1 Introductory Remarks

Chapter 7 discussed various ways in which environmental standards could be applied in an extraterritorial manner, primarily through national law addressed at companies or attribution clauses to widen and extend responsibility to several actors along any given supply chain. In this regard, one must keep in mind that the specific context of Chap. 7 was the due diligence obligations of companies, which should not be confused with the concept of the due diligence of States as used in the public international law terminology. A set of such rules could indeed be climate change related.Footnote 1 This chapter looks at climate change litigation against the backdrop of existing law as well as climate science, particularly the well-documented impacts of climate change which are both deadly and devastating and will become increasingly so as more greenhouse gases (GHGs) are released into the atmosphere in the coming decades. To put it bluntly, emissions need to drop globally by 3 to 7% per year to adhere to the globally accepted temperature target provided by the Paris Agreement to the UN FCCC of 2015Footnote 2 to try and mitigate the worst of the “risks and impacts” of anthropogenic climate change:

Article 2(a) Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.

Chapter 2 referred to liability law as essentially a ‘private’ mechanism and, keeping in mind this broad understanding of liability, we discuss the two dimensions of liability in the context of existing or potential climate change cases/litigation, based on existing legal rules in different jurisdictions. By way of reminder, on the one hand, liability is about legal consequences given that it deals with compensation or restitution for damage sustained in a particular situation, i.e. the consequences of the harmful behaviour of certain actors. On the other hand, legal theory has always stressed the ‘regulatory’ or preventive function of liability—in this sense, liability is an instrument for the implementation and enforcement of environmental standards.

This chapter uses a comparative approach to discuss tort/nuisance type cases that have principally occurred in the USA, Germany and the Netherlands. It focuses on private actors but also includes ongoing vertical climate litigation (i.e. addressed at States and governments), as such cases are also essential to understand both limitations and parallels of private liability. However, this chapter does not attempt to provide a conclusive overview of all the relevant cases and possible categories of climate change litigation as there are now so many that this would be impractical.Footnote 3 The categories provided here are selected to enable meaningful and transparent analysis of the challenges regarding the forensic (e.g. causation, attribution) and legal issues (e.g. damage baseline, environmental damage) that such cases face, and thus any attempt to hold private entities ‘responsible’ or liable for climate change impacts. This also precludes this chapter from examining every legal problem that must be addressed in relation to climate-change cases (such as jurisdiction, applicable law, etc.). Rather, the present analysis focuses on key issues where climate cases serve particularly well as a reference area.

In contrast to the previous Chap. 7, this chapter refers to the duty to protect in the sense of a State’s obligation to protect its citizens and discusses the standard of care that defines these duties. Such standards could be substantive duties of result or duties of conduct – depending on the legal system and level of analysis. This should be noted against the backdrop of the duties discussed in Chap. 5 (regarding the liability of private entities in international law), Chap. 6 (the liability of private entities under national law) and especially Chap. 7 (the due diligence requirements of companies as a distinct concept of law).

1.1 Broad Categories of Private Liability Actions

For this chapter, it is useful at the outset to establish broad categories of horizontal civil litigation in the climate context. These categories provide an understanding of the various forensic and legal issuesFootnote 4 to be discussed in the sections that follow.

Firstly, there are a number of tort/nuisance type cases that have been brought in the USA, Germany and the Netherlands that will be presented in more detail below (¶ 14 et seq) and that are at the centre of the following analysis. Pertinent to the subject matter of the study, the defendants in these cases are private entities, large GHG emitters (the ‘carbon majors’,Footnote 5 ¶ 97). These cases can be divided further by the type of action involved, namely;

  • monetary compensation or actual relief for damages incurred by changing trends or extreme weather events linked to climate change (the first dimension of liability), this would be actual compensation for climate-change damage.Footnote 6

  • implementation or financing of individual protection measures (the first dimension of liability) which suggests a monetary order but should be qualified as ‘adaptation’ in accordance with climate-change terminology.

  • injunctions (the second, preventive, dimension of liability), focusing on a change in the conduct of a specific business to ensure climate-change impacts are averted by reducing emissions, such actions are classed as ‘mitigation’ in international-law terminology.

    This latter category of mitigation-targeted cases can now be supplemented by cases such as the TOTAL case in France (Notre Affaire à Tous and Others v TOTAL, ¶ 47)Footnote 7 where specific due diligence obligations are applied as described in Chap. 7. These cases are based on the premise of a breach of due diligence, not an injunction, but are equally focused on forcing private entities to reduce GHG emissions.

In addition to the foregoing, there have been actions brought by shareholders against major GHG emitters claiming a loss of company value due to a failure to adapt business strategies to climate change, demanding climate-risk disclosuresFootnote 8 or arguing for staying certain investments, such as in Poland where shareholders argue that building a new coal-fired power plant violates fiduciary duties.Footnote 9 A non-disclosure claim in Australia was halted after the defendant bank included a climate-risk assessment in its 2017annual report.Footnote 10 These cases also belong in the category of horizontal climate litigation but have little to do with concrete physical and environmental damage as they focus on the risks of climate change to company/shareholder value.

1.2 Public Law and Private Law Litigation and the Relationship Between State and Private Duties of Care

At the outset, it is also necessary to establish that cases involving private companies do not even come close to covering all the legal actions directly or indirectly aimed at climate protection or restitution for negative impacts. On the contrary, most cases considered to fall under the heading of climate change litigation are in fact cases that address States or invoke public law. Some of these latter group of cases are listed here, again in broad categories to give context to the following discussion:

  1. 1.

    Actions brought by private individuals or NGOs against States and/or government agencies to force States or their agencies to enact legislative or administrative measures to regulate GHG emissions. Most of these use human-rights arguments to support complaints about States’ failure to mitigate climate change, and, to a more limited extent, to address the impacts of climate change (‘adaptation’).

    In December 2019, in the well-known Urgenda case, the Supreme Court of the Netherlands (in the third instance) applied Dutch civil law using the European Convention on Human Rights as a substantive basis when it upheld a verdict obligating the Dutch government to reduce GHG emissions by 25% by 2020.Footnote 11 This succession of three rulings from 2015 to 2019 in the Netherlands is said to provide hope for the climate in the face of delaying tactics employed in diplomatic efforts to solve the problem globally.Footnote 12 The Supreme Court’s decision will also be further discussed here (¶ 41) since the legal basis for the claim was a tort/nuisance type provision used, in this instance, against the State.

    1. a.

      In 2020, two cases in France resulted in judgements requiring restitution for ecological damage resulting from the omission of climate protection measures of the French State as well as obligating the government to take effective measures to curb emissions. This includes a claim by a coastal community Grande-SytheFootnote 13 and one made by several civil-society organisations.Footnote 14

    2. b.

      In New Zealand, the government was similarly ordered by a court to update its climate policies. On 2 November 2017, the High Court in WellingtonFootnote 15 held that climate change presents significant global risks, that the government is legally accountable for its actions to address climate change and that it had failed to review the country’s climate-change targets for 2050. Unlike in Urgenda however, the court refrained from issuing an order due to the new political targets set by the newly elected government.

    3. c.

      In the USA, the most well-known such case is probably Juliana v United States of America, in which several young Americans ask for a climate recovery plan from the government based on the public trust doctrine, which was recently prevented from moving to full trial but remains pending.Footnote 16 Another well-known and somewhat similar US-based case is one of the first climate cases brought to court, Environmental Protection Agency (EPA) v. Massachusetts,Footnote 17 which will be presented in depth below (¶ 22 et seq).

    4. d.

      In Germany, an application was brought to the administrative court of Berlin by several farmer-families seeking to hold the government to its promise made in 2007 to reduce emissions by 40% of their 1990 level by 2020. The case was dismissed in October 2019Footnote 18 on legal grounds, however, justiciability was accepted as was the existence of a duty to protect against the impact of climate change based on human rights as enshrined in the German Basic Law. Since Germany adopted a climate-change law in December 2019, an appeal would have been ineffective and several constitutional complaints against this law from youth plaintiffs and private individuals from Bangladesh had been brought. Similar cases are ongoing in the courts of the EU,Footnote 19 Switzerland,Footnote 20 Belgium,Footnote 21 France,Footnote 22 Canada,Footnote 23 South KoreaFootnote 24 and others.

    5. e.

      About 18 months after the judgment of the Administrative Court of Berlin, the German Federal Constitutional Court held that the German Climate Protection Act (CPA) was unconstitutional insofar as it lacked reduction targets for the time after 2030.Footnote 25 While the court did not consider that a legislative duty of care had yet been violated, mainly because adaptation measured may still prove sufficient to protect fundamental rights against climate change, it ruled that the reduction path of the CPA violated fundamental rights in their “intertemporal dimension”.Footnote 26 As most of Germany’s CO2 budget would be exhausted by 2030 if the path set forth by the CPA was followed, severe restrictions on individual freedoms (e.g. on mobility) would become necessary to meet Germany’s contribution to the binding goals of the Paris Agreement. Therefore, the CPA placed a disproportionate burden on future generations who would have had to bear the brunt of the government’s radical last-minute action to reduce emissions. This line of argument may open a new avenue for climate change litigation, not only against States but also against private emitters who consume a disproportionately large share of the remaining CO2 budget, thus threatening to impose severe restrictions on future freedoms.

    6. f.

      In Ireland, the Supreme Court ordered the State to draft a new climate-change plan based on the 2015 legislation since the existing plan did not provide sufficient measures to meet the agreed-upon targets.Footnote 27 It ruled that “a compliant plan must be sufficiently specific as to policy over the whole period to 2050.”

    7. g.

      Another successful case that focused on adaptation to climate change is the Leghari case in Pakistan.Footnote 28 Mr Leghari, a Pakistani farmer, applied for an order for the failure of the Pakistani government to implement its national climate-change law and policy. In 2015, the Green Bench of the Lahore High Court upheld the claim based on the State’s obligations to protect the constitutional rights to life and dignity.

    8. h.

      In Colombia, the Supreme Court issued a rather spectacular ruling in April 2018 on an application brought by youth plaintiffs against the national government, several local governments and a number of corporations where the court found that the Colombian Amazon has its own rights and, given its importance for halting climate change, ordered the government to make and carry out action plans to address deforestation in the Amazon.Footnote 29

  2. 2.

    Actions indirectlyFootnote 30 brought against large GHG emitters to ensure the enforcement of existing environmental statutes or invoking climate change in discretionary decisions for the approval of certain projects such as harbours, coal mines or roads, i.e. legal actions aimed at cassation of facility approvals. Today, there are probably several thousand cases worldwide based on various aspects of climate change and, since 2015, the Paris Agreement in the context of projects approvals or plans enabling projects such as those mentioned just above. While a case involving drilling approvals in the Arctic failed in NorwayFootnote 31 in the first instance, in Gloucester Resources Limited v Minister for Planning, an Australian court denied permission for a coal mine in the final instance due to coal mining’s foreseeable impacts on the climate.Footnote 32 Similar, earlier attempts to stop climate-damaging projects around the globe had failed.Footnote 33 However, in the recent Heathrow Airport caseFootnote 34 a London court rejected the development decision for an additional runway because GHG emissions and their impact on climate targets had not been taken into account.Footnote 35 The decision was ultimately overturned by the Supreme CourtFootnote 36 but bears witness to the increasing legal importance of climate change for project approvals.

  3. 3.

    Last but not least, there are several pending international applications currently before human rights bodies (Right of the Child Convention,Footnote 37 Australian islanders at the United Nations Human Rights CommitteeFootnote 38)Footnote 39

Public law litigation is very relevant to private liability litigation because the science and forensics as well as many legal principles, in particular regarding causation and attribution, used in State-related cases can also be used in arguments in civil cases. Furthermore, since business decisions and the conduct of major polluters can have a similar impact on global climate change as policy decisions by national legislators, it does not seem far-fetched to demand similar standards of care from such private actors. How administrative or constitutional courts are continuing to examine and interpret the duty of care against the background of climate science necessarily also influences civil courts. This has been examined in depth in the context of the due diligence obligations of companies in Chap. 7. Turning this argument around, some French courts have now applied to the State statutes originally designed to restrict certain private behaviour to prevent, for example, ecological damage.Footnote 40 These decisions will be examined further below.

Nevertheless, one of the important lessons learned from past and ongoing cases is the difficult relationship between State duties and the duties of private entities. The parallel existence of public and civil law cases raises a few core questions regarding climate-change litigation: Is there a parallel responsibility for both States and private enterprises and to what extent do State and private duties align? Can the behaviour of private entities be justiciable at all if the State assumes responsibility for climate protection (as is the case in most jurisdictions, at least generally)? We will turn to this question first, in the next section.

1.3 Structure of the Analysis

This chapter approaches the issues raised above as follows: Using a comparative approach, tort/nuisance type cases from the USA, Germany and the Netherlands are presented in the first part of this chapter (¶ 14 et seq) with a focus on the preliminary question of justiciability. While forensic questions, especially the problem of causation, are also relevant here, the main point of the analyses is the overlapping duties of State and private actors and the often-raised general hypothesis that State duties exclude responsibility for private actors.

The second part of the chapter (¶ 55 et seq) will then explore the issues of standing and compensable damage as well as causation in more detail. The forensic challenges that arise in this context are very different, depending on the broad categories of civil cases outlined above (¶ 5 et seq). In fact, as will be seen, some types of claims avoid forensic problems altogether. The analysis will also include an examination of policy proposals designed to enhance procedural and substantive laws to engage companies’ commitments to address climate change.

The third part (¶ 135 et seq) will revolve back to the relationship between private and State duties, irrespective of whether they are referred to as such or as duties of care, due diligence etc. in the given set of applicable rules. The argument will be made that new positive duties of private actors exist, or are at least emerging, that are similar to State duties and are essentially aimed at meeting the reduction targets of the Paris Agreement. It will be seen that international environmental law, while not directly binding private entities,Footnote 41 can be used to specify general obligations under national law. General rules of liability may thus serve a gap-filling function where there are currently no statutory cross-border due diligence obligations in national and European law as discussed above (Chap. 7).

