Keep pace with developments affecting financial market participants and corporates.

This monthly update helps you keep up with what ESG litigation might or should encompass.

  • December 2023

    Brussels Court of Appeal imposes 55% reduction obligation on Belgian governments for 2030
    On 30 November, the Brussels Court of Appeal ruled that the climate policies of the Federal State, the Flemish Region and the Brussels Region violate articles 2 and 8 of the European Convention on Human Rights and their duty of care under Belgian tort law by failing to do their part in the reduction of global greenhouse gas emissions. Diverting from the ruling in first instance, the Court of Appeal imposed a specific order on the governments as a relief for the unconstitutionality of the policies. The court ordered the governments to reduce, in consultation with the region Wallonia, the yearly greenhouse gas emissions at the Belgian territory by at least 55% by 2030 as compared to 1990. The claim against the Walloon Region was dismissed because it had already legally implemented the aforementioned target. Since the Urgenda case, this is the second time worldwide that a court has ordered a government to reduce its greenhouse gas emissions by a specific percentage by a certain date.

    German government ordered to adopt climate action programmes on buildings and transport sectors
    On 30 November, the German higher administrative court of Berlin-Brandenburg ordered the German federal government to adopt a resolution on an ‘immediate action programme’ for emission reduction in the buildings and transport sectors for the years 2024-2030. The court ruled that Section 8 of the German Climate Protection Act (CPA) required the adoption of such a resolution, as the Federal Environment Agency had determined that the permissible sectoral emission levels as specified in the CPA were exceeded in 2021 and 2022. The government’s Climate Protection Programme 2023 does not meet the requirements of the CPA for an immediate action programme, as it does not contain effective short-term measures that ensure compliance with the CPA’s sectoral maximum emission levels. The court allowed an appeal to the Federal Administrative Court.

    Dutch NGO Milieudefensie to launch climate case against financial institution
    On 27 November, Dutch NGO Milieudefensie (Friends of the Earth Netherlands) publicly announced that it will launch its next climate case against a Dutch financial institution. The announcement was accompanied by a study of research group SEO Amsterdam Economics, which assesses the integrity and transparency of the climate plans of seven Dutch financial institutions. The study is a targeted follow-up to Milieudefensie’s broader 2022 study on the climate plans of 29 large Dutch companies. On 19 January 2024, Milieudefensie will publicly announce which financial institution will be targeted.

    UK Court of Appeal definitively dismisses claim against Shell board members
    On 16 November, the UK Court of Appeal definitively dismissed ClientEarth’s derivative claim against the board members of Shell plc, by rejecting CientEarth’s application for appeal against the UK High Court’s decision on this matter in May of this year. In this case, ClientEarth argued that the board members of Shell breached their fiduciary duties under UK company law relating to the management of climate risk, most notably by failing to adopt a Paris-aligned transition strategy and violating the Dutch court order in Milieudefensie v. Shell. As the UK Court of Appeal is the highest competent judge on this matter, the case is now definitively closed.

    PepsiCo sued for plastic pollution
    On 15 November, the New York State Attorney General filed a civil claim against PepsiCo for polluting the environment and endangering public health with its single-use plastic bottles, caps and wrappers. The State accuses PepsiCo of contributing to a public nuisance by generating a significant share of plastic waste found in and near the Buffalo River. More than 17% of the identifiable plastic items in the river was produced by PepsiCo. In addition, the State argues that the company failed to warn consumers about the potential health and environmental risks of plastics, and misled the public about its progress in fighting plastic pollution. This is the first ESG lawsuit filed by a U.S. state against a major plastic producer.

    Request for disclosure of Australian bank’s biodiversity risk framework
    On 9 November, a shareholder of Australian bank ANZ filed a discovery request against ANZ at the Federal Court of Australia, requesting disclosure of the bank’s internal risk management framework relating to the ‘twin risks’ of climate change and biodiversity loss. The shareholder seeks to assess whether the bank is adequately managing the material risks associated with climate change and biodiversity loss, in view of Australian prudential and misleading conduct laws. The shareholder states that she initiated this claim because ANZ’s annual report does not sufficiently address the management of these risks. This is the first discovery request that specifically addresses the interrelationship between biodiversity risks and climate change risks.

    Criminal complaints against French banks relating to illegal deforestation
    On 8 November, French NGOs filed a criminal complaint with the French Financial Prosecutor’s Office, alleging that four French banks and insurance companies violated anti-money-laundering laws by providing deforestation-linked finance to Brazilian companies. This is the first criminal complaint against French banks for money laundering and receiving stolen goods, based on their alleged financial support of and profit from activities responsible for deforestation. The complaint follows a pending civil lawsuit on the same matter.

