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Islanders’ claim highlights climate-related risk facing global businesses

Out-Law News | 28 Jul 2022 | 1:44 pm | 2 min. read

Legal proceedings raised in Switzerland against cement producer Holcim highlight the growing risk global businesses face from climate-related litigation, experts have said.

Michael Fenn and Danielle Murphy of Pinsent Masons were commenting after it was reported that Indonesian islanders are pursuing Holcim for compensation over what they see as the company’s proportionate responsibility for the effects climate change is having on them and their families.

The four islanders are seeking £3,000 each in compensation for what they claim is the damage done to their mental health from the impact rising sea levels has had, and to account for the cost of planting mangroves and installing flood defences to mitigate further impact.

The compensation claim reflects approximately 0.42% of the actual costs of damages and climate adaptation the islanders say they have incurred. The percentage corresponds to the proportion of historical global industrial emissions that researchers at the Climate Accountability Institute estimate that Holcim, together with Lafarge – the French company it merged with in 2015 – were responsible for between 1950 and 2021, according to the Guardian.

In addition to pursuing compensation, the islanders’ claim seeks to compel Holcim to commit to cutting greenhouse gas emissions by 43% by 2030 and 69% by 2040.

Climate-related actions and climate-motivated actions are on the increase. Companies need to be increasingly aware of their real-life impact to mitigate the climate-related effect their actions have, as well as to mitigate against future legal cases

The case is similar to a claim brought before the German courts by a Peruvian farmer, who has argued that multinational electricity producer RWE is liable for a share of the costs of installing flood defences to address the threats posed by global warming to a melting glacial lake near his home. 

Fenn said: “Climate change litigation continues to increase worldwide and this trend is not new. Businesses need to be alive to the fact that climate-related claims are having a wider impact. This was recognised earlier this year by the annual  report of the Grantham Research Institute on Climate Change and the Environment (GRI).”

“This case, however, specifically seeks damages against a corporation attributed to a percentage of the alleged contribution to climate impact by that corporation and seeks measures to curb future impact. It is an example of a further case based on the specific contribution and attribution of a particular company to climate change. It is similar to the RWE case in Germany which is also based on attribution studies and the ‘lineal causal chain’ concerning the melting of a glacial lake and consequent flood protection measures,” he said.

“These contribution cases are different to more traditional causes of action claims where responsibility is alleged in a more entire manner. Ultimately in these contribution cases, claimants are seeking recourse against those they believe responsible, in part, based on attribution studies. There is the potential for cross jurisdictional challenges to be made to seek to engage responsible companies, both to compensate for historic trends and damage caused, as well as to attempt to limit further damage,” he said.

Murphy said: “Whilst climate related litigation is increasing, these types of cases are not particularly common at present. Compensation-type claims are still being issued in quite low numbers outside the US. We could expect to see an increase in the number of proceedings issued in the originating jurisdictions seeking compensation from entities which could be held partly responsible for the effects of climate change based on attribution studies. The approach of the courts will be interesting to observe, and further claimants are likely to be encouraged to issue similar proceedings.”

“It is a stark reminder that climate-related actions, and climate-motivated actions, are on the increase. Companies need to be increasingly aware of their real-life impact to mitigate the climate-related effect their actions have, as well as to mitigate against future legal cases based on practices that are inadequate and that adversely contribute,” she said.