2 Justiciability of Climate Change in Civil Courts and the Overlap of Public and Private Duties of Care

2.1 Preceding Remarks

The anthropogenic causes of climate change are no longer disputed by any serious scientistFootnote 42 and have not been contested by the defendants in the cases presented below. Nevertheless, tort/nuisance liability actions against large GHG emitters (the ‘carbon majors’) have largely not been fully successful, nor have there been many such cases to date.

We approach the reasons for this in a practical manner, looking at the countries in which tort/nuisance actions have actually been brought, namely the U.S., Germany and—most recently—the Netherlands, where for the first time a multinational company (Shell) has been held responsible for its contribution to climate change. While U.S. courts have seen by far the most cases, the one case brought before German courts was the first tort/nuisance-based climate case to pass the ‘motion to dismiss stage’ and will be decided on the merits. The German Court of Appeals of Hamm found the plaintiff had stated his claim conclusively and that further evidence, in the form of written scientific expertise as well as a site visit, was needed to arrive at a verdict.Footnote 43 In contrast, all U.S. claims have been dismissed for ‘purely legal’ reasons by citing that the plaintiffs had no claim, even if all their allegations were found to be true.

This relative success of the German case seems odd at first, considering that both the U.S. and German legal systems require the plaintiff to plausibly argue what are essentially the same issues,Footnote 44 including the neuralgic points mentioned above (¶ 3). In particular, the plaintiff must show

  • a violation or an impairment (unreasonable interference) of his or her rights (“injury in fact”, covered type of damage) (forensic/legal)

  • caused by (“fairly traceable to”) the defendant’s conduct (forensic)

  • fault or foreseeability or conduct depending on the cause of action used (legal/forensic).

The discussion below will, however, demonstrate that there is a very specific reason for this divergence. The dismissal of the U.S. lawsuits in the cases analysed below did not primarily hinge on forensic questions but on the more fundamental problem of justiciability, ‘political question’ and preemption or, to put it more simply, the relationship between public and private law.

This points to the overlap between State or government duties to address climate change, which clearly exists and is subject to litigation around the world, with any private actor duties which could be the basis for this latter group’s liability. Any tonnage of CO2 or other GHG emitted will be:

  1. (i)

    subject to a State inventory and reduction commitment under the UN climate regime following the principle of State sovereignty and the no-harm rule,

  2. (ii)

    be emitted using fossil fuels mined/produced/sold by a private actor and

  3. (iii)

    be physically emitted by a car/power plant/industry facility on the territory of the pertinent State (except for international air and ship transport which are not attributed clearly to a given State).

The same is not so true for natural processes such as emissions of methane from cattle or F-gases from industry. However, for the bulk of the ‘damaging substances’ that have negative impacts on the environment, property, health etc., there is a sense of overlapping responsibility for both the State as well as the producers and users of said products. This is especially the case since emissions of CO2 are not explicitly forbidden and can be, as in the case of the EU (since 2005) and some states in the USA,Footnote 45 explicitly allowed through the purchase of an emission certificate.

Each emitted molecule of a ‘damaging substance’ can thus be attributed simultaneously to various actors within the State and the private sector. Each actor has a distinct pattern of behaviour that may involve acts of commission and omission: the State through regulation and/or enforcement or a lack thereof, primary producers through extracting and selling substances such as fossil fuels while further downstream, companies and consumers contribute by ultimately emitting. The legal duties assigned to each actor are accordingly directed at the relevant but very different actions (regulating, stopping or minimising extraction and/or sale, stopping or minimising emissions). This chapter does not seek to conclusively define and differentiate sector-specific duties of care within the private sector, rather its focus is on the overlap between State and private duties as such and the fundamental question of the relationship between State and private responsibility. A topic that is already highly controversial in itself and has been addressed differently in varying legal systems.

2.2 U.S. Cases and Justiciability: The Argument of Displacement by the Clean Air Act (CAA)

It is important to understand that, in the U.S., GHG emissions are subject to regulation under the CAA by the Environmental Protection Agency (EPA), as the Supreme Court held in the landmark decision of Massachusetts v EPA,Footnote 46 see below. This case was the first and arguably most successful case of climate-change litigation in the U.S., and yet, as we will see, also the main reason why tort-based climate-change cases have either been dismissed or must overcome specific difficulties to proceed.Footnote 47

Massachusetts v EPA

The case brought by several states (one of which was Massachusetts) evolved around Section 202(a)(1) of the CAAFootnote 48 and the EPA’s refusal to regulate GHG emissions. The CAA requires the EPA to set emission standards for “any air pollutant” from motor vehicles or motor vehicle engines “which in its judgment cause[s], or contribute[s] to, air pollution which may reasonably be anticipated to endanger public health or welfare.” In 2003, the EPA ruled in a binding decision that it did not have the power to regulate CO2 and other GHGs, and even if it had, it would decline to set GHG emissions standards for vehicles. The first instance court, the U.S. Court of Appeals for the District of Columbia Circuit decided in September 2005 in favour of the defendants after heavily debating whether the plaintiffs had standing to challenge the EPA’s decision. The U.S. Supreme Court, in its 2007 judgement, not only found the states and cities had standing due to the impacts expected to result from global warming (with a lenient approach to causation that did not demand a concrete and traceable physical causal chain) but also agreed that GHGs are indeed pollutants. The EPA was ordered to re-issue its decision under the CAA. In 2010, the EPA decided that GHGs were indeed a threat to the environment and health, a finding supported by a court of law in 2012 and CO2 emissions in vehicles, both new and used, have since been regulated.Footnote 49

It was against this backdrop that the first waveFootnote 50 of U.S. tort-based climate litigation took place between 2005 and 2011 with the claims primarily based on the torts of public and private nuisance under federal common law.

American Electric Power Co. et. al. v Connecticut et. al.

The case that set the tone for tort-based climate change litigation in the U.S. was American Electric Power Co. et. al. v Connecticut et. al. It was brought in 2004 and it is, notably, the only tort-based climate case in the USA that was decided by the Supreme Court. The plaintiffs (both states and private land trusts) claimed that the defendants (six major electric power companies) violated federal common law by emitting large quantities of GHGs and thereby contributing to global warming. As a remedy, the plaintiffs did not seek damages but injunctive relief in the form of the judicial imposition of caps for carbon-dioxide emissions on the defendants. This case is the earliest example of using liability rules to prevent damage from climate change (mitigation).

In a unanimous decision, the Supreme Court dismissed the case,Footnote 51 arguing that the plaintiffs’ claims were displaced by the CAA. In the Court’s opinion, the CAA transferred the sole power to regulate GHG emissions to the EPA. The argument rests on the principle of separation of powers, namely, by enacting the CAA, Congress had used its legislative powers to authorise the executive branch (the EPA) to impose carbon-dioxide caps and had, as a result, taken that competence away from the judiciary. This delegation of power to the EPA had to be respected by the courts, even if the agency refused to set emission caps or to regulate carbon-dioxide emissions at all. The Court added, however, that the EPA’s inaction in itself would be subject to judicial review, as the Court had decided in the case of Massachusetts v EPA mentioned above. Effectively, the plaintiffs had sued the wrong defendant because the Supreme Court decided that the state duty excluded possible private duties as the duty to regulate had been placed on the EPA.

While the Supreme Court decided that the plaintiff’s mitigation claims, aimed at the judicial imposition of emission caps, were displaced by the CAA, it is also interesting to note which arguments did not lead the Court to dismiss the case: An equally divided Court (4:4) found that the plaintiffs had sufficiently alleged standing under Article III of the Constitution. The Court’s written opinion does not give much insight on why it arrived at this conclusion. Nonetheless, the result in itself is remarkable because, by refusing the defendants’ argument that the plaintiffs lacked standing, the Supreme Court effectively acknowledged that the plaintiffs had sufficiently alleged a concrete injury of their rights and causation. In other words, the Supreme Court would not have dismissed the case without further examination of the facts had it not been for the displacement by the CAA. Furthermore, since the Court had not ruled on the question of damages, but rather on injunctive relief and an in-effect reduction of GHG emissions by the defendants, it initially remained open whether such claims would also be displaced by the CAA.

Native Village of Kivalina v Exxon Mobile Corp. et. al.

In Native Village of Kivalina v Exxon Mobile Corp., however, the Court of Appeals for the 9th Circuit extended the displacement doctrine from American Electric Power to monetary damages.Footnote 52 In Kivalina, the Native Village of Kivalina and the City of Kivalina sued multiple energy producers for damages arising from injuries incurred as a result of climate change. The City of Kivalina was threatened by the melting of sea ice that had protected the city from heavy coastal storms. Due to the loss of sea ice, the entire city with its 400 residents had to be relocated. The plaintiffs argued that the ice loss was a result of global warming, to which the defendants significantly contributed, and sought compensatory damages for the costs of relocation. The Kivalina case received a lot of attention since the village appeared to be the ‘perfect plaintiff’Footnote 53 as it alleged both a very concrete injury and a convincing causal chain given broad acceptance that melting sea ice can quite easily be traced to global warming.Footnote 54 It is both an adaptation case and a claim for damages under the categories sketched out above.

Nonetheless, the District Court dismissed the case, finding that the claims were barred by the political question doctrine and also asserting that Kivalina lacked standing since it had not sufficiently established causation. On appeal, the 9th Circuit did not dwell on those questions. Instead, it waited for the Supreme Court’s decision in American Electric Power and then—at least in the majority opinionFootnote 55—solely relied on the Supreme Court’s displacement argument to dismiss the claim.

Although American Electric Power, as we have seen, did not concern a damage claim, the majority in the Kivalina case assumed to “have direct Supreme Court guidance” on the issue and simply acknowledged a “slightly different context” between seeking injunctive relief (i.e., setting of emission caps) on the one hand and damages on the other.Footnote 56 While the CAA gives the EPA the power to regulate emissions by setting caps it does not provide for any damage remedies, however, the Court found that the CAA displaced all common-law actions. This reasoning has been contested by U.S. scholarsFootnote 57 and did not necessarily follow from the Supreme Court’s decision in American Electric Power that was limited to the specific case and the relief sought. Nevertheless, the Supreme Court denied the plaintiffs’ petition for a writ of certiorariFootnote 58 without comment.Footnote 59

Ned Comer et. al. v Murphy Oil USA et. al. (Comer I and II)

Before Kivalina, Comer v Murphy Oil USA was a tort-based climate change action that was first filed in 2005 by a group of residents and landowners that had suffered injuries from Hurricane Katrina.Footnote 60 This is one of the first cases seeking compensation for climate change damage arising from a specific extreme weather event. In Comer, the plaintiffs claimed that the effects of global warming had contributed to the strength of the storm and, contrary to American Electric Power, they did not seek injunctive relief but damages for the injuries incurred as a result of the storm.

The District Court dismissed the case for lack of standing and political question grounds, declaring itself unfit to develop a standard of unreasonableness and arguing that such matters best be left to the legislative and administrative branches.Footnote 61 In 2009, before the Supreme Court’s decision in American Electric Power, a panel of the Court of Appeals for the 5th Circuit found that the plaintiffs had sufficiently alleged causation to have standing and that their claims were not barred by the political question doctrine.Footnote 62 This view is especially notable since the injuries were incurred by a single extreme weather event and such events are generally said to be much harder to attribute to climate change than a phenomenon such as rising sea levels.Footnote 63 This decision, however, was later annulled for procedural reasons and, after more procedural turbulence and a refiling of the case in 2011,Footnote 64 the District Court’s 2005 decision became legally binding. Though the Court of Appeal’s annulled decision does not carry much precedential value,Footnote 65 it still illustrates that the main hurdle for getting past the motion to dismiss stage is neither causation nor the political question doctrine, but the issue of displacement by the CAA.

New Cases Based on State Common Law

Displacement of tort-based claims by the CAA remains the primary issue in a new, second waveFootnote 66 of climate change litigation which began in 2017. Those actions focus on defendants’ knowledge about their contribution to climate change and its catastrophic consequences, somewhat reminiscent of tobacco litigation,Footnote 67 and are brought by local governments based on state rather than federal common law.Footnote 68 These claims may have been encouraged by Justice Pro’s concurring opinion in Kivalina that insinuated that plaintiffs may be able to bring an action under state common law.Footnote 69 Furthermore, some such cases have even been brought for specific types of economic impacts, as was seen in a case brought by Pacific fishermen.Footnote 70 As a result, the legal problem shifts to the questions of whether such claims can be brought under state common law and, especially, whether the federal CAA legislation also preempts tort claims based on state common law.

To date, at least two District Courts have dismissed such claims, holding that tort-based climate-change cases could not be brought under state law due to the interstate nature of GHG emissions and confirmed that federal common law was displaced by the CAA.Footnote 71 Other decisions, however, have granted plaintiffs’ motions to remand and rejected the argument that state common law was displaced.Footnote 72 The final say on these claims is still open.Footnote 73

Germany – Luciano Lliuya v RWE AG (adaptation)

In the German Luciano Lliuya v RWE AG case,Footnote 74 the plaintiff’s property in the Peruvian city of Huaraz is alleged to be in acute danger because a glacier above the city is receding and melting, resulting in a swollen glacial lake which threatens to flood the city or to bury it under a mudslide. Since anthropogenic climate change contributes significantly to glacial melting, Lliuya brought an action in German civil courts against the energy utility RWE, demanding the company pay 0.47%, proportional to the company’s historic share of worldwide GHG emissions, of the costs to take appropriate safety measures above Huaraz.Footnote 75 RWE is Europe’s biggest single source emitter and one of only 90 ‘carbon majors’ that, based on analysis of historic production records covering the period from 1854 to 2010, have caused about two-thirds of global CO2 emissions.Footnote 76 The claim was based on a general tort law provision in Section 1004(1) of the German Civil Code (BGB) which states:

If the ownership is interfered with by means other than removal or retention of possession, the owner may require the disturber to remove the interference. If further interferences are to be feared, the owner may seek a prohibitory injunction.Footnote 77

The District Court in Essen dismissed the claim, holding that causation (‘traceable cause’) had not been sufficiently established. Moreover, RWE’s contribution was found to be insignificant: even if the company’s emissions were proportionally causal for global warming, the court argued, there were too many tortfeasors to be able to attribute consequences of climate change, in short, the plaintiff’s situation would be the same even if RWE had never emitted anything.Footnote 78 A year later, the Court of Appeals in Hamm disagreed, holding that the plaintiff had conclusively alleged both causation and attribution.Footnote 79 The court found the plaintiff had stated his claim conclusively but further evidence, in the form of written scientific expertise as well as a site visit, was needed to arrive at a verdict.

