes.

“This case is about setting a precedent for holding major emitters responsible,” Noah Walker-Crawford, a researcher and advisor on the case, told Context.

This definition of major emitters is becoming increasingly broad, as a larger variety of companies are facing lawsuits including banks, pension funds and agricultural firms.

On the other hand, Sabin’s Burger points out that some companies are starting to seek hundreds of millions of dollars from governments for the profits they say they will forgo due to progressive climate policies.

In response to a separate lawsuit brought by RWE, for instance, the Dutch government said last month it would pay the company 331.8 million euros (US$355 million) in compensation for lost income after capping coal companies’ production.

Burger said the money in these cases, known as investor-state dispute settlements, could have a “chilling effect” on governments’ climate policies, particularly for developing countries that rely on foreign direct investment.

Business opportunity

Meanwhile, as the potential financial payouts from climate lawsuits grow, litigation funders are eyeing an opportunity - whereby a third party pays a claimant’s legal fees, such as a community impacted by climate change, in return for a share of any damages awarded by a court.

Proponents of such litigation deals say the practice could democratise funding sources and increase access to climate justice.

Global law firm Pogust Goodhead recently secured 450 million pounds (US$545.58 million) from investment manager Gramercy to help meet growing demand for class-action lawsuits against corporations.

The boom in climate lawsuits lowers the financial risk for investors as each case sets a precedent to build stronger arguments in future, legal experts say.

Seeking damages from a company may not have a direct impact on climate change, said Ana Carolina Salomão Queiroz, chief investment officer at Pogust Goodhead, but it could have a knock-on effect by heightening corporate awareness of the risks of doing nothing or too little.

“By holding corporations accountable, it is increasing the cost of non-compliance with environmental regulations,” she said.

More litigation funding for climate lawsuits could mean more cases and more momentum for climate justice, said Walker-Crawford. But, he warned, it could also lead to investors cherry-picking the biggest payouts.

“If there’s a profit motive, there might be a financial incentive to look more toward cases brought by wealthy homeowners who are threatened by sea level rise,” he said.

That, in turn, could disadvantage poor communities on low-lying islands where property sells for less, he added.

While it is still early days for landmark climate cases - with most verdicts expected in 2024 - corporations and governments should expect an acceleration fuelled by NGO-led rights-based cases and investors seeking damage payouts.

“I do believe that the speed of change from now on will baffle us,” said Salomão Queiroz.

This story was published with permission from Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit https://www.context.news/.

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