Recently, several Canadian youths aged 10 to 19, filed a lawsuit against the Government of Canada and the Attorney General of Canada over climate change, alleging violations of their rights under the Canadian Charter of Rights and Freedoms.
On October 25, 2019, the plaintiffs claimed that the release of anthropogenic greenhouse gases (GHGs) into the atmosphere is triggering a host of adverse consequences, including global warming and disproportionately harming children.
Among other things, the plaintiffs allege that the Government of Canada has actively participated in, and supported, the development, expansion and operation of industries and activities involving fossil fuels that result in a level of GHGs that they say are incompatible with a stable climate system. The plaintiffs seek declarations that such claimed conduct has unjustifiably infringed their rights, and the rights of all Canadian children, under subsections 7 and 15 of the Canadian Charter of Rights and Freedoms. The plaintiffs seek an order from the court that the defendants be required to develop and implement an enforceable plan that is said to be consistent with Canada’s purported “fair share” of the global carbon budget necessary to reduce GHG emissions.
An almost identical claim was filed in the U.S. in Juliana v. United States, which we discussed in our September 2019 Blakes Bulletin: Environmental Litigation on the Rise in Corporate Canada and Around the World. The U.S. government vigorously opposed those claims, and on October 22, 2018, Chief Justice John G. Roberts Jr. enjoined the trial from proceeding. Proceedings have continued in the Ninth Circuit Court of Appeals in 2019, and the parties are awaiting further court decisions. Similar legal actions have also been taken in other jurisdictions.
The emergence of case law reflects the numerous ways in which climate litigation is seeking to influence public policy and compensation for such claims.
Climate litigation claims generally fall into three categories:
- Mitigation (i.e., seeking the reduction of GHG emissions)
- Attribution (i.e., alleging a party is liable to pay for the claimed damages of GHG emissions)
- Adaptation (i.e., addressing the claimed impacts of GHG emissions)
While the U.S. has seen approximately 1,200 climate cases filed, Canada remains in the top five jurisdictions in terms of the number of similar lawsuits commenced. Actions in the U.S. are often a precursor for similar climate change actions in Canada.
The implications of climate change litigation are wide ranging. For example, another important emerging trend in climate-change-related litigation is the growing number of suits regarding disclosure of climate change business risks and corporate plans to address those risks. While there are no current Canadian cases, there are at least two Australian cases, and a growing number in the U.S., where shareholders, including pension and other investment funds, have commenced claims against corporations and banks for failing to disclose climate-change-related business risks. For example, in McVeigh v. Australian Retail Employees Superannuation Trust, an Australian pension fund member filed a suit against the Retail Employees Superannuation Trust alleging that the fund violated the Corporations Act 2001 by failing to provide information related to climate change business risks and any plans to address those risks. The case raises the issue of the climate change disclosure requirement by the pension to its members.
Based on these developments, Canadian issuers, and particularly oil and gas issuers, should be mindful that their disclosure accurately discloses and accounts for material risks, if any, related to their businesses as a result of climate change and the related contingencies, including increased regulation. Recently, the Canadian Securities Administrators (CSA) issued Staff Notice 51-358 Reporting of Climate Change-related Risks that provides specific guidance to issuers in disclosing material climate-change-related risks. As noted by the CSA, “Climate change-related risks are a mainstream business issue. Issuers should consider these risks as part of their ongoing risk management and disclosure process and they must disclose any such risks that are material to their business.” Accordingly, Canadian issuers should be cognizant of the advice and direction of the CSA on materiality thresholds, timing, measurement and other applicable factors in disclosing climate-change-related risks.
Time will tell how Canadian courts will address the legal and political complexities associated with climate change litigation. Many strategies and defences are available to mitigate the risks from this emerging litigation trend. Advocacy groups have overtly stated that climate litigation claims are commenced, in part, to obtain discovery of documents from corporations to justify claims. As a result, early and aggressive steps may be advisable to combat the risks of such those actions to Canadian issuers.