Notably, and in sharp contrast to the U.S. decisions presented above, the Court of Appeals in Hamm did not have any problem accepting the overlap between State and private duties,Footnote 80 although the German equivalent to the CAA, the Bundesimmisionsschutzgesetz (BImSchG) provides a statute similar to the CAA in the U.S. and the German cap and trade scheme (Treibhausgasemissionshandelsgesetz—TEHG) applies to the coal-fired facilities owned and operated by RWE which emit GHGs. This is because the statute itself expressly regulates the issue of preemption and the relationship between public and private law in Section 14 BImSchG, which is a universally applicable federal law, and provides for a differentiated approach:Footnote 81

[1] Nobody shall have the right to request cessation of operation at any installation on grounds of civil-law claims, not based on specific titles, to protection against the detrimental impacts emanating from any piece of land on neighbouring premises, insofar as the license for such an installation has become final; it shall only be admissible to insist on such precautionary measures as are necessary to prevent such detrimental impacts. [2] If such measures are not technically feasible according to the best available techniques or not economically viable, compensation may only be claimed for the actual damage suffered.Footnote 82

Section 14[1] BImSchG thus only preempts claims aiming at a complete shutdown of a facility (e.g., a power plant), since the permission granted based on the BImSchG legalises the operation itself.

Having said that, a claim for the abatement of emissions of a given facility is, in principle, admissible (see also Section 14[1] BImSchG), however, an application for a specific abatement measure is highly unlikely to be successful. The concrete implementation of protective measures must be left to the operator of the facilityFootnote 83 and the law limits abatement claims to measures that are technically feasible and that do not involve unreasonable costs.Footnote 84 It naturally follows from this that pure mitigation claims (injunctions) may therefore be difficult to conceive.

Under no circumstances, however, does the BImSchG displace or preempt compensatory claims for monetary damages or protection and, as a result, both adaptation and compensation for damage claims are set out in Section 14[2] BImSchG. Thus, the BImSchG legalises a plant and its emissions in the interest of the public, however, individuals can still demand protective measures with respect to their property and so forth as well as damages.Footnote 85 Since a claim under Section 1004(1) BGB does not require a breach of duty but only that the consequence of an interference with property is unlawful, it was irrelevant that RWE had not violated German public law.

The preliminary legal assessment of the court, particularly with respect to the application of partial causation , can be informed by the French cases mentioned above. Being based on a civil law stipulation, the courts found that the State’s omissions to reduce GHG emissions cause ecological damage.

Notre Affaire à Tous v France

A coalition of French NGOs brought a case against the French State before the Paris Administrative Court. Basing their legal argument on the State’s climate law, as well as overarching constitutional provisions and the right to a clean and healthy environment, the application asked the court to find that the State was liable for the ecological damage caused by its failure to keep within the targets for 2015–2018. On 3rd February 2021, the court indeed found this to be illegal behaviour giving rise to the claim to redress ecological damage. The Administrative Court considered that a public person, in the same way as a private person, can be held responsible for damage caused to the environment. This sets a new precedent under French law, as ecological damage has to this point only been invoked under civil law against private entities. The court also found that any association that has statutes covering the protection of the environment can ask for reparation from parties causing ecological damage. The court rejected the defence’s notion that damages could not be sought due to a lack of (direct) causation, adopting the application’s assertion that this was a matter of partial contribution to ecological damage. The stipulation invoked was a specific tort provision under Article 1246 of the French Civil Code which states “Toute personne responsable d'un préjudice écologique est tenue de le réparer.“ (Every person responsible for ecological damage is obliged to pay reparation). The case continues at the time of writing as the State was given 2 months to declare how it seeks to rectify its illegal behaviour.

Urgenda and Shell Cases in the Dutch Courts (mitigation)

In the context of the overlap of and relationship between State and private responsibilities, the case of Milieudefensie v Shell Footnote 86 in the Netherlands is particularly interesting. Different from the Lliuya case, the plaintiffs sought injunctive relief and obtained an order obligating Shell to align its business model with the reduction targets of the Paris Agreement. In their application, the plaintiffs referred primarily to the judgments of the courts against the Dutch government in the Urgenda case.

Urgenda Foundation v The State of the Netherlands

In the Urgenda case, Dutch courts have ruled in three instances that the Dutch government is obliged to reduce its GHG emissions by 25% from their 1990 level by 2020.Footnote 87 The claim by a Dutch NGO alleged a breach of a duty of care by the Dutch government towards its citizens and was based on a general provision in Dutch civil (tort) law. In the context of private law actions, the District Court’s reasoning is particularly interesting because it relied most strongly upon the general tort-law provision in Article 6:162 of the Dutch Civil Code. The District Court argued that Urgenda, as an organization, could not directly invoke Article 2 (the right to life) and Article 8 (the right to respect for family and private life) of the European Convention on the Protection of Human Rights and Fundamental Freedoms (ECHR).Footnote 88 Urgenda could, however, rely on the general provisions of Dutch private tort law and its open-to-interpretation standard of care. This standard of care was subsequently specified, inter alia, by the legal requirements of Articles 2 and 8 ECHR and other factors such as international and EU climate policy.Footnote 89 The Court of Appeals and the Supreme Court also deemed that the Dutch government had violated its duty of care but were of the opinion that this duty followed from Articles 2 and 8 ECHR and that Urgenda could directly invoke those provisions;Footnote 90 therefore the courts did not go into as much detail with regard to the interpretation of the tort-law provision.

In the Shell case, the plaintiffs successfully argued that the reasoning of the Urgenda courts regarding the State’s duty of care can also be applied to private defendants. As we have seen, the Urgenda judgments, although directed against the State, were based on a civil law provision at the outset. The Dutch law in Article 6:162 of the Dutch Civil Code is a basic and general provision regarding a ‘tortious act’:

  • 1. A person who commits a tortious act (unlawful act) against another person that can be attributed to him, must repair the damage that this other person has suffered as a result thereof.

  • 2. As a tortious act is regarded a violation of someone else’s right (entitlement) and an act or omission in violation of a duty imposed by law or of what according to unwritten law has to be regarded as proper social conduct, always as far as there was no justification for this behavior.

  • 3. A tortious act can be attributed to the tortfeasor [the person committing the tortious act] if it results from his fault or from a cause for which he is accountable by virtue of law or generally accepted principles (common opinion). Footnote 91

In the Shell case, the plaintiffs used this provision, in effect transferring obligations from the State to companies.Footnote 92 The district court largely followed the plaintiffs’ reasoning, holding that Shell had a duty to reduce its net CO2 emissions (Scope 1, 2 and 3) by at least 45% from their 2019 levels by 2030.Footnote 93 The court formed its view of the unwritten standard of care provided by the second paragraph of the above-cited provision by, inter alia, referring to the Urgenda case and the dangers climate change poses to human rights enshrined in the ECHR. While Shell is not directly bound by human rights obligations, the effects of climate change on human rights factored into the court’s overall interpretation of the open legal standard, as did the Paris Agreement, international soft law and climate sciences.Footnote 94

The relationship between the Urgenda case and the Shell case is somewhat similar to the relationship between the Massachusetts and American Electric Power cases discussed above, however, the outcomes are starkly different. On the one hand, there is a judgment obliging the State to regulate or to act, on the other hand, there is one that imposes the same or similar duties on corporate defendants. At the same time, the Shell case makes the issue of overlapping State and private duties particularly clear. The court also denied a preemption by the European Emissions Trading System (ETS), holding that Shell’s private law obligation was independent of State or EU legislation.Footnote 95

The Shell decision and the ‘social duty of care’ premise developed there will be examined in more detail at the end of this chapter. Concluding the case analysis, this section now examines a case that also entailed an argument for a corporate duty to adapt its business conduct to meet the emission-reduction goals of the Paris Agreement. However, this argument is based on a statutory due-diligence provision that was discussed in the previous chapter.

Notre Affaire à Tous and Others v Total S.A.

In this case, the plaintiffs argued that the fossil fuel company Total has violated its statutory duty to sufficiently incorporate the climate-change-related dangers of its business model into a due-diligence plan (‘plan de vigilance’).Footnote 96 The claim is based on a provision in Article L225-102-4 of the French Commercial Code that was introduced in 2017 and specifies the general environmental duty of care stemming from Articles 1 and 2 of the Environmental Charter which is a part of the French constitution. The provision in the Commercial Code requires large companies to identify the environmental hazards and risks of their activities along their supply chains in a due-diligence plan and to specify appropriate measures to manage risk and deal with accidents. If a company fails to take action as provided for in its due-diligence plan, enacting these measures can be forced upon a company by a court. Notre Affaire à Tous (a green legal NGO) and Others assert that Total. which is responsible for approximately 1% of global CO2 emissions, failed to properly identify and evaluate the climate-change-related risks of its business because its due-diligence plan does not provide for a course of action that would align Total’s business model with the emission-reduction goals of the Paris Agreement. The plaintiffs, therefore, requested the issuance of a due-diligence plan suitable for this purpose. Since such a plan would be enforceable under the relevant legal provisions (see above), success for the plaintiffs would force Total to make significant adjustments to its business model.

2.3 Assessment

The above analysis shows that both U.S. and German courts have been divided on the issue of causation. There is, however, no fundamental difference between the two legal systems in that regard. The main difference is the interpretation of the relationship between private (tort) and public/administrative law by the judiciary. The question is whether the State, given existing statutes and regulations, is the sole carrier of justiciable responsibility concerning climate change or whether companies are accountable as well.

Since the decisions in American Electric Power and Kivalina, U.S. courts have taken the former view, at least with regard to federal law. In the first case, the Supreme Court argued that injunctive relief was not available under federal tort law against private polluters because the CAA transferred the power to regulate emissions to the EPA. The Kivalina court extended this reasoning and applied it to the question of adaptation type relief demands and damages.

In Germany, statutory law provides for the opposite, at least partially. While certain forms of injunctive relief (e.g., cessation of a permit for a facility) cannot be sought through civil law litigation, other forms of injunctive relief depend on technical and financial feasibility. Claims for compensation in the form of financial damages and adaptation type relief and protective measures are always admissible, at least this is the opinion of the High Court of Appeal in Hamm.

In the Shell case, the district court essentially blurred the difference between State and private obligations, arguing that private companies owe a duty of care which is, on the one hand, independent of State regulation and, on the other hand, largely corresponds to the State’s responsibility as determined by the Paris Agreement (Chap. 16). This highlights the question that arises regarding the existence, basis and extent of a positive duty of care, an issue that will be examined in the final part of this chapter (¶ 138 et seq).

The U.S. case law undermines an important aspect of tort and nuisance law, which has traditionally been used to tackle behaviour that may not be unlawful but still detrimental to individual rights. It is a field of law that constantly adapts standards of reasonableness in the view of current social and scientific findings.Footnote 97 In this sense, common tort law has a ‘gap-filling function’.Footnote 98 The view taken by U.S. courts regarding the displacement of federal common law claims runs counter this general idea.

The effect of this reasoning on legal protection is particularly strong because the cases would be able to rely on what is essentially a concept of strict liability. This is true for both the U.S. concept of private and public nuisanceFootnote 99 and the relevant provision in the Lliuya case in Germany (Section 1004 of the German Civil Code). Public or private nuisance claims do not require unreasonable conduct but an unreasonable interference with protected legal interests.Footnote 100 Therefore, in the cases discussed above, the main requirement for establishing liability was unreasonable damage suffered by the plaintiffs or the prospect of such damage and the causality of the defendant’s conduct. Arguing displacement due to the possibility of public law regulation under the CAA deprives the cases of any basis, without even entering into the merits. The French cases referred to above have found illegal behaviour on part of the State without indicating whether such reasoning could be applied to private entities. Given that a number of cases are pending in the jurisdictions examined, the issue here is far from closed. The results of this analysis suggest that the overlap of State and private duties remains an issue to be examined in further research.

Operating on the basis of a preliminary ‘green light’ evidenced in the RWE and Shell cases with respect to the justiciability of private liability (i.e., of how the overlap of State and private duties could be dealt with using tort/nuisance principles), attention will now turn to a deeper analysis of the legal and forensic problems associated with questions of damage and causation in climate-change litigation.

3 Damage and Causation: Who Can Claim What Against Whom?

The issues of compensable damage and, in particular, causation have been extensively discussed in connection with civil liability regimes that could be employed to help address the effects of climate change.Footnote 101 Some of the literature extends to the climate change regime and the issue of ‘loss and damage’ now enshrined in Article 8 of the Paris Agreement (see Chap. 16). Regardless of questions involving a breach of duty or fault, which we will come back to later in this chapter (¶ 135 et seq), damage and causation form the basis of civil liability because they determine who can claim what from whom.

The question of compensable damage determines who can sue for what: Applicants must claim that a protected legal interest has been, or is likely to be, infringed. Only after such a determination has been made can applicants be entitled to relief, be that in the form of the implementation or financing of protection measures, monetary damages or injunctive relief. In cases such as the NGOs case against the French State, this issue was largely moot as NGOs are deemed to be entitled to claim unquantified ecological damage. However, concerning claims in a horizontal context, the issue of compensable damage will remain a precondition for liability, and especially with respect to cumulative and extensive damage, standing was identified as a major issue in enforcing liability in Chap. 6.

