How a Peruvian farmer’s authorized defeat raised new dangers for corporations | USAEMALL.com

Welcome back.

BlackRock’s reduced public enthusiasm for climate action seems to be bearing fruit. Yesterday, the Texas state comptroller removed the world’s biggest asset manager from a blacklist of companies that supposedly boycott the oil and gas industry. That means BlackRock now has an opportunity to manage money for Texas state-run funds that manage a total of $300bn in assets.

The asset manager is still being sued by Texas and other state governments for supposedly conspiring to constrain coal output and push up prices. That case looks unconvincing. But the larger wave of climate-related lawsuits is worth your attention, as I highlight in today’s newsletter.

CLIMATE JUSTICE

Carbon emitters in court

Rarely has the losing side in a court case looked so pleased with the outcome.

Last week, a court in the German city of Hamm threw out a suit brought by Saúl Luciano Lliuya, a Peruvian farmer, against the electricity company RWE. Lliuya had argued that his village was threatened by the melting of a mountain glacier, which had been accelerated by climate change. He asserted that RWE — as one of the world’s largest all-time carbon emitters — must pay its share of the cost to protect against a disastrous flood.

Despite the defeat, Lliuya and his partners at the non-profit group Germanwatch appeared jubilant at the court’s ruling. “It is exactly what we wanted to achieve from the start,” he said.

This seemingly odd response reflects a nuanced ruling by the court which may open the door for future cases with a better chance of success. And with dozens of similar suits already being brought around the world, the litigation risk for high-emitting companies appears to be growing.

The Hamm court rejected Lliuya’s case because, it said, he had failed to show that he faced imminent danger as a result of climate change. Court-appointed experts had found that the risk of a major outburst flood from the nearby glacial lake in the next 30 years was just 1 per cent.

But the court made clear that if there had been clearer evidence of pressing danger — or of a climate-related disaster that had already happened — it might have reached a different verdict. It endorsed the basic logic of Lliuya’s suit: that if you face costs as a result of climate change, then German law allows you to pursue major carbon emitters to help you meet those costs.

The ruling may be of interest to the displaced inhabitants of Blatten, a Swiss village that was devastated by a collapsing glacier just a few hours after the court announced its decision.

“They’ve really established a legal principle of corporate climate liability, which no court has ever done anywhere,” said Noah Walker-Crawford, a research fellow at the London School of Economics’ Grantham Research Institute.

In November, a Dutch court delivered another verdict that sparked a similar glass-half-full reaction from the environmental movement, but which some insisted was a victory of sorts. The court struck down an earlier judgment requiring oil company Shell to reduce its carbon emissions 45 per cent from 2019 levels by 2030, saying the judiciary was not empowered to impose such specific targets. But it did reaffirm that high-emitting companies had a general “duty of care” to tackle climate change — and hinted that Shell’s investments in expanded fossil fuel production might conflict with this duty.

That ruling “seems to suggest a path for new climate change litigation focused on preventing future emissions by aiming to block specific investment plans rather than addressing past emissions”, wrote lawyers at Dutch law firm Loyens & Loeff.

More verdicts will come soon, with more than 30 climate-related lawsuits now under way according to the LSE. In a Belgian court, a farmer is pursuing French oil major TotalEnergies for compensation over damage to his farm caused by extreme weather. At a court in Switzerland, four residents of an Indonesian island hit by flooding are seeking damages from cement giant Holcim.

Other cases are being pursued in the US against fossil fuel companies by state governments — despite resistance from the Trump administration — and by the family of a woman who died in a 2021 heatwave.

Optimists in the climate litigation space insist that the recent defeats have created a foundation for future success — and that each of these court verdicts has given valuable guidance on how to design lawsuits that could succeed. “We got a clear part of the verdict showing how climate attribution claims are winnable,” said Christoph Bals, chief policy officer at Germanwatch.

It’s reasonable to wonder, though, whether courts will continue to find reasons not to award climate-related damages claims — for fear of opening a Pandora’s box of large-scale litigation that could destabilise whole industries.

In an ideal world, all this would not be a matter for the courts. The growing number of climate-related lawsuits is a symptom of failings in other areas of global governance — in particular, the failure to put a proper price on pollution, and to build an effective international system to cover loss and damage costs for those hurt by climate change.

But as long as those structural flaws persist, this kind of litigation looks like — as Laura Clarke, chief executive of the climate law non-profit ClientEarth, put it to me recently — “an important part of the sort of nudge effect that we need, to transform mindsets and behaviour”.

Judges are far outside their comfort zone with these climate cases, and may well continue to err on the side of caution. But heavily emitting companies would be wise not to take that for granted.

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