Climate litigation arguments are becoming more widespread and complex, presenting added legal jeopardy for companies with carbon neutrality claims, a new report suggested.
More than 2,340 climate lawsuits have been filed since the mid-1980s, according to the report from the London School of Economics' Grantham Research Institute on Climate Change and the Environment.
Nearly three-quarters of the suits were filed in the US, where the US Supreme Court recently rejected an industry appeal to move climate cases from state to federal courts. At least 20 state and local lawsuits primarily against oil and gas companies are now likely to go to trial, the report said.
In one of those cases, Mass. v. ExxonMobil (No. SJC-13211), the Massachusetts attorney general accused Exxon Mobil Corp. of marketing its products as low-carbon fuels that would help combat climate change while failing to disclose to consumers what impact those fuels have on emissions. Such cases, dubbed in the report as "climate-washing" lawsuits, are quickly spreading to other economic sectors, researchers said.
"Those cases often concerned misleading claims that a particular product line is net-zero and that its emissions are carbon neutral," Catherine Higham, a policy fellow at the institute, said during a June 29 lecture in London to discuss the report. "We've seen a massive growth in the number of such cases in the last three years."
In May, a class-action lawsuit was filed in California against Delta Air Lines Inc. after the company, per the complaint, "repeatedly touted itself as the world's first carbon-neutral airline" by relying on allegedly questionable carbon offsets.
That same month, a German judge allowed a lawsuit filed by environmental groups over TotalEnergies SE's energy transition claims to move forward.
An ExxonMobil spokesperson said such climate lawsuits are a "waste of time" and do nothing to address climate change.
"Central to our efforts is our intention to invest $17 billion to leading the way in a thoughtful energy transition that takes the world to net-zero carbon emissions," the spokesperson said in an email, adding that the company's climate goal includes operational but not Scope 3 emissions. "Few companies can capture carbon and permanently store CO2 on an industrial level as we can, having recently signed three major carbon offtake agreements with several higher-emitting industries, steel and fertilizer, totaling up to 5 million metric tons per year."
Indirect Scope 3 emissions from the fuel that oil companies sell comprise about 88% of their total carbon footprint, according to S&P Global Commodity Insights estimates.
Climate cases from opposite sides
So far in 2023, climate litigation cases are seemingly off to a slower start, but researchers cautioned that the data is preliminary and only captures the first five months of the year. Michael Gerrard, the founder of Columbia University's Sabin Center for Climate Change Law, which tracks such cases, said 11 additional cases were filed in June.
Gerrard also noted that the Biden administration's climate agenda has tempered litigation, at least for the time being.
"During the Trump administration, environmental groups and blue states brought many lawsuits challenging the administration's actions in weakening regulations," Gerrard wrote in an email. "The Biden administration has been strengthening, not weakening, the regulations, so that side has less to complain about."
Another large category of lawsuits that has declined in the last couple of years focused on environmental impact statements for proposed projects. Suing on those grounds has become harder as federal and state agencies increasingly include a discussion of climate change in such documents, Gerrard said.
Two-thirds of the cases in Columbia University's database, on which the London School of Economics report was based, were filed since 2015, when the Paris Agreement on climate change was reached.
Climate litigation involves both sides of the political spectrum. Lawsuits from states opposed to Biden administration policies will appear in the coming months.
"Industrial groups and red states sue the Biden administration, as they did the Obama administration, for, in their view, going too far with regulations," Gerrard wrote. "These lawsuits are not ripe for litigation until the rules are issued in final form."
Meanwhile, companies operating on both sides of the Atlantic face growing pressure from regulators to match actions with words.
The SEC under President Joe Biden has stepped up enforcement of misleading corporate environmental, social and governance claims and is proposing new ESG disclosure mandates for investment firms.
The Federal Trade Commission is also updating its Green Guides to crack down on deceptive environmental marketing claims. The European Union is taking similar steps.
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