    Consumer groups launch greenwashing complaint on plastic bottles
    On 7 November, the European Consumers Organisation (BEUC), including the Dutch Consumentenbond and 12 other member organisations, filed a greenwashing complaint with the EC. BEUC is requesting a coordinated supervisory investigation by the EC and the network of supervisory authorities (CPC) into the ‘100% recycled/recyclable’ claims and green visuals on plastic bottles of Coca-Cola, Nestlé and Danone. BEUC’s complaint alleges that these claims and visuals are in breach of European consumer law because they would not reflect the practical and technical realities of plastic recycling. BEUC’s complaint follows a similar legal complaint against the European aviation sector (see July edition of ESG Matters).

  • November 2023

    London High Court dismisses legal challenges to new North Sea oil and gas exploration
    On 19 October 2023, London’s High Court dismissed legal challenges by NGOs Greenpeace and Uplift to the UK’s 2022 licensing round for new oil and gas exploration in the North Sea. The claimants argued that the Secretary of State had acted unlawfully or ‘irrationally’ by not considering the scope 3 emissions (arising from consumer end-use of oil- and gas-derived fuels) that can be attributed to the licensing round. After the claimants were granted permission for judicial review in April 2023, the Court has now dismissed their argument on the merits. Greenpeace said it will appeal the Court’s decision.

  • October 2023

    State of California sues carbon majors for alleged climate damage and misinformation
    On 15 September, the State of California added another case to the growing list of state climate lawsuits against carbon majors. The state filed a lawsuit against several carbon majors, their subsidiaries, and an industry group, alleging that the defendants have caused public nuisance and have knowingly misled the public and policymakers. Among other things, the state is asking the court to order the defendants to compensate the damages that have been or will be caused by climate change.

    ECB’s Frank Elderson urges banks and supervisors to get up to speed with climate litigation and risk mitigation
    In his keynote speech of 4 September at the ECB Legal Conference, Frank Elderson discussed the rise of climate and environment-related litigation, which is increasingly targeting corporates, including in the financial sector. Such litigation is becoming a major source of risk that needs to be properly anticipated and managed by banks as well as supervisors. Elderson offered banks and regulators two strands of thought. The first is the 'bread-and-butter guidance': get up to speed on litigation trends and mitigate the associated risks for your institution, referring also to the Urgenda and Shell cases. The second refers to the importance of putting in place Paris-aligned transition plans while ensuring that an accurate data set and proper internal governance is in place.

    NGFS reports on climate-related litigation trends and micro-prudential supervision
    On 1 September, the Network of central banks and supervisors for Greening the Financial System (NGFS) published two complementary reports on climate-related litigation risks. The first report provides an update on the trends and developments in climate-related litigation risks and how this may affect the financial sector. It highlights that climate-related litigation is growing rapidly, in terms of the volume of cases being initiated as well as the legal arguments being used, and the diversity of the addressees of such claims. Such litigation can have a significant impact on the financial sector. The second report looks at how these developments need to be stressed from a supervisory perspective. The report highlights the important of supervisors identifying risk drivers, transmission channels and exposures in order to properly assess the resulting financial risks for financial institutions, and using a risk-based approach to prioritise supervisory activities.

    DNB President Klaas Knot calls for action to curb nature-related financial risks
    During his speech at the launch event of the NGFS reports, Klaas Knot urges for immediate action to assess and reduce the risks that the nature crisis poses to the economy and the financial system. "Services such as clean water, healthy air, food and materials are all essential to our economies and our very existence as humans. As central banks and supervisors, we have every reason to be concerned, because it’s an illusion to think we can preserve financial stability if this degradation continues." Knot stressed that starting now, working together and keeping all eyes on the summit are essential to make meaningful progress.

    USD 19 million settlement for greenwashing allegations by US financial supervisor
    The US Securities and Exchange Commission (SEC) announced that asset manager DWS has agreed to pay USD 19 million in order to settle the SEC’s allegations of ESG misstatements (greenwashing). The SEC alleged that DWS made misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG-integrated products, including certain actively managed mutual funds and separately managed accounts.

    Hearings in ECtHR climate case of Duarte Agostinho and others v. Portugal and 32 other states
    On 27 September, the Grand Chamber of the European Court of Human Rights (ECtHR) held hearings in the climate case of Duarte Agostinho and others (Portuguese youth) v. Portugal and 32 other states. In this case, the plaintiffs claim that the defendants are failing to do their part to avert climate catastrophe, thus allegedly acting in breach of their obligations under the European Convention of Human Rights. A recording of the hearings is available here. During the hearings, the parties have amongst others responded to a number of questions (text in French) of the Grand Chamber. The Grand Chamber will now commence its deliberations on a decision in the case.

