Climate-related litigation surges globally, with claimants winning 70% of 'climate-washing' cases, as companies face growing financial and legal risks for misleading sustainability claims and inadequate climate risk management
Claimants bringing climate-washing litigation have been successful in 70% of completed cases, according to new data from the Grantham Research Institute (GRI) at the London School of Economics.
Plaintiffs launched 47 climate-washing cases in 2023, bringing the total number of such cases in the climate litigation database to 140, the Global Trends in Climate Change Litigation (2024 Snapshot) showed. The report was released in June and was authored by Joana Setzer, an associate professional research fellow, and Catherine Higham, policy fellow and coordinator of the GRI’s Climate Change Laws of the World project.
“Climate-washing cases have often centered on claims around climate neutrality of products and services, with several recent claims relating to transport,” the report stated. “Cases can also involve financial products and services. For example, in 2023, Australia’s Federal Court ruled that Vanguard Investments’ claims about an ethical bond were false and misleading.”
Of the 77 cases decided to date, 54 have been found for the claimant, the report noted.
The growing attention from regulators, shareholders, and investors on the risks associated with climate litigation highlights the need for insurers and reinsurers to evaluate and better understand their existing frameworks.
Aside from climate-washing cases, financial firms are also at risk from what the authors refer to as “turning off the taps” cases. Six such cases were filed in 2023, bringing the total to 33 since the 2015 Paris Agreement. Governments, corporations, and company directors are also facing litigation that targets their failure to adapt, integrate climate considerations, and transition risks. Indeed, 97 cases filed in 2023 addressed firms’ consideration of climate risks.
Interestingly, 233 new cases were filed in 2023, including first-time actions in Portugal and Panama, with litigation cases now filed in 55 countries. The report used a dataset containing 2,666 climate litigation cases compiled by the Sabin Center for Climate Change Law at Columbia Law School. Around 70% of these cases were brought after 2015.
Increase in litigation hindering climate progress
In 2023, there was an increase in the number of lawsuits aimed at impeding climate progress. Last year, 50 such cases were documented, some of which fall under the category of strategic litigation against public participation (SLAPP) suit. The purpose of SLAPP suits is to intimidate, muzzle, and financially cripple non-governmental organizations, activists, and journalists. For instance, Shell and its partner Fluor initiated a SLAPP against Greenpeace in the United Kingdom, and TotalEnergies filed a separate (now dismissed) lawsuit against the same organization in France during 2023.
Despite the relatively low number of such cases in the databases, it is evident that SLAPP suits are among the various legal strategies employed by the fossil fuel industry to discourage its adversaries, according to the GRI report. In fact, the report refers to a study conducted by EarthRights International in the United States, which found 152 instances in the past decade in which fossil fuel companies resorted to SLAPP suits to suppress critics.
Additionally, financial regulators are taking a closer look at climate-related lawsuits to better understand how these actions might affect individual companies and the entire financial system, according to the report. The authors acknowledged the significant contribution of Frank Elderson, a member of the European Central Bank’s executive board, who presented a compelling case in 2023 on the potential devastating impact of climate litigation on the banking industry. Similarly, reinsurers are reassessing the risks that climate litigation poses to their current models.
The growing attention from regulators, shareholders, and investors on the risks associated with climate litigation highlights the need for insurers and reinsurers to evaluate and better understand their existing frameworks. Moreover, it emphasizes the importance of developing a forward-thinking strategy to minimize potential vulnerabilities and mitigate future exposures, the authors noted.
What developments mean for companies
Implications from this analysis suggest a shifting landscape in corporate responsibility, legal accountability, and financial risk management concerning climate-related issues. Specifically:
Increased accountability for misleading claims — With a success rate of 70% for claimants in climate-washing litigation cases, there is a growing trend towards holding companies accountable for misleading claims regarding climate neutrality and sustainability. This high success rate could serve as a deterrent for many companies.
Financial and legal risks increase — The spike in climate-washing cases, along with other climate-related litigation, poses significant financial and legal risks for corporations. This, in turn, may prompt businesses to invest more in genuine sustainable practices and thorough due diligence to avoid such litigation.
Growing scrutiny indicates a likely spike in regulation — The increased attention from financial regulators and reinsurers on climate litigation outcomes suggests that the impact of these cases extends beyond individual companies and into the broader financial system. This scrutiny may lead to stricter regulations, changes in risk assessment models, and potentially higher insurance premiums or reduced coverage for companies vulnerable to climate-related litigation.
As climate litigation continues to evolve and expand globally, companies across all sectors must prioritize genuine sustainability efforts, transparent reporting, and proactive risk management strategies to navigate the increasingly complex legal and regulatory landscape surrounding climate change.