Establishing causation is necessary to determine who is liable for the damage suffered. Damage or risks of incurring damage as a result of the effects of climate change must be, at least to some degree, a result of a defendants’ conduct. In the context of climate change cases, legal and forensic problems arise primarily from the fact that anthropogenic climate change is both global in scope and complex in nature, as typified by the following two points:

  • The effects of anthropogenic climate change are universal, affecting both individual rights and common resources. This fact is captured legally through the question of standingFootnote 102 and compensable damage. Questions concern the interests protected by law, especially with regard to purely environmental damage, and the entitlement to enforce protection of those interests in court. The forensic challenge lies in assessing the value of protected interests, especially where intangible and collective goods without a clear market value (e.g. ecosystems) are concerned.

  • Anthropogenic emissions are not the only reason for harmful trends or extreme weather events, and virtually every single human being as well as every public or private sector entity contributes to climate change in one way or another. This fact must be discussed and solved when establishing causation for the purposes of litigation. It seems clear today that establishing contributory causation is sufficient for cases to proceed (see the Urgenda-case, the decision of the German Federal Constitutional Court as well as the cases of RWE and Shell), nevertheless, causation will remain a core issue for any adaptation and compensation cases. For a claim to be successful, the damage or risks of damage have to be sufficiently linked, firstly, to climate change and, secondly, to the given defendants and their relative contribution. Legal questions arise in such a process regarding, for example, the necessary degree of probability and the de minimis threshold of contribution to global warming.

The above-mentioned problems are by no means exclusive to climate change litigation as they are also present in other areas of environmental litigation, however, climate change case law, in particular, can serve as a reference area to illustrate the problems of litigation involving environmental liability in general.

As mentioned above (¶ 5 et seq), the severity of the legal and forensic problems depends on the concrete legal action. Following the categories established above, namely actions for damages, adaptation, mitigation and shareholder actions, we will proceed by highlighting the foreseeable key problems that can occur in climate change litigation (¶ 61 et seq and ¶ 89 et seq). The problems highlighted are the most relevant in tort and nuisance (i.e., damages or adaptation) cases. Here, the legal and forensic substantiation requirements are highest because a concrete impact has to be quantified into damages and the impact would have to be attributed to the defendant’s conduct. Nevertheless, we will see that it is still often possible to meet these requirements, although the degree of difficulty to do so can depend on the legal system involved. Following the general analysis of the legal and forensic issues regarding compensable damage and causation, we will turn to actions seeking protection measures or injunctive relief and consider shareholder actions that argue a loss of company value (¶ 113 et seq). We will show how these actions avoid some, or even most, of the problems commonly associated with climate change liability. We have included a table that concisely lists the key issues as they arise in the various categories of cases to provide both clarity and serve as a ready reference.

The concluding section of this part of the chapter discusses means to overcome the problems identified by taking a look at the ‘Model Climate Compensation Act’, a policy proposition from Canada that aims to facilitate climate change liability litigation (¶ 123 et seq).

3.1 Who Can Claim What? Compensable Damage, Standing and Relief

The issue of compensable damage is of central importance to answer two questions: Who has standing in court and what remedy can they claim? To undertake an effective structured analysis, it is important to first distinguish the different types of damage. As liability litigation is usually based on national tort law from the outset, it is important to keep in mind that the scope of legally protected interests, as well as the entitlement to enforce those interests in court, both depend on the legal system in which the claim is brought. This was discussed in depth in Chap. 6 and, as was made clear, the problems faced in liability litigation may vary from country to country.

The following section takes, as a starting point, the classical position that legal protection is primarily the protection of individual rights. It begins with the least problematic legal positions, that of absolute individual rights, as these are protected under almost all legal systems. We then look at the more problematic category of individual economic risk and financial loss before finally turning to the most difficult category, namely damage to collective goods and especially to the environment. This latter category is particularly important with regard to climate change impacts as, under varying scenarios, the IPCC reports leave no doubt that entire regions, ecosystems, watercourses and species will change, may be severely reduced or damaged or even disappear altogether.

Individual Harm to a Rightsholder

In virtually all jurisdictions, damages and abatement remedies are awarded for violating absolute individual rights, such as the right to life, health, liberty and property. In Germany, for example, Section 823(1) and Section 1004(1) of the German Civil Code (BGB) grant damages and redress against such violations (Chap. 6 ¶ 59 et seq (Sect. 6.6.1)). If absolute rights are infringed, the right holder is entitled to damages, including restitution in kind (Section 249(1) BGB) or monetary compensation. Monetary compensation extends to loss of profit (Section 252 BGB) and damages for pain and suffering (Section 253 BGB).

This will cover the bulk of the impacts on individuals that result from anthropogenic climate change and other man-made impacts on nature and the environment because, in most cases, personal damage or risk can be linked to an impairment of individual rights. In the Lliuya and the Kivalina cases, for example, personal property is threatened by glacial melting or rising sea levels. In such cases, damages can include loss of profit if the affected property is used commercially. Similarly, climate change results in heightened health risks to certain groups of peopleFootnote 103 who may, as a result, be entitled to damages for the costs incurred to mitigate those risks.

As for forensics, the assessment of damages does not pose any unusual problems. The assessment of material damages, such as the value of property and even of pain and suffering, is the daily business of courts. If necessary, courts will hear expert opinions to guide them in these matters. In some cases, there is statutory guidance, such as the German Real Estate Value Assessment Ordinance (Immobilienwertermittlungsverordnung, ‘ImmoWertV’) that is used to determine the value of real estate. If property is destroyed by an extreme weather event, such as a flood or storm, the issue of determining baselines to put a figure on the damage occurs, however, this is no different to any other environmental case involving, for example, a chemical spill.

Though the protection of absolute individual rights is a general principle of tort /nuisance law across jurisdictions and legal systems, there is no uniform standard as to who is entitled to enforce these individual rights in court. While it is clear that life, health and liberty are legal interests possessed only by individual persons, impediments to property are more complicated, even though there is broad agreement that both individuals and private corporations can have and claim property rights. However, when it comes to the standing of public entities, such as municipalities, the legal situation varies even among “Western” jurisdictions. In the U.S., the legal concept of ‘public nuisance’ entitles, inter alia, municipalities to bring claims as was discussed in the Kivalina and American Electric Power cases (¶ 24 et seq). Municipalities can make claims not only if their own property is affected (e.g., infrastructure) but also on behalf of municipal citizens (so-called parens patriae claims).Footnote 104 In contrast, German law does not enshrine the concept of parens patriae standing meaning that actions based on the violation of individual rights must be brought by the impacted individuals.

For such jurisdictions as Germany, liability claims will, therefore, be individualised and it will be difficult to actually capture all of the damage caused. This situation is alleviated only partially by the newly established class determination action (“Musterfeststellungsklage) introduced in November 2018 in Section 616 of the German Code of Civil Procedure (Zivilprozessordnung, ZPO). Its purpose is to make it easier for consumers who have suffered similar damages from a certain business conduct, to take legal action by enabling consumer-protection organisations to sue on behalf of such individuals, thereby reducing said individuals' cost risk of litigation. Improved enforcement of civil law claims is also in the public interest as it prevents unlawfully obtained profits from remaining with the injuring party.Footnote 105 However, these legitimate aims are at best partially achieved by the statutory regulation as the main problem remains, namely that such collective action only allows the determination of the existence or non-existence of certain legal conditions for a claim and but not a claim for damages or abatement itself (Section 606(1) ZPO).Footnote 106 Therefore, individuals participating in a class determination action must bring a second action to obtain the remedy that they are actually seeking. Due to this construct, the intended incentive effect is unlikely to materialise on a larger scale and, with respect to climate change damage, it neither increases nor changes the type of damage covered by law.

Pure Economic Loss

Climate change will and is already affecting ecosystems worldwide, an example being coral bleaching due to rising sea temperatures. When it comes to the compensation for and protection against such ‘pure economic loss’ (Chap. 6 ¶ 70 et seq (Sect. 6.6.2)), there are major differences between various national legal systems which lead to a patchwork of possible claims. This patchwork creates gaps and loopholes that exclude some communities heavily affected by climate change. In the context of climate change litigation, damage associated purely with economic loss can arise when businesses depend on natural resources that they do not own.Footnote 107 Examples include the fisher who depends on fishing grounds, the owner of a ski resort who is dependent on snow and the tour boat operator who relies on a coral reef. It is this category of damage that is at the centre of the pending PCCA case in the US where, in this particular instance, fishermen have applied for monetary compensation for their loss in fishery-based revenue due to changes in the maritime environment.Footnote 108 The case is pending.

Germanic jurisdictions are taking a particularly reluctant approach, usually denying compensation for pure economic loss outside of contractual relationships.Footnote 109 If there is no violation of absolute rights, namely loss of property, there is, in principle, no claim under tort law (Section 823 or Section 1004 BGB). According to German legal doctrine, an exception is made only where there is an immediate interference aimed at the business itself (betriebsbezogener Eingriff).Footnote 110 This will usually not apply to the situations described above because the destruction of natural resources resulting from the behaviour of big polluters, such as fossil fuel companies, is not directed against specific enterprises. This approach is, as mentioned, rather specific to Germanic legal systems as Roman law tradition does not follow such a narrow concept. Rather, it is sufficient for plaintiffs to show a personal and actual interest in the claim to have standing.Footnote 111

As far as pure economic damage can be claimed outside contractual relationships, forensics are not overly complicated. The assessment of economic loss (e.g., loss of profit) is routine and would be based, for example, on data detailing average annual income generated in a specific area or ecosystem based on tax returns and expert evidence. The problem comes in cases such as the PCCA, however, in being able to differentiate between causes. Is the actual decline in income the result of new fishery regulations or climate change impacts? Such problems can only be addressed by extensive forensic scrutiny undertaken by courts on a case-by-case basis.

Pure Environmental Damage and Immaterial Collective Loss

Pure environmental damage and immaterial collective loss represent the most problematic area of compensable damage and standing and will undoubtedly increasingly occur with further global warming. The theoretical debate has been set out in Chap. 6. “Pure environmental damage” means, for example, the destruction of natural habitats or extinction of speciesFootnote 112 that does not concern the private interests of a person. Similar problems arise regarding damage to culture, heritage and identity, including the loss of ‘homeland’ (Kivalina).Footnote 113 There are two issues to be resolved when dealing with pure environmental damage and immaterial collective loss, as briefly detailed below.

Firstly, there are the legal issues of standing and admissibility. This concerns the question of whether such damage can be claimed at all and, since it cannot be pinned to an individual, who can make such a claim. The answer depends to a large degree on the applicable legal system, be it international law or, as is normal in tort litigation, national jurisdictions. The French Administrative Court has resolved this by giving NGOs access to justice for ecological damage, as long as their statutes of association concern environmental protection. Footnote 114

Secondly, there is the forensic question of assessing damages. Even if environmental damage is covered in principle in the applicable jurisdiction, it is much more problematic to evaluate the damage suffered. The value of ecosystems and other environmental intangibles is much harder to determine than when assessing the economic damage incurred by individuals. This problem, however, only arises in damage claims as it is not present in legal actions seeking the restoration of habitats, protection or adaptation.

Is Pure Environmental Damage Recoverable?

Pure environmental damage can be claimed under international law, as was referenced in Chap. 3 with regard to the ICJ’s ruling in the Wetland Compensation Case (Costa Rica/Nicaragua). In February 2018, the ICJ ordered Nicaragua to pay compensation to Costa Rica for environmental harm inflicted by the felling of trees and the dredging of a channel in a wetland on Costa Rican territory that was internationally protected by the Ramsar Convention.Footnote 115 It was the first time that the Court awarded damages for an instance of international environmental harm.Footnote 116 However, this case concerned the question of State responsibility and a conflict between States, while we focus in this study on claims against private corporations.

International cases against corporate defendants initially raise the question of what is the applicable law. The answer to this question is usually national law since international liability regimes do not normally apply to private activities (for exceptions Chap. 5 ). National bodies of law, however, take very different approaches when it comes to standing in and admissibility of claims relating to pure environmental damage.

Some jurisdictions are rather progressive on the issue, as is illustrated by Burlington Resources v Republic of Ecuador.Footnote 117 Burlington Resources had brought an expropriation claim before the International Centre for Settlement of Investment Disputes (ICSD), while Ecuador, in its counterclaim, argued that Burlington was liable for damage caused to the environment. In the end, Ecuador was awarded compensation of almost USD 39.2 million. In this case, Ecuadorian law was applicable as the damage occurred in Ecuador which, since 2008, gives constitutional rights to nature (Pachamama) and establishes a system of strict liability for environmental damage.Footnote 118

Similarly, the recent advisory opinion of the Inter-American Court of Human RightsFootnote 119 explained that forests, rivers and seas, at least under this special legal framework, constitute protected juridical interests in themselves. A similar ruling was made by the Colombian courtFootnote 120 in the climate change decision mentioned above and essentially means that pure environmental damage is recoverable. These cases have not been concluded by monetary awards, so it remains unclear how the respective bodies will value the loss or determine what is appropriate compensation.

In the U.S., the tort of public nuisance is available and can be invoked by public entities such as municipalities/states and, under certain circumstances, by individuals. Under federal common law, a public nuisance is defined as an “unreasonable interference with a right common to the general public”.Footnote 121 According to U.S. legal doctrine, a claim requires proof that a defendant’s activity unreasonably interfered with the use or enjoyment of a public right and thereby caused the public-at-large substantial and widespread harm.Footnote 122 Under those circumstances, damages can be claimed for the violation of common goods (parens patriae ),Footnote 123 which may also cover pure environmental damage in some scenarios.Footnote 124

On the opposite side of the legal spectrum stands German tort law tradition, where the violation of collective goods, such as the environment, is traditionally a ‘blind spot’. As we have seen, German tort law only protects individual rights under Section 823(1) and Section 1004(1).Footnote 125 Specifically, environmental goods are not viewed as ‘other rights’ in the sense of Section 823(1) BGB.Footnote 126 ‘Ecological damage’, namely the actual damage to the environment as a collective legal good, is only covered by private environmental liability law if it simultaneously presents itself as a violation of individual legal goods. In the German system, a tort similar to the American public nuisance category does not exist. No parens patriae torts are available and the standing of municipalities and States in civil courts is limited to cases involving a violation of the respective entity’s property.

