Lawyer Monthly - November 2021 Edition

34 WWW.LAWYER-MONTHLY.COM | NOV 2021 SURGING CLIMATE LITIGATION CALLS FOR BETTER DISCLOSURE The number of climate change-related litigation cases filed globally saw a dramatic increase between 2017 and 2020, with more than 1,800 court cases filed across 40 countries as of May 2021. As the effects of climate change become harder to ignore, corporates are being held increasingly accountable for their actions – or lack thereof – when it comes to mitigating the crisis. Investors are likely already aware of the growing body of cases and may be pondering how the trend could affect the value-at-risk in their portfolios. While to date no rulings have resulted in materially large pecuniary damages, there is a growing consensus that court orders for corporates to decarbonise more quickly could lead to greater financial and reputational risk – as well as bringing their strategic planning into question. Indeed, there have already been several significant preliminary rulings that could have wide-reaching implications for corporates across the board. Moving forward, we expect the volume of climate litigation cases, as well as the impact of associated judicial decisions in the policies, commitments and finances of affected organisations may continue to grow. Improving climate attribution science will be pivotal While climate cases typically proceed under a variety of legal theories, one element that unites many is causation. In other words, claimants may have to prove that a defendant committed harmful environmental acts that had climate-related repercussions, and that said harm experienced by the claimant could not have happened but for the actions of the defendant. Climate change attribution science aims to provide evidence of this – highlighting the link between the harmful environmental acts of a defendant and climate-related repercussions. While some legal scholarship, including a 2020 note in the Columbia Journal of Environmental Law, posits that the current state of this science may be sufficient for establishing causal connections for some adjudications, scientists face the challenge of strengthening the link between certain actions – such as emissions – and worsened climate change, particularly in a courtroom setting. Nevertheless, as the datasets that support climate change attribution science continue Surging Climate Litigation Calls for Better Disclosure Thomas Englerth Associate Director, S&P Global Ratings 55 Water Street, New York, New York 10041 E: Thomas.englerth@spglobal.com www.spglobal.com As corporates’ climate-related disclosures come under increasing scrutiny from stakeholders, the appetite for climate litigation is growing. Thomas Englerth, Associate Director at S&P Global Ratings, looks at the potential financial and reputational risks associated with this emerging issue and how they can be identified and managed. Thomas Englerth has been part of S&P’s sustainable finance group for more than five years. An experienced ESG professional, Thomas has worked on the development and launch of the ESG Evaluation as well as initiatives with regards to further integrating ESG into credit rating analysis. S&P Global Ratings , a subsidiary of S&P Global, is a leading provider of independent credit ratings. With more than 1 million credit ratings outstanding on government and corporate entities and securities, S&P’s ratings are essential to driving growth, providing transparency and helping educate market participants to make decisions with confidence.