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New trends in enforcing corporate accountability: Making corporations pay for climate change damage

31 October 2014 at 9:54 am

Durban Climate Change ProtestIn October 2014, we have seen two new reports published in the U.S. and Canada on opportunities to use domestic and international legal action to hold accountable those corporations who contribute to climate change through significant greenhouse gas (GHG) emissions. Given South Africa’s contribution to global GHG emissions, big South African GHG emitters should perhaps check their insurance.

Payback Time? What the internationalization of climate litigation could mean for Canadian oil and gas companies analyses scenarios in which the legal landscape concerning climate damages litigation could suddenly and dramatically change.

According to the study by Andrew Gage, Staff Counsel at West Coast Environmental Law and University of British Columbia professor Michael Byers, the most serious risk to Canadian companies is not litigation in Canada. Because the impacts and causes of climate change are global, climate damages litigation could take place in, and apply the laws of, any of the countries where damage occurs. These countries may also choose to adopt new laws clarifying the legal rules around climate damages litigation, much as Canadian provinces did to facilitate tobacco litigation. As a result, large-scale GHG producers and their shareholders are exposed to significant legal risks that will only grow into the future.

Payback time? then considers the total potential liability of five oil and gas companies currently trading on the Toronto Stock Exchange—EnCanada, Suncor, Canadian Natural Resources, Talisman, and Husky—and finds these five companies could presently be incurring a global liability as high as $2.4 billion per year for their contribution to climate change. The study concludes that given the sheer number and diversity of potential venues for litigation, and the growing interest in pursuing it, civil liability for large-scale GHG emitters is extremely likely, particularly as the costs associated with climate change rise.

In the U.S., Environmental Law Alliance Worldwide (ELAW) has just released a new report Holding Corporations Accountable for Damaging the Climate. “Courts in several countries − including Brazil, Colombia, Ecuador, India, Kenya, and Mexico − are poised to bring justice to victims of climate damages. … Requiring corporations causing climate impacts to compensate damaged communities would help remedy the injustice of climate change, internalize costs of greenhouse gas emissions, make corporations tremble at the prospect of further damage awards, and thus help prevent further harm.”

Law professor Shi-Ling Hsu writes that “seeking direct civil liability against those responsible for greenhouse gas emissions – is the only [type of litigation] that holds out any promise of being a magic bullet. By targeting deep-pocketed private entities that actually emit greenhouse gases[,] … a civil litigation strategy, if successful, skips over the potentially cumbersome, time-consuming, and politically perilous route of pursuing legislation and regulation.”

Also see Why Climate Change Litigation Could Soon Go Global, Globe & Mail, 9 October 2014