This situation is barely mitigated by the influence of European law even though Directive 2004/35/EC on environmental liability has been transposed through the German Environmental Damage Act (Umweltschadensgesetz, USchadG, Chap. 6 ¶ 62 (Sect. 6.6.1)). These laws are supposed to cover legal ‘blind spots’ regarding pure environmental damage, but the protection is incomplete and not designed to establish private liability. Firstly, there is no comprehensive protection as the act is expressly limited to damage to water, land and protected species and habitats. It does not cover air/climate and is, therefore, far from being a comprehensive tool for climate protection.Footnote 127

Furthermore, existent European and German law dealing with environmental damage does little to address the fact that there is no established right to address private companies directly and claim damages. Redress is currently limited to preventive and remedial measures (Sanierungsmaßnahmen, Section 8 USchadG, Article 7 Directive 2004/35/EC) that can only be ordered by the competent national authority at the operator’s expenses (Section 9 USchadG, Article 7 Directive 2004/35/EC), establishing a public rather than private law regime.Footnote 128 As for standing, only environmental NGOs can request a competent authority to take action (Articles 12, 13 Directive 2004/35/EC, Sections 10, 11 USchadG). Individuals only have standing if they can show there has been a violation of their individual rights.

All in all, the admissibility of damage claims seeking compensation or mitigation for pure environmental damage will, in most cases, depend decisively on the regulations of the national legal system. Approaches to remedy this issue have been discussed in Chap. 6 and shall not be repeated here.

Looking at the RWE case (¶ 34 et seq) one may ask, however, if this prevents systemically effective litigation overall. In the RWE case, the adaptation request for protective measures to be taken against the risks posed by glacial meltwater is based on Luciano Lluiya’s property. If implemented, the city of Huaraz, as well as the watercourse that connects the current glacial lake to the city, and the ecosystem there would be protected. One could therefore argue that this issue, or hurdle to claims, is less prevalent in adaptation claims.

How to Assess Environmental Damage?

Even if environmental loss and damage can be claimed, forensic problems remain. It is generally hard in any practical claim to pin a price on the environment or portion thereof. In the Wetland case introduced above, the ICJ took a view on assessing pure environmental damage that has been criticized as economy-centred (Chap. 3 ¶ 65 (Sect. 3.4.4)). On the one hand, the court called for an “overall assessment” of the environmental goods and services that have been impairedFootnote 129 but on the other hand, it concluded that only monetary compensation for the loss of those environmental goods and services was the appropriate remedy. The court ultimately awarded USD 120,000, a number which was much closer to Nicaragua’s proposal of a maximum of USD 35,000 than to Costa Rica’s claim seeking USD 2.88 millionFootnote 130 Costa Rica had claimed damages with regard to six categories of environmental goods and services provided by the ecosystem: Standing timber (1), other raw materials (fibre and energy) (2), gas regulation and air quality (3), biodiversity, in terms of habitat and nursery (4), natural hazards mitigation (5) and, finally, soil formation and erosion control (6)Footnote 131 The court considered only the first four of those to have been impaired by Nicaragua’s activities.Footnote 132 Furthermore, the ICJ rejected Costa Rica’s view that damages for each category had to be assessed based on the assumption that the ecosystem would take 50 years to recover since the baseline condition was unclear and different components of the ecosystem required different periods of recovery.Footnote 133

Regardless of such questions as to the calculation of compensation, the underlying premise of limiting reparations for pure environmental damage to compensation for economically taxed services has been criticised as insufficient in literatureFootnote 134 and even within the ICJ.Footnote 135 Equitable considerations should play a greater role and lead to higher damages.Footnote 136 Indeed, in his dissenting opinion, Judge Dugard argued that other factors had to be taken into account, namely the contribution of deforestation to climate change and the gravity of a State’s violation of international law.Footnote 137 Judge Bhandari gave a separate opinion arguing that a precautionary approach should be factored in and even considered punitive or exemplary damages, awards that would have been unprecedented in international law.Footnote 138

The same evaluation problems, namely the role of equitable considerations, arise under national tort law. In the Ecuadorian Burlington Resources case, the ICSD—similar to the ICJ—found compensation to be the (sole) appropriate remedy, applying Ecuadorian law.Footnote 139 However, the calculation of damages can vary considerably from State to State. This is evident from the fact that some jurisdictions, most prominently U.S.A., award punitive damages as a deterrent while other States strictly reject this concept. For example, punitive damages are not enforceable under German lawFootnote 140 and immaterial damages can only be recovered where the law explicitly provides for it (Section 253(1) BGB), and there is no such provision for pure environmental damage. In a national setting, the loss of ecosystems could be quantifiable in a similar manner as the loss of forests and even single trees. Under German law, a particular method for quantifying damage to trees and forests has been sanctioned by the Federal Civil Court.Footnote 141 The ‘Koch Method’ is, however, a procedure used to assess the economic value of a given tree based on the value-of-the-object proceedings (Sachwertverfahren). What is done essentially is (1) establishing the costs of planting a young tree, (2) adding the costs to grow the tree to the destroyed tree’s size, (3) adding a reasonable amount of interest to those costs and, if necessary, (4) subtracting the loss of value due to advanced age or damage on the destroyed tree.Footnote 142 This kind of method works well for economic assets and the like but is not feasible when dealing with the loss of intangibles such as culture or home (e.g., if Pacific Islands disappear). This issue is not resolved in human rights petitions, such as that presented by Torres Strait Islanders against Australia to the UN Human Rights Committee of the United Nations, since the cultural and ecological damage does not need to be quantified in this setting.

European environmental damage legislation, as laid down in the USchadG and Directive 2004/35/EC, are designed to facilitate restitution and compensation in natura. Annex II, no.1.1 of the Directive provides for the following remedial measures: Firstly, there should be primary remediation (i.e., restitution)., however, if full restoration by primary remediation is not successful, complementary remediation elsewhere is owed. For the interim loss of natural resources and services pending recovery, compensatory remediation is owed; however, this compensation does not entail financial compensation to the public but improvements to habitats at the damaged site or another site. Thus, European environmental damage law avoids forensic problems, at least insofar as it does not need to quantify environmental damage in monetary terms.

Overall, it appears that any liability claim for pure ecological loss caused by climate change would force a civil court to develop a new method for evaluation if such damage was covered by the court’s national jurisdiction.

3.2 Claim Against Whom? Causation

Climate liability cases raise the question of the relationship between scientific and legal concepts of causality. Legal causation is not the same as scientific causation but is heavily normative: causation in the scientific sense, using the but-for test or condition sine qua non, does not necessarily lead to legal liability due to certain normative corrections.Footnote 143 Conversely, in the context of climate change liability, the question has to be posed to what extent the strict but-for causation can be relaxed in face of the fact that in climate research, often only probabilistic statements are possible.

We will approach these causation issues by differentiating two questions or stages of arguing causation: Firstly, it is necessary to establish sufficient contributory causation between climate change and a defendant’s conduct.Footnote 144 Secondly, there is the more complicated issue of tracing certain natural weather events or trends to climate change (‘detection and attribution’) and the problem of how to deal with probabilistic causation. As set out in more detail below (¶ 112 et seq), the problems described in this section will not arise in all cases involving private liability actions, but are essentially limited to litigation seeking compensation or adaptation whereas they are completely irrelevant in ‘mitigation’ cases, such as the Shell case.

Attributing Climate Change Loss and Damage to Individual Polluters and the ‘Carbon Majors’

Holding big polluters liable for damage incurred due to climate change is confronted with the problems of distance and cumulative damage: Damage can occur far from the place of emission and almost every individual’s behaviour contributes to some extent to climate change as well as its attendant damage and risks. These problems are not limited to climate change litigation but are present in many fields of environmental liability.

The simple fact that the effects of a certain activity occur far away is not problematic as such.Footnote 145 However, it becomes increasingly difficult to prove that the tortfeasor’s behaviour caused or contributed to specific damage as the distance increases. In the German forest damage (acid rain) case, for example, the German Federal Court (BGH) found that plaintiffs had not established a sufficient causal link because the defendants’ emission contributions were mixed indistinguishably with those of other emitters and one emitter’s pollution could not be traced to the damage incurred by a specific forest owner.Footnote 146 However, this ruling was largely a product of the fact that the SO2-emissions relevant to this case stay at relatively low altitudes and are, therefore, subject to the wind and not dispersed homogenously.Footnote 147 Under such circumstances, the difficulty of establishing a causal link grows proportionately with the distance from the alleged source.

The causal nexus between a single company’s GHG emissions and climate change is much clearer because GHG emissions disperse homogenously in the atmosphere.Footnote 148 Therefore, the following stages of causation can be identified:

  1. 1.

    GHG-Emissions rise into the atmosphere where they lead to a higher density of GHG around the globe,

  2. 2.

    the higher density of GHG traps part of the outgoing terrestrial radiation causing Earth to heat up more than it would otherwise do,

  3. 3.

    the rise in temperature causes regional trends or increases the likelihood and/or intensity of certain weather events (for this last stage ¶ 100 et seq)

This causal chain of contributory causation was accepted as legally conclusive by the Court of Appeals in Hamm in the Lliuya case, and is now being tested on the merits.Footnote 149 It was also explicitly accepted by the courts in the Urgenda case and implicitly by the Paris Administrative Court.Footnote 150

The second issue in attributing climate change loss and damage to individual polluters is that there are many emitters and, only when they are taken together, do they cause climate change (‘concurrent causation’).Footnote 151 From the viewpoint of the but-for test of contributory causation, this is not a problem. Since each emission leads to a higher density of GHG in the atmosphere, all emissions contribute equally to global warming regardless of where they occur.Footnote 152 Thus, a causal link to a defendant’s emissions can be established, provided the weather event itself can be traced to anthropogenic climate change (¶ 100 et seq). A defence submitting that a certain molecule of CO2 may have been absorbed by oceans or forests would be inadmissible because the overall effect of contribution remains the same.

Making such a contribution to damage is sufficient to establish liability according to both GermanFootnote 153 and U.S.Footnote 154 jurisprudence. There is, however, the issue of adequacy or minimal causation: small emitters, such as individual consumers and small enterprises, are not legally liable because their contribution to climate change damage is negligible and falls under the de minimis threshold. A polluter’s contribution to anthropogenic climate change must therefore be measurableFootnote 155 in the sense that it must be responsible for a quantifiable share of the anthropogenically-generated CO2 accumulated in the atmosphere. Where exactly the threshold limit is set will be a matter for national law or the court in each given case.

If a significant contribution is established, it would be possible to apply principles of joint and several liability in principle. However, for climate change in particular, it has been proposed that an emitter is only liable for its share since assigning liability for all the damage, as would be the result of joint and several liability, would be excessive.Footnote 156 This may be different when holding States accountable for ecological damage, as discussed by Epstein and Deckert,Footnote 157 but it is in line with the principle that whenever an emitter’s share of total damage can be determined, it is liable for this share.Footnote 158 The RWE case follows this latter approach, while U.S. tort cases currently brought by municipalities follow the former. In any event, it is essential to specify the emitter’s contribution to climate change to both establish liability (i.e., the de minimis threshold has been exceeded) and to define the defendant’s share. For this task, Heede has laid the groundwork in the Carbon Majors Study,Footnote 159 which determines the emission share of the biggest GHG polluters. The data is regularly updatedFootnote 160 and can be used in court to determine a defendant’s portion of liability. This is being done in the Lliuya case where, according to the Carbon Majors Study, the emission share of RWE is 0.47% and this figure is being used to give the court a basis for estimating, under Section 287 of the German Civil Code, RWE’s share of the costs to install protective measures. The Carbon Majors Study is also being used in the pending U.S. cases referred to above and in the ongoing Shell case in the Netherlands. Its validity has been criticised by defendants and not yet been clarified by courts. Yet, at least in jurisdictions with disclosure rules, it should be possible to excise sufficient information about the actual emissions of a defendant in a particular case.

As it is feasible to determine emission shares, it is not necessary to resort to market or pollution share liability concepts as used in earlier high-profile U.S. cases involving tobacco and asbestos companies . This is because, in essence, those earlier concepts dealt with alternative causation.Footnote 161 Those approaches may, however, prove useful in other environmental liability cases relating to air pollution, such as the aforementioned forest damage cases.

All in all, proving and quantifying big emitters’ causal contribution to climate change should be possible if courts approach the issue in the same way the Higher Regional Court in Hamm has in the RWE case. Some issues regarding the determination of individual emitters’ contributions remain , such as the question of which time frame of emissions may have to be considered,Footnote 162 especially in cases of fault-based liability.

Detection and Attribution: Tracing Damage to Climate Change

While we have seen that determining a company’s contribution to climate change should generally be possible, pinning natural and weather events to climate change is a more difficult task. Tracing, or rather attributing, natural and weather events to anthropogenic climate change is, first and foremost, a scientific question that is yielding increasingly accurate answers as climate-attribution science continues to make significant progress in that respect.Footnote 163 In a first step, there is a need to differentiate between ‘slow-onset events’, such as rising temperatures and sea levels as well as glacial melting, and ‘extreme weather events’, such as hurricanes, droughts, floods and the like.Footnote 164

For ‘slow-onset events’, the causal chain is scientifically clear in the sense of the conditio-sine-qua-non formula and contributory causation.Footnote 165 Climate science can even attribute a percentage of temperature and sea-level rise to the ‘carbon majors’. Moreover, it can differentiate between historical (pre-1980) and recent (i.e., 1980–2010) emissions. For example, according to recent studies, 26–32% of sea-level rise is attributable to historical emissions, and 11–14% to recent emissions.Footnote 166

The attribution of ‘extreme weather events’ is more difficult as it currently seems only possible to give statements of probability.Footnote 167 It is all but impossible to rule out that a single event would not have occurred without anthropogenic climate change. However, climate science has made rapid progress in the field of probabilistic attribution so that, according to an editorial in Nature magazine, “pinning extreme weather on climate change is now routine and reliable science”.Footnote 168 Therefore, proving the chain of causation in climate change litigation regarding extreme weather events becomes increasingly possible.Footnote 169

Attribution science is about determining the statistical significance of anthropogenic climate change on the probability or magnitude of a particular weather event.Footnote 170 In recent years, it has become increasingly accurate and is now able to quantify the increased probability for single events, such as heat waves. For example, researchers have found that anthropogenic climate change tripled the likelihood of the three-year drought in South Africa that lasted until 2018. Beyond probabilistic statements, in 2017 attribution-science studies claimed, for the first time, that three extreme weather events would not have occurred at all without anthropogenic climate change.Footnote 171

However, such definite statements are rare and may remain the exception, depending on the questions that courts ask.Footnote 172 Therefore, the chances of successful climate liability litigation regarding extreme weather events largely depend on the question of whether and to what extent probabilistic and statistical attribution is sufficient to establish legal causation. This depends, once more, on the national jurisdiction and its relevant rules regarding the burden and standard of proof, which are, more often than not, not anchored in statutory law but rather set by jurisprudence on a case-by-case basis. While the burden of proof determines who must prove causation, the standard of proof determines the necessary degree of certainty about the causal chain, both aspects are briefly detailed below.