    ITLOS hearings on climate responsibilities of states towards the marine environment
    From 11 to 25 September, the International Tribunal for the Law of the Sea (ITLOS) held hearings on the responsibilities of states in regard to climate change under the UN Convention on the Law of the Sea (UNCLOS). More specifically, the hearings addressed the effects of climate change on the marine environment. The hearings follow the request of a group of island states on 12 December 2022 and have been recorded. The ITLOS is now deliberating on this matter and expects to issue its advisory opinion by early to mid-2024. The group of island states has also submitted requests for climate change-related advisory opinions to the Inter-American Court of Human Rights and the International Court of Justice.

  • September 2023

    Held v. Montana: state has active duty to realise right to clean and healthful environment
    On 14 August, in a case brought by 16 young citizens of Montana against Montana, the District Court of Montana held that the children have ‘the right to a clean and healthful environment’ and the state has an affirmative duty to take active steps to realise this right. The District Court declared a legal limitation included in Montana's State Energy Policy Act which forbids Montana from considering the impacts of greenhouse gas emissions and climate change in their environmental reviews to be unconstitutional.

    Climate litigation more than doubles in five years
    On 27 July, the United Nations Environment Programme (UNEP) published the Global Climate Litigation Report: 2023 Status Review. The report gives an overview of the state of climate change litigation and an update on global climate change litigation trends. The findings demonstrate a rapid growth in climate change litigation worldwide: from 884 cases in 2017 to 1,550 cases in 2020 and 2,180 cases in 2022. The report predicts a rise in the number of cases dealing with, amongst others, climate migration, pre- and post-disaster conditions, transnational responsibility and vulnerable groups disproportionately affected by climate change.

    ClientEarth appeals dismissal of climate risk mismanagement claim against Shell directors
    In the June edition of ESG Matters, we reported that the English High Court dismissed environmental organisation ClientEarth’s claim against Shell Plc and its directors. In an oral hearing on 12 July, ClientEarth requested the court to reconsider this judgment. The London court upheld the dismissal by judgment of 24 July, whereupon ClientEarth announced that it will appeal this decision.

    ClientEarth takes EU Commission to court for approving France’s agriculture plan
    ClientEarth and Collectif Nourrir have brought proceedings against the European Commission before the Court of Justice of the European Union. The claimants argue that the European Commission has unlawfully approved a French national agriculture plan. They require the European Commission to reassess the plan and require France to improve it.

    Greenpeace sues Dutch State for failure to protect nature against nitrogen damage
    On 12 July, Greenpeace launched legal proceedings against the Dutch State on the reduction of nitrogen emissions. Greenpeace claims that the Dutch State commits an unlawful act by failing to reduce nitrogen deposition in natural habitats and the habitats of species in the short term and by failing to present a plan to sufficiently and timely reduce nitrogen emissions. The hearings are expected to take place in 2024.

    Amsterdam Court of Appeal: flight-reduction Schiphol permitted
    On 7 July, in preliminary relief proceedings, the Amsterdam Court of Appeal (nullifying the District Court’s judgement in first instance) held that the intended measures of the Dutch State to reduce the amount of flights around Schiphol do not violate EU law. The claimants (including the International Air Transport Association and KLM) have the opportunity to appeal in cassation against the judgment.

  • July 2023

    Global trends in climate change litigation: 2023 snapshot
    On 29 June, the Grantham Research Institute published its 2023 report on ‘Global trends in climate change litigation’. This ‘2023 snapshot’ signals a strong increase in climate litigation filed against corporates, as greenwashing cases against corporates are particularly on the rise (see the previous ESG Matters). While litigation strategies show parallels across jurisdictions, the diversity in cases and the complexity of arguments and claims in general seems to be increasing.

    BEUC files complaint against airlines
    On 22 June, the Association of National Consumer Unions in Europe (BEUC) and 23 national consumer groups launched a complaint against 17 European airlines to the EC and the European Consumer Protection Authorities Network. BEUC calls for a legal investigation, maintaining that the airlines are misleading consumers through climate-related marketing claims. BEUC maintains, amongst others, that the airlines should cease their communications on sustainable flying and reimburse any green premiums paid by consumers.

