Car manufacturers such as Volkswagen, BMW and Mercedes-Benz and energy companies such as RWE and Wintershall Dea have been held accountable in court for contributing to climate change. So far, these lawsuits in Germany have been mild for the companies.
Around the world, more and more people are trying to obtain better measures for climate protection in court, and some are also demanding compensation for damage caused by climate change. According to the London School of Economics, to date, more than 2,000 complaints have been filed around the world on this issue.
Some companies drive climate change
Although until now most of the lawsuits have been against governments, lately there are more and more complaints against companies, according to the consultancy EY. And it is that some companies do more damage to the climate than many States. For example, more than a third of the world’s CO2 emissions emitted between 1965 and 2018 were caused by the 20 largest oil, coal, and gas corporations.
However, there are not only lawsuits against companies in the fossil fuel sector, but also companies in the transport, food, agriculture, plastics and finance sectors, according to Hengeler Müller, an international firm specializing in business law.
How concerned should companies be?
The Netherlands, which has a very progressive legal system when it comes to climate complaints, handed down the first judgment against a government and a large company in May 2021. After a successful lawsuit against the Dutch government to do more for climate protection, British-Dutch oil company Royal Dutch Shell was forced to cut CO2 emissions from the sale of Shell oil products by 45 percent by 2030.
“The ruling against Shell is the first to uphold a claim against a private company,” says Marc-Philippe Weller, Director of the Institute for Foreign and International Private and Commercial Law at the University of Heidelberg.
This sentence was pioneering and inspired other plaintiffs. Later that same year in Germany, the Federal Constitutional Court forced the government to readjust its climate policy. Climate activists relied on that ruling to bring several companies to German courts. “Will they succeed? We can be quite skeptical about that, given the status quo of the legal situation,” Weller says.
The judicial path has already begun
Four judgments have already been handed down in favor of the defendant car manufacturers in Germany. However, this has not prevented the complainants from turning to the next instance in all four cases, that is, to the respective higher regional courts.
In this scenario, the case against RWE, pending since 2015 in the Higher Regional Court in Hamm, is particularly interesting, in which the plaintiffs want RWE to be forced to emit less CO2 in the future and to pay damages.
Climate lawsuits are a risk
“These demands will definitely increase,” Weller says. In addition, it cannot be ruled out that companies may have to answer for weather damage in the future. Germany does not have a static legal system, there are many dynamic elements. “We have open legal concepts, which are changing and will undoubtedly become more climate sensitive. This means that what doesn’t work today can work tomorrow,” says Weller.
The Hengeler Müller law firm also claims that these types of lawsuits are a real business risk. Thus, whether claims would pose significant risks to a company’s strategy, financial position and reputation.