Burden of Proof

It is a general rule across jurisdictions that the burden of proof regarding causation lies with the plaintiff who has to establish his or her claim. However, this burden may shift under certain circumstances.

Firstly, this is the case where explicitly provided by law. For example, Section 6 of the German Environmental Liability Act (UmwHG) provides a legal presumption of causation regarding damage allegedly incurred by the operation of an industrial plant. A plaintiff only has to show that a defendant’s plant is likely to have caused the damage according to the circumstances of the individual case. If the plaintiff is successful, the burden of proof shifts to the defendant who then has to prove that the plant did not cause the damage. Since a plaintiff must only prove the substantial probability of causation within the scope of Section 6 UmwHG,Footnote 173 he or she can rely on studies that show statistical probabilities and many authors, when considering this scenario, have pointed to epidemiological studies.Footnote 174 This approach may also apply to the findings of climate change attribution science,Footnote 175 although Section 6 UmwHG has not yet been used to establish climate change liability, probably because the Section refers to single industrial facilities. However, the fact that the plant could not have caused the damage or weather event by itself, but only in combination with other factors, does not hinder the legal presumption of causation.Footnote 176

Secondly, German courts reverse the burden of proof where there is a violation of a legal duty to take safety precautions, such as that to refrain from unnecessary emissions.Footnote 177 A violation of a general duty of care under tort law to minimise dangers for the general public that result from a certain activity (Verkehrssicherungspflicht) is sufficient for this reversal to be enacted.Footnote 178 If a duty of care is breached, it is assumed that the same activity caused the damage. A duty of care to refrain from GHG emissions, or at least minimise them as much as possible, has already been assumed by the district court in the Shell case and such duties will be discussed in detail below (¶ 139 et seq). The legal assumption of causation following a breach of duty, however, does not necessarily help to establish liability because it is not the emitter's contribution to climate change that is unclear (see above) but whether the specific weather event was caused by climate change. In the RWE case, the plaintiff suggested that statements made in IPCC reports may establish prima facie facts which could result in a reversal of the burden of proof. Neither court in the RWE case has made a finding as to this assumption to date.

Standard of Proof

The standard of proof varies among jurisdictions. Under German law it traditionally has strict requirements and demands to establish causation beyond reasonable doubt (Section 286 ZPO). Common law jurisdictions, such as the U.S. and Britain, follow a less strict approach that is satisfied with a preponderance of evidence so that causation is “more likely than not”.Footnote 179 In other cases, courts have used a ‘doubling of the risk’ standard as the basis of liability.Footnote 180 Employing these more relaxed standards of proof have enabled legal actions based on statistical evidence and has been successful in asbestos and tobacco litigationFootnote 181 that relied on probabilistic statements.Footnote 182

There is also a new and elaborate proposition to establish a ‘matrix of causation’ that takes into account not only necessity and sufficiency but also ‘sustenance’ as a new element of causation.Footnote 183 Sustenance in this context means the capacity of a factor to protect or maintain an effect despite certain structural changes in a model, which opens up the concept of causation to capture general trends.Footnote 184

Employing a more relaxed standard of proof deals with probabilistic evidence in a way that does not affect the ‘all or nothing principle’ of full compensation. Another approach is probabilistic-proportional liability, which establishes liability in proportion to an increase of risk and has been discussed in Germany in the context of environmental liability since the 1990s.Footnote 185 For example, if the risk of a flood or drought was increased by 50% by anthropogenic climate change, the tortfeasors can be held accountable for 50% of the resultant damage. Such probabilistic solutions have been promoted in the context of climate change tort litigationFootnote 186 because, especially from an economic analysis of the law perspective, the ‘all or nothing principle’ tends to be economically inefficient. Probabilistic concepts have already been applied in medical law in France and Belgium under the perte-d’une-chance theoryFootnote 187 and in the U.S. in cases involving the negligent failure to reduce a risk.Footnote 188 Similarly, in a class action claiming damages for cancer allegedly resulting from the use of Agent Orange in the Vietnam war, the court proposed a settlement sum based on the increased probability of those exposed to the chemical getting cancer.Footnote 189 Transferred to climate change litigation, private liability for damage caused by extreme weather events could be summed up as follows: “Liability is apportioned among tort defendants based on the percentage by which anthropogenic influences contributes to the risk of harm, and further divided based on each plaintiff's share of the GHG ‘market’.”Footnote 190

While some jurisdictions are open to relaxed standards of proof and probabilistic concepts, this does not yet apply to the German legal system, at least according to the dominant legal doctrine.Footnote 191 However, Section 287 of the ZPO authorises a court to rule based on estimates. Some authors claim that the provision relaxes the standard of proof only regarding the legal consequences, namely the amount of damages or the contribution payable by a single tortfeasor for damage, but that it cannot be applied to the question of whether an action has contributed to a specific event.Footnote 192 However, this view is controversial since it is clear that, in both climate and medical cases, the evidential problems are similar and closely linked.Footnote 193 This issue remains controversial in the RWE case, with the plaintiff arguing that even if the exact percentage contribution to warming cannot be determined, the court is enabled, under Section 287 ZPO, to estimate the extent of RWE’s contribution to the risk of a flood in the concrete circumstances.Footnote 194

Under the dominant German legal doctrine, there is only a relatively relaxed standard of proof concerning the ‘typical course of events’. Such prima facie proof (Anscheinsbeweis) is, for example, applied in cases of severe medical malpractice.Footnote 195 Since this method has been developed for uniform events and ‘everyday life experiences’, its application to extreme weather events has been rejected in literature.Footnote 196 However, also under German law, there is still some room for judges to develop rules regarding the burden and standard of proof in the context of liability for extreme weather events. A practical and reasonable point of reference would be the probability of the event itself: a court could reverse the burden of proof or at least accept prima facie proof regarding damage caused by weather events that would have been extremely unlikely to occur in the absence of anthropogenic climate change. As noted above, IPCC statements have been argued to be prima facie truth in the RWE case.

3.3 Areas of Liability Avoiding Forensic Problems of Compensable Damage, Causation and Attribution de lege lata

The legal and forensic problems described above only fully present themselves with regard to claims for damages, such as in the Kivalina case (¶ 27 et seq). They are present in such cases because, when claiming damages, it is necessary both to substantiate the damage suffered, which may potentially lead to forensic problems in assessing the damage, and to prove a causal link between the concrete damage (e.g. the destroyed house) and the harmful event (e.g. the flood or storm).

Those issues can, at least partially, be avoided in claims seeking protection against risk rather than compensation for damage incurred. As previously suggested above, these non-compensation types of actions can be divided into three categories. Following the terminology of international climate change law, there are claims for (1) adaptation (i.e., protection against consequences of climate change, ¶ 114 et seq) and (2) mitigation (i.e., reducing and preventing further climate change, ¶ 117 et seq). Also pertinent to the issue of this study are (3) ’investor actions’ claiming a loss of company value due to a failure to adapt business models (¶ 120 et seq), however, these fall outside of the climate regime’s remit and relate to risks or damage to a company, resulting from a failure or delay in adopting adaptation or mitigation measures.

Actions for Protective Measures (adaptation)

The challenges described above are already less of a hurdle to bringing claims aimed at implementing or financing protective measures against specific threats, such as in the Lliuya and RWE case (¶ 34 et seq). Standing is, of course, limited to the protection of those rights the plaintiffs can assert, which may be relevant regarding actions to prevent pure environmental damage, although this is different in countries where standing is provided to NGOs. However, providing a monetary assessment of any damage incurred is not necessary as the most that would be required is an assessment of the costs of protective measures.

Regarding causation, there is no need to prove that anthropogenic climate change caused a singular weather event. This is because protection measures are, by definition, preventive and it is sufficient to prove that the applicant’s protected legal interests, such as his or her property, are concretely endangered as a result of anthropogenic climate change.Footnote 197 He or she must show that climate change has significantly increased the personal risk of becoming a victim of floods, storms and the like, so that protective measures are warranted. Because risk is the reference point, there is no need to establish a causal link to a specific weather event in the past. This can draw on precedent in U.S. medical law, where plaintiffs have successfully claimed costs of ongoing monitoring that is necessary because of an increased likelihood of latent damage; the same argument can be used in the context of climate change litigation with regards to an increased probability of extreme weather events.Footnote 198

Actions for Injunctive Relief (mitigation)

The problems described above are even less relevant in actions seeking injunctive relief, such as in the Shell case (¶ 41 et seq). In these actions, plaintiffs ask that major GHG emitters align their business plans with the reduction targets of the Paris Agreement. The fundamental legal question in such cases is whether the company in fact contributes to negative changes and whether private companies have a duty of care to abate such risks. This effectively obliges them to comply with the requirements of international law, which we will discuss in detail below (¶ 135 et seq).

Irrespective of the details, such constellations avoid the bulk of the legal and forensic problems because actions for injunctive relief are more ‘abstract’ than actions for protective measures. Plaintiffs are not claiming individual protective measures or damages and, as such, there is no need to determine a specific causal contribution to a concrete infringement. Rather, the situation corresponds to climate change litigation against States, where plaintiffs also demand policies that effectively reduce emissions. Consequently, only a more general causal chain between the defendant’s conduct, global warming and resulting risks must be shown.Footnote 199 This avoids both forensic problems in proving causation and the need to assess damage.

A different and purely legal question is whether individuals have standing to bring actions for injunctive relief. This issue did not present itself in the Shell or the TOTAL cases because the plaintiffs there were NGOs. Individual standing may be called into doubt because plaintiffs demand measures that effectively not only serve to protect their own legal interests. They do not (only) demand the protection of their property, but a general change in company policy benefitting society at large. The question is, in other words, if there is standing for individuals only regarding adaptation or if this extends to mitigation. The answer is that mitigation is included because there is a specific need for legal protection in either constellation. Plaintiffs assert different risks to their individual rights: protective measures help with regard to concrete risks that are already unavoidable (adaptation), while injunctive relief seeks protection against risks that can still be minimised or avoided (mitigation). This is the basis of the many statutory and constitutional applications around the world directed against States which, in short, operate on the premise that better climate change mitigation protects both individual rights and the world at large.

Shareholder Actions

Finally, we will take a brief look at shareholder actions, the type of claim that forms the basis of cases such as Client Earth v Enea (¶ 7) and entail claiming violations of fiduciary duties and unacceptable financial risks due to a company’s failure to adapt to climate change. Those lawsuits differ fundamentally from the actions discussed above because they are not based on tort law but a contractual relationship. This means that shareholders are both entitled and restricted to asserting their rights regarding their invested financial interest. They neither have to prove nor can they assert, a violation of rights beyond the purely economic aspects associated with share value.

This economic interest is also the reference point of causality.Footnote 200 Plaintiffs do not need to prove a causal link between a company’s behaviour and climate change loss and damage. Rather, shareholders must show that a company’s lack of mitigation or adaptation to climate change poses a financial risk to the company itself because the business model is not sustainable given its incompatibility with the reduction goals of the Paris Agreement.

Summary Table: Legal and forensic issues by case type

The analysis above has been coalesced and summarized in the Table 8.1 below. When examining the categories of actions established above (¶ 6) from a practitioner’s point of view, it becomes clear that the remedy sought will, in fact, determine both the parties and the types of damage covered as well as the legal and forensic problems arising in litigation.

Table 8.1 Legal and forensic issues by case type

3.4 Tackling the Problems of Climate Change Litigation de lege ferenda: The Model Climate Compensation Act

As we have seen, the severity of legal and forensic problems associated with climate change litigation depend largely on the remedy sought. While actions seeking protection against risks can avoid many problems, claiming damages and compensation remains problematic.

Here, in the absence of a specific legal framework, the outcome of climate change litigation is rather unpredictable. As discussed above, much depends on the specifics of the national jurisdiction under which a proceeding takes place, nevertheless, uncertainties and risks persist for both plaintiffs and defendants. As climate change progresses and the once theoretical risks materialise into realities all over the world, it becomes increasingly likely that at least some courts will assign liability. It is, therefore, also in the interest of companies to have legal certainty as to the scope of their liability. To meaningfully explore some options of how this could be achieved, we will turn to a specific proposal.

In Canada, an independent law centre drafted a “Model Climate Compensation Act” (MCCA)Footnote 201 that aims to tackle the risks and uncertainties of climate change litigation against major emitters that are defined in Article 8 MCCA. The MCCA proposes rules for national jurisdictions as litigation is based on national tort law regimes and the implementation of liability standards seems more realistically achievable at the national as opposed to the international level.

The MCCA applies a nuisance approach that is restricted to major emitters and provides primarily procedural rules. While it deals with a variety of problems of climate change litigation, we will focus our examination of the MCCA on the issues discussed above and look at proposals regarding standing as well as compensable damage and causation. We will also introduce the idea of funds and/or insurance schemes that would make financial risks more calculable for emitters.

