What is corporate climate liability?
In the light of the Milieudefensie v Shell judgement, which affirmed the existence thereof, corporate due care for the climate should be at the forefront of everyone’s attention.
Corporations have long avoided being held accountable for climate-related questions as those were conceived as part of the public interest sphere. After all, the traditional outlook was that those questions were not in the domain of private entities, but rather the state. Those public interests were precisely within the domain of the state as they concerned the welfare of the general public – whereas the interests the corporation needs to be attentive of are those of its share- and/or stakeholders. However, as a private entity the corporation still has to act according to the duty of care; i.e., foresee any reasonable harm that could be caused by its conduct and avoid or mitigate it.
When discussing breach of duty of care, couple of elements need to be addressed: (i) existence of damage, (ii) causation, and (iii) unlawful behavior. With that in mind, at the core of duty of care is balancing of interests. Meaning, those three elements will be assessed through a prism of hierarchy of interests of a certain society at a certain point in time. Liability is essentially the ability to be held responsible for the harm one has caused to the protected interests of the society in question at that point in time.
Ad i. For the mechanism of civil liability to be triggered, damage has to have had occurred. Alternatively, it can be also triggered in cases where although the damage has not occurred, the threat of irreparable damage is real and imminent. Regardless of the harm’s modality, law will require for the it to be individualized and specific.
Whilst damage caused by climate is undeniable, it is often difficult prove certain company’s contribution and causation. With that said, for climate liability the hazard of injury is of special importance. The effects on the climate are only seen after 10 to 20 years after the harmful act - meaning that there is a delayed risk realization. This in turn allows the courts to make probabilistic judgements as to relative risk.
Ad ii. Causation in its core consists of the 'but-for' tests and remoteness. Whilst the first is used to establish the cause-consequence relation, the latter is there to normatively limit it. With the development of climate science, the emissions companies produce and the injury, or risk thereof, that those cause have been linked. In other words, the previously missing causal nexus can now be established.
However, foreseeability might affect the ability to sufficiently affirm this connection. It has to be proven that the tortfeasor has known, or should have reasonably known, that its conduct will lead to injury. This will often be substantiated by various circumstances of the case, such as state of relevant science, internal and external reports, or common knowledge. Although on first glance this might be easier to prove in backwards-looking claims, climate change case law has shown that forward-looking claims are more common.
Namely, backwards-looking claims are rarely sought or confirmed as it is difficult not only to prove the injury to individual interests by certain company, but also as it can be taking to prove that it should have foreseen the injury. Claims for injunctive relief are more common and more apt for climate-related risk as they allow judgement on the probability of the risk realizing. By the virtue of its nature, this assessment does not require proving something beyond reasonable doubt, rather, the substantial probability of a certain outcome. The judgment in the aforementioned case has explicitly tackled this issue by confirming the high probability of injury to interests of Dutch citizens in case Shell does not reduce its emissions.
Ad iii. Unlawful behavior is that conduct for which the law finds no excuses and for which it prescribes possibility of relief for the victim. A common argument on the side of corporations is that of not breaching any statutory norms as well as being in possession of permits. However, due care is a standard additional to both mentioned; it transcends and fills the gaps of hard law by asserting what is the acceptable conduct.
Therefore, and especially in the light of the Milieudefensie v Shell judgment, we can assert that the corporations can be unlawful in their conduct if they harm, or create the risk thereof, by not being mindful and limiting their emissions – regardless of statutory norms or permits they possess.
In conclusion, corporate climate liability is no longer just a topic of activist discussion. Its importance and applicability will only grow with time. Therefore, it would be prudent from the corporations to pay more attention to their business strategies as well as emission mitigation plans. Responsibility for one’s effect on the climate is no longer just a public issue – it has claimed its role as a private one as well.