Climate and biodiversity risk
In this chapter of our Annual Insurance Review 2023, we look at the main developments in 2022 and expected issues in 2023 for Climate and biodiversity risk.
Key developments in 2022
2022 has been eventful year, with both the COP27 and COP15 conferences taking place at the end of the year, and a continued uptick in climate change related litigation, with over 2,000 cases having been filed worldwide. We are also seeing an increase in litigation concerning biodiversity, with a growing enclave of cases brought on behalf of individual species and the environment.
COP27 focused on the financing of greener energy projects and compensating developing countries for loss and damage as the result of extreme weather events. Whilst world leaders were able to commit to a US$100bn compensation fund by 2023, no deal could be negotiated in relation to the phasing down or reduction of fossil fuels. In particular, it had been hoped that discussions regarding the phasing out of coal could progress. However, the war in Ukraine has seemingly led to several EU countries re-opening coal plants or extending the lifespan of existing ones.
Although this was a disappointing end to COP27, other important topics were discussed including water and drought resilience, biodiversity and carbon removal initiatives. De-forestation and forest protection were also discussed, with 26 countries (accounting for 35% of the world's forests) agreeing to partner and launch the Forest and Climate Leaders Partnership. There were also encouraging discussions led by the Global Mangrove Alliance and Coral Reefs Resilience Action.
COP15 focused on biodiversity and the protection of ecosystems. Most prominently featured throughout COP15 was the "30-by-30" target whereby countries committed to protecting 30% of their land and sea territories by 2030. COP15 concluded with the adoption of a framework aimed at setting in motion concrete measures to halt and reverse biodiversity loss. Featured in its 23 targets, the framework also outlined the phasing out of subsidies that harm biodiversity by at least USD500bn per year.
2022 also saw the world move closer to reaching a consensus on solutions for plastic pollution, with 173 countries agreeing to negotiate the terms of a global plastics treaty which will address the lifecycle of plastics (themselves a derivative of petroleum and linked to the climate crisis). There is a long road to go, however, in terms of regulation. Whilst the UK has just announced a ban on single-use plates, cutlery and cups, water bottles and plastic bags are yet to be addressed.
The "Carbon Majors" cases brought against various oil companies concerning historic GHG emissions, remain at an early stage in the US courts (the majority still litigating whether they should proceed in federal and state courts). This type of "climate impact" case has not yet got off the ground outside of the US, except in Lliuya-v-RWE, which has been brought in the German courts in relation to the melting of a glacier in Huarez, Peru. Lliuya is brought on nuisance grounds and is regarded as a test case for whether a private corporation can be held liable for historic GHG emissions, by reference to its percentage contribution to global emissions (using attribution science to calculate RWE's 0.47% share). The case is currently at the evidential stage and the outcome will be highly anticipated.
The Enrol Vert et al -v- Casino "value chain" case continues in the French courts. This case is brought by eleven NGOs (representing Amazonian tribes) against French supermarket chain, Casino, in relation to the cattle industry in Colombia and Brazil and deforestation and Casino's responsibility in the supply chain. ClientEarth has just announced similar litigation against Danone, in relation to plastic pollution and its global supply chain. It is alleged that Danone has failed to devise a solution (only considering recyclability and not the use of plastics in its products) and in 2021 used more than 750,000 tonnes of plastic. Both the Casino and Danone cases are brought under French vigilance law, under which parent companies must identify and prevent adverse human rights and environmental impacts resulting from their own activities and those of subsidiaries and contractors (i.e. the supply (value) chain).
Climate change cases in a fiduciary context are also gathering pace, with ClientEarth having targeted Shell's directors in relation to carbon emissions commitments. We are also seeing governments targeted in relation to failures to respond to the climate crisis. The Torres Strait Islanders' complaint to the UN was successful, with the UN finding that the Australian government had violated human rights by failing to adequately respond to the devastation of the islanders' home and crops due to storms, heavy rains and rising sea levels contributing to flooding. This follows the Providencia Island case brought against the Colombian government following Hurricane Iota and the displacement of communities and failure to carry out emergency work.
What to expect in 2023
In 2023, the climate change litigation movement will continue, including tactical, injunctive relief seeking cases in relation to plastics and the preservation of biodiversity. In Latin America there is a well-established tutela and, in particular, it is recognised that indigenous tribes have a special relationship with the land. Globally, the concept of environmental legal personality is becoming much more widely understood and there is increasing willingness for these types of case to be heard/ facilitated. This is all against the backdrop of the courts' willingness to permit both collective redress and claims against multinationals concerning the environment.
Written by Lucy Dyson.
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