Standing and Compensable Damage

The scope of protected rights determines who has standing and what damages are compensable. As we have seen, the protection of immaterial collective goods, such as nature, depends very much on the relevant jurisdiction. In that regard, Article 4(1) MCCA stipulates a “right to a healthy atmosphere” and the alteration of atmosphere to a measurable degree constitutes a violation of that right and a public nuisance giving rise to remedies, Article 4(2) MCCA. Where individual rights are harmed, Article 4(3) MCCA provides for strict liability. In other words, plaintiffs do not need to establish the breach of a duty of care, which naturally facilitates liability litigation even though, as we will see in the next part of this chapter, there are compelling reasons to assume that such duties exist.

The MCCA also establishes parens patriae jurisdiction for State and local governments in its Article 5 and Article 6. This provides governments with extensive rights to bring claims for damages based on damage to public infrastructure, increased public health costs, harm to the natural environment and so forth. This would be a significant step forward for States, such as Germany, which do not know parens patriae standing, thus excluding local governments from bringing liability actions in the public interest and the interest of their citizens.

Causation

Regarding causation, the MCCA does not propose major changes to existing Anglo-American tort law.Footnote 202 As already claimed in current climate change litigation, such as in the Lliuya case, polluters are liable for a share of damage that corresponds to their contribution to emissions, Article 9(1) MCCA. Joint and several liability is assumed where two or more large emitters are responsible for the same emissions, Article 9(2) MCCA, as is the case in supply chains.Footnote 203 This type of rule would overlap with the new due diligence law suggested in Chap. 7, however, the reasoning behind this rule assumes that the major emitters are a part of the fossil fuel industry. There is no economy-wide solution offered, especially with regard to actually accounting for Scope 1, 2 and 3 emissions.Footnote 204 We will reflect on this issue below and against the backdrop of Chap. 7.

The MCCA does not reverse the burden of proof regarding causation, however, Article 10 (1) MCCA emphasises that courts have to take into account statistical evidence and Article 10(2) and (3) MCCA refer to the “balance of probabilities” or “doubling of the risk” standard of proof. Though this is already the standard in the U.S. and UK, such a rule would be a considerable step forward in the German legal system that relies on the ‘no reasonable doubt’ standard (¶ 108 et seq).

Beyond Litigation: Climate Damages Insurance and Climate Compensation Fund

The MCCA does not exclusively aim at facilitating litigation, but also proposes the interesting idea of a Climate Compensation Fund in Article 11 et seq MCCA. The idea of compensation funds for climate change loss and damage has long been discussed at the international levelFootnote 205 without leading to any concrete results. The advantage of the fund proposed in the MCCA is that it would be implemented at the national level. The proposed fund is designed as a form of insurance for big emitters who can escape liability and litigation by contributing to the fund, thereby keeping their risks calculable. This insurance-style approach serves as the ‘carrot’ alternative to the ‘stick’ of damage litigation.Footnote 206

According to Article 16(1) MCCA, a major emitter that holds an acceptable insurance is not liable for damages covered by the policy. The scope and conditions of this insurance would be determined for each fund by its respective national government. Emitters could then purchase this insurance and the money would go into the Climate Compensation Fund (CCF), Article 16(6), Article 11 MCCA. In the event of extreme weather events that meet certain criteria (“triggers”), the policy would require a payment of funds into the CCF, which in turn would compensate victims.Footnote 207

Beyond the voluntary approach of the MCCA, the compulsory financing of a fund by big emitters is also worth considering. Under such an approach, such companies would be legally obliged to pay a premium into the fund proportionate to their emission share (e.g., as a surcharge on emission certificates). In Germany, the implementation of such a concept would be legally possible as special taxes to finance certain tasks (Finanzierungssonderabgabe) are constitutional where there is a special financial responsibility for said task. Such responsibility exists, inter alia, regarding risks that are inherent to the professional activities of those being taxed. For example, banks can be forced to contribute to funds designed to protect citizens against the risk of financial crisesFootnote 208 and sewage sludge producers can be obligated to pay into a fund designed to compensate for damage stemming from sludge production.Footnote 209

Regardless of the particular design, the challenges of any climate-liability fund are defining the triggers and thresholds that give rise to claims against the fund. This requires defining under which circumstances, particularly to what degree of probability, can loss and damage be considered climate change induced. Other problems include the amount, distribution and modalities of compensation.Footnote 210 In determining the compensation amount and its distribution, legislators could employ innovative concepts such as probabilistic-proportionate liability (¶ 110). It needs to be stated clearly, however, that the MCCA only deals with the consequences of past and ongoing emissions as partial contributors to climate change damage and, even then, this is only done so with regard to the compensatory dimension of liability. With respect to the preventive dimension, no resolution is offered by the MCCA as it does not tackle the issue of mitigation commitments or reduction pathways.

4 Emergence of New Positive Duties

Finally, and while remaining conscious of the fact that this matter will necessitate further research, we turn to the question of emerging duties of care for the large GHG emitters such as the ‘carbon majors’ and others to reduce GHG emissions and the relationship between these duties and the duties of care owed by States and governments. We have partially dealt with the issue in the first part of this chapter (¶ 14 et seq) when analysing the preliminary question of whether or not existing public law and State duties preclude private obligations under tort /nuisance law. We found that U.S. courts consider at least federal tort claims against private companies inadmissible due to displacement by the Clean Air Act. In contrast, this argument has been rejected in the Lliuya case because German statutory law (Section 14[2] BImSchG) explicitly provides that claims for compensation and/or protective measures remain possible against private defendants even if the emitting installation has been approved by the authorities. We have also introduced the case of Milieudefensie v Shell , where a district court held that big emitters such as Shell have an independent social duty of care to reduce emissions, strongly resembling the duty owed by the State.

In this section, we will follow up on the question raised in the Shell case and analyse more closely the emergence of new positive private duties of care to reduce emissions in accord with the reduction goals of the Paris Agreement, the scientific needs of risk reduction as well as the relationship of such duties to the duties owed by the State. We take the view that State and private duties of care converge in the face of the long-term temperature goal of the Paris Agreement and the ever-increasing urgency of combatting climate change. We also contend that, even though international law usually does not directly bind private individuals (Chap. 3 ), it can be relevant indirectly through national tort law and nuisance principles. This is underpinned by the fact that under international law, States have a duty to provide sufficient regulation in matters that do or could involve transnational damage. This duty, as discussed in Chap. 3, can be discharged by courts applying national tort law.

While cases arguing strict liability, such as Lliuya (¶ 34 et seq), do not need to establish negligence, in many other instances determining there has been a breach of a duty of care is necessary to establish civil liability. In this context, it is important to realise that duties of care may have different points of reference in time depending on the remedy sought. Civil law claims for the compensation of damages suffered in the past would have to establish past negligence, whereas in the following we will focus on forward-looking duties and cases seeking injunctions and behavioural change using the future as the temporal point of reference. Taking this future-oriented perspective means that the standard of care defining the duty of care of companies will be very different than that used in cases such as Kivalina and others. With this in mind, we analyse the line of argument put forward by the plaintiffs in the Shell case and consider the possibility to generalise (¶ 138 et seq). We then turn to alternative and/or complementary approaches to establish positive duties for international companies to adapt their business models (¶ 157 et seq). This includes another proposal to deduce and define corporate duties, which is provided by the Principles on Climate Obligations of Enterprises drafted by a group of experts in 2018 as well as shareholder actions that take a starkly different perspective on the issue and argue that a corporation’s failure to adapt to climate change constitutes a business risk and violation of fiduciary duties owed to its shareholders.

4.1 New Social Duties of Care

In the Shell case (¶ 41 et seq), the district court held that Shell has an independent duty of care to align its business model with the targets of the Paris Agreement and has until 2030 to reduce its CO2 emissions by 45% from its 2019 level.Footnote 211 Taking a closer look at the court’s reasoning, we consider that it is based on general legal tort and human rights principles and is, therefore, transferable to other jurisdictions, though it ultimately depends on the case-by-case development of such duties by the judiciary.

The ‘Social Duty of Care’ in the Shell Case

The District Court derives Shell’s positive obligation to reduce its emissions from general principles in Dutch tort law. It relies on the general clause in Article 6:162 of the Dutch Civil Code (for the text ¶ 43) and argues that Shell’s business conduct is “in conflict with what is generally accepted according to unwritten law” and therefore violates a social duty of care and constitutes unlawful endangerment.Footnote 212 Shell is beyond doubt a major emitter, it is not only one of the most prolific private GHG emitters in the world but it is also one of the world’s largest ‘carbon majors’.

Article 6:162 of the Dutch Civil Code is similar to Section 823 of the German BGB and represents an old concept of tort law. The positive social duty of care is an open and dynamic legal standard. Its existence and content with regard to a specific behaviour is the result of a balancing of interests in a specific context that calls for an assessment of all circumstances of the case in question.Footnote 213 As already mentioned (¶ 41 et seq), the same provision was used in the Urgenda case to establish the Dutch government’s duty of care. In the case against Shell, the court included 14 factors in its interpretation, essentially dealing with the following issues:Footnote 214

  • the human rights relevance of climate change and its significance for tort law,

  • the concretisation of Shell's duty of care based on international hard and soft law as well as the findings of climate science,

  • the proportionality of the reduction obligation, and

  • the relationship of the social duty of care to existing or missing State regulatory measures, i.e. the question of overlapping duties.

As for human rights, the District Court first cited the well-known dangers that climate change poses to the inhabitants of the Netherlands, particularly the results of rising sea levels. The court referred to the Urgenda judgments, holding that climate change threatens the rights to life, privacy and family as enshrined in Article 2 and Article 8 ECHR.Footnote 215 It then invoked the indirect horizontal effects of human rights. While the ECHR does not directly bind private corporations, it is accepted that its fundamental guarantees are, indirectly, relevant to interpreting private law in general and open legal standards and general clauses (i.e., in the case at hand, Article 6:162 of the Dutch Civil Code) in particular.Footnote 216

The court then turned to the task of concretising the extent of Shell’s duty of care, referring to the expectations of science and society. The judgment establishes an “international consensus”, which derives from international hard and soft law as well as the findings of climate science. The expectation that and how enterprises have to respect human rights is drawn from international soft law standards, particularly from the UN Guiding Principles on Business and Human Rights (UNGPs).Footnote 217 Even though these standards are non-binding, they are internationally endorsed, which allowed the court to correctly, but nevertheless courageously, refer to them when defining societal expectation in this regard. The standards of the UNGPs are particularly used to establish responsibility for emissions in supply chains (Scope 3).Footnote 218 As for the temperature targets and reduction pathways, the court invoked the Paris Agreement and the findings of organisations such as the IPCC and the International Energy Agency (IEA).Footnote 219 The court deemed that, in the light of the dangers to human rights, Shell’s longstanding knowledge about climate change as well as the foreseeability of further damage, the considerable inconveniences of restructuring its business to bring it in line with current scientific knowledge and the goals of the Paris Agreement could not be considered disproportionate.Footnote 220

Since Shell’s emissions are governed by the European ETS, which would allow for more emissions than permitted according to the tort law standard as applied by the court, the court also had to decide on the question of the relationship between private law and public law as discussed above (¶ 18 et seq). It did so quite briefly, only stating that Shell’s obligation was independent of the State’s regulatory responsibility. As the social duty of care constituted a minimum of protection under private law, this threshold could not be further lowered by State regulation, or a lack thereof.Footnote 221

Forward-Looking Duties as a New Approach in Private Climate Change Liability

Concerning future injunction/mitigation cases, we consider the following points to be crucial in the analysis, rendering these types of cases very different from compensation or adaptation cases, both with respect to the legal issues involved and their forensic requirements:

The main difference between past injunction type cases, such as American Electric Power (¶ 24 et seq), and possible approaches today is the timeframe and the clarity of the result that needs to be achieved to protect both global climate as well as the legal interests, rights and indeed, the lives of millions of humans around the world. Today’s duties under tort or nuisance type claims would be directed forward in time, not backwards. The issue is no longer whether a company foresaw or could have foreseen the impacts of climate change throughout its history of producing emissions, though such knowledge will still be relevant when evaluating the proportionality of the imposition of mitigation duties. The question is to what extent each major emitter today has a duty to protect and reduce the risks associated with climate change as much as possible to achieve a level of protection that is objectively necessary and has been legally agreed upon in the Paris Agreement. Even if the Paris Agreement was to be disregarded as an international legal standard,Footnote 222 the IPCC’s findings are more than clear about the world having to reduce emissions drastically to protect lives and ecosystems worldwide as there are big differences in the outcomes of “well below 2°C” or 1.5 °C warming, and other scenarios.

Today, we know that we essentially have 10 years to reduce emissions drastically and get to GHG neutrality as quickly as possible. This is highlighted in a current paper by some of the key scientists involved in IPCC projections modelled on reduction pledges versus the necessities of the global GHG budget.Footnote 223 At the time that some of the cases discussed above (¶ 21 et seq) were brought to the attention of courts, the discussion was still very much focused on State obligations and relatively long timeframes. In 2010, science and the global public, including political and business leaders had reason to believe that the world still had about 30 years to only halve global emissions of GHGs from their pre-industrial levels. Given the fact that emissions have continued to increase dramatically, this is no longer scientifically viable. In fact, to keep within the agreed temperature target of the Paris agreement, reduction pathways must be very steep and immediate. The graph below displays this dilemma only concerning short-term targets, 2020 and 2030. It relates to time frames from the international climate regime and while, for example, the Paris agreement of 2015 may not be directly applicable to private entities’ duties with respect to preventing climate change, the graph clearly shows that there is very little time for global emissions to move towards GHG neutrality to avoid catastrophic future global-climate outcomes. The emissions gap, that is the gap between current policies all over the world and what actually needs to be done to reach the 2 °C target, as seen in Fig. 8.1 below, is already large, grows annually as emissions continue to rise and result in increasingly difficult to achieve pathways to reach the agreed-upon goals.