    General Court dismisses appeal against the inclusion of nuclear and natural gas within the EU Taxonomy
    On 21 June, the General Court dismissed the action for annulment of Delegated Regulation 2022/1214 laying down the conditions under which nuclear and natural gas energy activities may be included in the list of economic activities covered by the Taxonomy Regulation (Case T-628/22). A Member of the European Parliament brought the action for annulment, claiming that that regulation infringed the Parliament’s legislative competence and, therefore, his rights as a Member of the Parliament. In its order, the General Court considers that the applicant does not have standing to bring the action because his rights connected with the exercise of the Parliament’s legislative competence are intended to be exercised only in the context of the Parliament’s internal procedures and cannot therefore be regarded as directly affected by the adoption of Delegated Regulation 2022/1214.

    AFM publishes draft guidelines regarding sustainability claims
    On 12 June, the AFM has put the Guidelines on sustainability claims up for consultation for financial institutions and pension providers. The purpose of these guidelines is to provide market participants with the tools to make correct, clear, and non-misleading sustainability claims. The consultation will run until 24 July. The ACM has issued - and recently revised - similar guidance.

    Amsterdam District Court: Fossielvrij admissible in claims against KLM
    On 7 June, the Amsterdam District Court held that Fossielvrij is admissible in its claims on green advertising against KLM. Fossielvrij was permitted to file  a submission by 5 July 2023 on the question of whether the specific advertisements on which the claims are based are still relevant

    Greenwashing in the financial sector: ESAs publish progress reports  
    On 1 June, the European Supervisory Agencies (ESAs) published their progress report on greenwashing risks in the financial sector. In these reports, EBA, ESMA and EIOPA arrived at common high-level understanding of ‘greenwashing’ with each ESA highlighting its current thinking of greenwashing and related risks in its respective sector.

  • June 2023

    London court dismisses claim against Shell directors
    On 12 May, the English High Court dismissed environmental organisation ClientEarth’s claim against Shell Plc and its directors. ClientEarth argued amongst others that the Shell directors owed and breached specific climate-related duties, including the duty to align Shell's risk strategy with the Paris Agreement. The High Court concluded that the Shell directors do not owe such specific duties under English law and dismissed the claim on the basis that ClientEarth has not made out a prima facie case for the relief sought. ClientEarth has asked and been granted an oral hearing to ask the court to reconsider the decision.

    EP approves Consumer Empowerment Directive proposal
    On 11 May, the European Parliament approved the proposal for a Consumer Empowerment Directive. The proposal will update the Unfair Commercial Practices Directive (2005/29/EC) and Consumer Rights Directive (2011/83/EU). According to the press release of the European Parliament, the primary objective is to assist consumers in making environmentally friendly choices and encourage companies to provide more durable and sustainable products. The Council of the European Union and the European Parliament will now start negotiations on the content and final wording of the directive.

    Inhabitants Bonaire and Greenpeace send letter of summons to Dutch State
    On 11 May, Greenpeace sent a letter of summons to the Dutch State, together with eight inhabitants of Bonaire. They demand that the Dutch State takes measures and develops policies to protect Bonaire against climate change. The inhabitants and Greenpeace threaten to start legal proceedings if the Dutch State does not reply to the letter before 23 June 2023 or if parties have not reached an agreement before 30 September 2023.

    Civil action of NGOs vs. ENI and large shareholders
    On 9 May, Italian NGOs Greenpeace and ReCommon and twelve Italian citizens initiated a civil lawsuit against energy company ENI. The plaintiffs state in a media briefing that they are requesting an order on ENI to reduce its group CO2-emissions by 45% in 2030 as compared to 2020 levels, and are asserting their right to claim a monetary penalty in case of non-compliance. The NGOs also sue the Italian Ministry of Economy and Finance as well as state-controlled investment bank Cassa Depositi e Prestiti in their capacity of ENI shareholders.

  • May 2023

    Milieudefensie v. Shell: joinder ‘Milieu en Mens’ foundation allowed
    On 25 April, the Court of Appeal of The Hague allowed the joinder (voeging) of the Milieu en Mens (M&M) foundation in the Milieudefensie v. Shell proceedings. On the same date, the request for joinder of Climate Intelligence Foundation (Clintel) was dismissed. M&M believes that Milieudefensie misuses the District Court’s judgment to pressure other Dutch organisations to comply with its climate demands. This leads to harm to citizens and businesses in the form of higher energy costs and prices. The case has been referred to the roll of 6 June to allow M&M to submit a statement.

    Greenwashing: chewing gum made of only natural ingredients?
    On 21 March, the Amsterdam Court of Appeal rejected a claim brought by chewing gum manufacturer Perfetti against its competitor Benbits in summary proceedings (for the ruling in Dutch, click here). Perfetti claimed that Benbits be prohibited from claiming that its chewing gum was made using only natural ingredients, because Perfetti considered such claims to be misleading and unlawful. Although rejected, this claim shows the potential of claims for greenwashing brought by competitors against each other.

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