Fig. 8.1
figure 1

Emissions gaps, Höhne et al. (2020), p. 27

In our view, this can guide the interpretation of legal requirements in the context of tort provisions, particularly concerning standards of negligence. If it is true that the overlap of State and private legal duties with regards to mitigation (i.e., reducing emissions of GHG) does not lead to an exclusion of duties of private entities (¶ 48 et seq), it is sound to argue that a duty of care exists with respect to every large emitter, meaning the Shell case is something of a precursor. If a private actor is causing and contributing to a certain and identifiable risk, the majority of jurisdictions would deduct from such knowledge a certain independent duty to prevent such risk insofar as this is possible.

For example,Footnote 224 the existence of social duties of care is well established in German tort law (Section 823(1) BGB). According to German legal doctrine, a person who creates or causes a risk to persist in his or her area of responsibility must take all reasonable measures and precautions to prevent harm to others (Verkehrssicherungspflicht).Footnote 225 The existence and extent of a duty to avoid unreasonable dangers emerging from a certain behaviour essentially depend on the same factors that are discussed in the Shell case; the gravity, probability and foreseeability of the danger have to be weighed against the costs and inconveniences of countermeasures.Footnote 226 As in the Shell case, this standard of care is flexible, dynamic and intensifies as scientific knowledge and technology advance, which together providing a better understanding of the risks and enhanced technical options to address them. It is acknowledged under both Dutch case law and German legal doctrine that the mere lack of legislation, or in this instance, a prohibition on emitting GHGs, does not preclude a duty of care for private entities, especially in the context of Section 14 BImSchG (¶ 38). Existing public law obligations constitute a minimum duty of care, but they are not exhaustive.Footnote 227

Considering the progression and intensification of climate change-related damage, a corporate duty of care is also becoming increasingly evident from a human rights perspective. The disastrous consequences of further inaction for fundamental and human rights have an impact on the duties of big polluters, since those basic rights, though not directly binding private entities, are relevant to the interpretation of civil law. In Germany, for example, the legal relevance of the basic rights guaranteed under the German Basic Law for the interpretation of private law has been accepted by the German Constitutional Court since the 1950s.Footnote 228 This approach follows the idea that fundamental and human rights are threatened today not only by State decisions and actions, but to a similar extent by those of private entities. Considering that a single private company, such as Shell, produces as much or more emissions than entire industrialised countries and is, therefore, a danger to fundamental and human rights, the indirect horizontal effects of human and basic rights clearly support the emergence of corporate duties of care.

Finally, there is now consensus as to what the minimum level of protection may look like given that the reduction targets set out in the Paris Agreement express global consensus and make it possible, for the first time, to define the obligations of companies in concrete terms.Footnote 229 Compared to the present and impending losses of property, health etc., the costs of adapting business models to the Paris Agreement can hardly be a decisive factor.Footnote 230 Moreover, adaptation will be necessary anyway, as is argued in financial actions brought by investors (¶ 162 et seq), and an early start to the process is likely to reduce the associated costs in the long run.

This essentially leads to the social duty of care argued and applied in the Shell case and we would venture to argue that such a duty could be established for other significant emitters. Insofar as a particular emitter has control over its emissions, it flows from the duty to counter known risks, meaning that a reduction pathway leading to GHG neutrality would have to be pursued. In the Shell case, the court deemed that not only must a reduction pathway lead to this overall goal but, because of the company's unique control over the extraction of oil, the need to restrict emissions quickly and the realities of the global carbon budget, there are also identifiable targets that should be met between now and 2050, the specific date set to reach GHG neutrality.

Here, in our view, the standard of care of large private entities could merge entirely with the duties of States and human rights regimes or in the context of the implementation of international climate agreements and targets. In principle, this applies regardless of different legal approaches used to define State duties. For example, the German Constitutional Court’s argument that the remaining CO2 budget available under the Paris Agreement must not be used up prematurely at the expense of future freedoms and generations (¶ 8) could also be applied to private corporations. A duty of care would then demand that a company does not consume more than its fair share of the remaining budget.

In essence, the standard of care applied by a court would be a duty of conduct corresponding to universally accepted risk-reducing measures in the context of negligence statutes or provisions in civil codes or environmental liability provisions. The duty of conduct would arise regardless of whether or not one company’s following a reduction pathway would actually avert damage. This issue was treated at length in the Urgenda judgments where the courts unanimously ruled that no single emitter, in this instance the Dutch State, could nullify its own duty of care because other States violate their duties as well.Footnote 231 The German Federal Constitutional Court concurred with the reasoning of the Dutch courts.Footnote 232 The argument that there are many other tortfeasors has also been rejected by the District Court in the Shell case as well as the court of 2nd instance in the RWE case in Germany. This is the logical consequence of a phenomenon such as climate change that is caused by cumulative emissions from various sources and processes: the nature of cumulative pollution is that taking away one contribution does not solve the whole problem.

It should be emphasised that the duty of care described here is directed at an enterprise’s own conduct and therefore does not rely on the attribution of or responsibility for the conduct of other companies. The latter may be achieved by statutory duties, such as the one underlying the TOTAL case described above (¶ 47). While statutory duties may be generally desirable, the line of argument in the Shell case is independent of legislative action and de lege lata. What can be said, however, is that it would be plausible to argue that there are climate change-related due diligence obligations both under the existing French code described in Chap. 7 and the newly introduced Supply Chain Act in Germany.Footnote 233 Given the human rights implications of climate change, it seems somewhat inevitable that a due diligence obligation with procedural and substantive obligations for companies would arise, with the cumulative nature of climate change only creating a challenge for their implementation.

What requires further research is the corporate law argument against setting parameters for management and board decisions in this context. Amongst other issues, such research would help clarify if a defence argument is permissible which rests, at least in principle, on fiduciary duty and shareholder expectation?Footnote 234

4.2 Alternative and Complementary Approaches

Finally, we briefly look at alternative and complementary approaches to define the positive duties of corporations to mitigate the effects of or adapt their business models to the reality of climate change. These approaches can serve as the basis for both an improved definition of management duties under corporate law and for a statutory provision, with the possibility of even extending into the field of due diligence obligations.

The Principles on Climate Obligations of Enterprises

A comprehensive approach to defining corporate duties to prevent or mitigate dangerous climate change are the Principles on Climate Obligations of EnterprisesFootnote 235 (Enterprise Principles), drafted by a group of experts in 2017. The Enterprise Principles are not a binding body of law but derived from an interpretation of tort law, human rights law as well as corporate guidelines and codes of conduct.Footnote 236 According to their authors, they are located between the interpretation of existing law and assumptions of how relevant law will developFootnote 237 and are meant to be a “source of inspiration for international or national legislation or other political instruments”.Footnote 238

In contrast to the MCCA discussed above (¶ 123 et seq), the Enterprise Principles do not deal with compensation as they are focused purely on prevention,Footnote 239 as such, they are not intended to address in any way the litigation problems described above (¶ 55 et seq). Having said that, they do define corporate duties whose violation would give rise to liability claims in civil courts and, according to the authors, the threat of liability serves as an important incentive for corporations to align with the Enterprise Principles.Footnote 240

The Enterprise Principles follow a different approach to defining a duty of care than was taken by the court in the Shell case. The Enterprise Principles are the counterpart to the Oslo PrinciplesFootnote 241 that aim to define countries’ legal obligations regarding climate change. The basic idea of the Oslo Principles was that a global GHG budget could be divided among the globe’s countries on a per capita basis.Footnote 242 The Enterprise Principles built on this by aligning corporate obligations with their respective countries’ obligations as stipulated under the Oslo principles. This is laid down in detail in principles 2–16 concerning GHG reduction obligations of corporations. The GHG budgets developed for States are also applied to corporations because, as was discussed under the heading “Duty Overlap” in (¶ 18 et seq), GHG emissions are primarily produced by corporations within a given country (principle 2).Footnote 243 The Enterprise Principles seek to go beyond just the problems associated with Scope 1,2 and 3 emissions, i.e. emissions not only from a production facility in a certain country (Scope 1) but all emissions associated with the facility and production along the value chain (Scope 2 and 3).

The approach to defining corporate duties followed by the Enterprise Principles is, on the one hand, less straightforward than the line of argument in the Shell case. Rather than tying corporate behaviour to the reduction goals of the Paris Agreement (especially CO2 neutrality by 2050), the Enterprise Principles define corporate obligations depending on the CO2 budget of the country they are located in. This complicates defining duties of care regarding multinational corporations (cf. Principle 5). Conversely, the principles offer a variety of very concrete actions corporations would have to take to comply with their duty of care. This is not limited to reduction obligations but extends to obligations to consider GHG emissions when choosing suppliers (principle 17), the obligations of investors and financiers (principles 25–30) as well as required disclosures and other obligations owed to regulators, the public and shareholders (principles 18–24).Footnote 244 This introduces another perspective on corporate duties, namely the duty to avert financial risks in the interest of the company itself and, ultimately, its shareholders.

Shareholder Actions, the ‘Financial Duty of Care’ and the XDC Model

Shareholder actions in the context of climate change liability allege a breach of the fiduciary duty owed by the directors of a company to its shareholders to avoid irresponsible financial risks by insufficiently adapting the company’s business model to address climate change.Footnote 245 In such cases, the duty of care is not derived from tort law but is of a contractual nature. It is not directly aimed at protecting the legal interests of third persons (such as life and property) but at securing the financial interests of shareholders. A recent example of a successful shareholder claim is the case of Client Earth v Enea,Footnote 246 where plaintiffs successfully argued that the construction of a new 1-gigawatt coal plant for €1.2 billion violated a financial duty of care due to climate-related financial risks stemming from rising carbon prices and the plummeting costs of renewables.Footnote 247

In Germany, there have been no similar court cases to date, however, there have been many attempts to operationalise the duty to do business while protecting the climate, for example, by using indicators. The start-up “right.based on science” has published a study evaluating the effectiveness of the German stock market’s 30 largest companies’ climate targets.Footnote 248 The evaluation is based on the economic climate impact model X-Degree Compatibility Model (XDC)Footnote 249 and is intended to help external stakeholders, shareholders, owners, investors and would-be investors assess companies according to the climate-related sustainability of their business plans.Footnote 250 The report compares a baseline scenario, in which companies do not alter their behaviour at all, to a second scenario in which companies reach their respective current climate targets.Footnote 251 The XDC Model follows three steps:Footnote 252 To begin with, the Economic Emission Intensity (EEI) is calculated by measuring the amount of GHG emissions per €1 million Gross Value Added (GVA) for each company. This is then scaled up to a global level to calculate the effect if each company operated as emission-intensely as the company analyzed. Finally, this data is translated into an effect on global warming measured in °C. The results were particularly sobering with regard to big energy suppliers such as E.ON and RWE, which returned results of 8.1 °C and 9.5 °C respectively if they met their own sustainability goals. If the proclaimed climate-related sustainability efforts on the part of such companies prove to be so strikingly insufficient, it could lead to investor reticence and both shareholders and third parties using the results as a basis for taking legal action and calling for more effective mitigation efforts.

5 Conclusion

Climate change has moved from being theoretical to a reality that causes, and will continue to cause, damage. It is now routinely accepted by a number of courts in different countries as an issue that needs to be judicially addressed. However, doing so raises questions such as who is responsible and is there a basis for liability of private actors? This chapter has taken the very new but active field of climate litigation as an example for an in-depth discussion of the hurdles and opportunities for introducing corporate liability for environmental damage. Against the background of the many already decided and still pending State-directed climate court cases, we began by classifying cases by the remedy sought, namely mitigation, adaptation or compensation for damage.

Given the nature of climate change, where emissions can give rise to responsibility on different levels, we then analysed the overlap between State duties and those of private actors, to which end we compared the situations in the USA and Germany. We found that in the USA, liability claims seem to be preempted based on the Supreme Court judgement in American Electric Power, even though this case only referred to a mitigation type claim and was not strictly a case about climate change damage. German courts appear to look at this issue differently, at least in the high-profile RWE case, using Section 14 BImSchG as the key guiding law in this area. While there will always be variation caused by the specifics of the jurisdiction involved, we have concluded that State duties will not normally preempt private actors’ duties concerning climate change. However, how each jurisdiction will approach this overlap in responsibility remains to be seen.

Looking at several legal and forensic issues, such as standing, types of damage and causation, we found that these only present hurdles to some types of cases. Given the increasingly accurate and provable scientific findings on the impacts and timeframes for mitigation, we found that even actions seeking compensation for past behaviour and damage due to an extreme event are increasingly likely to proceed in court. As a means of ready reference, we have included a table summarising the types of foreseeable cases as well as the specific problems each is likely to encounter. As a resource for discussions concerning policy options, we have summarised possible approaches to solve some of the key problems identified.

Looking forward to what we believe will become an increasingly commonplace occurrence, we took a closer look at two very recent cases involving claims for mitigation/injunctive relief against multinational companies, namely the Shell case in the Netherlands and the TOTAL case in France. The judgement from Shell is particularly demonstrative that simple tort and nuisance principles already existent in many countries can be applied to oblige private actors to minimise the climate-related risks created by their business operations and thus impose requirements to reduce their emissions. This is now possible primarily because the issue of fault in the past is no longer relevant as the standard of care now sought is forward-looking. Given how little time is left for the global community to address climate change and given how a duty of care is and has always been a social construct developed by courts on a case-by-case basis, we find the arguments in the Shell judgment transferrable to other jurisdictions. While further research is needed on procedural and forensic issues, as well as corporate law implications, it seems reasonable to deduct that major companies do indeed have an independent duty to reduce emissions to satisfy their duty of care towards those at risk.

With new statutory instruments on due diligence emerging in Germany and being planned at the EU level, it remains to be seen where corporate responsibility overlaps with State responsibility, and how the standard of care under either duty can be defined to help limit the otherwise catastrophic impacts of climate change. Hopefully, with or without litigation forcing them, States will accept their responsibility to follow the emission reduction pathways required to achieve the Paris Goals. The questions examined here would then only be directed at those companies residing in or being regulated by States that do not comply with their own duty of care. While not an insurmountable issue, this may require a new look at extraterritorial regulation or civil liability instruments that can be applied across national boundaries.