Greenwashing Is Becoming a Bigger Legal Risk 

A report from the London School of Economics shows climate litigation is on the rise, although the cases filed each year may be stabilizing.

Photo of a sign demanding climate justice from a protest
Photo by Markus Spiske via Unsplash

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If you’re not as green as you say, it’ll cost you some green.

A new report from the London School of Economics shows that climate litigation is still on the rise, although it noted that the number of cases filed each year might be starting to stabilize. With new trends emerging in what kinds of cases achieve success for plaintiffs, however, that number could easily tick up again.

A Painful Transition

Catherine Higham, a policy fellow at LSE and one of the report’s authors, told The Daily Upside that “greenwashing” cases — where companies are accused of misleading the public about their green commitments — are an area in which plaintiffs enjoy high success rates. “70% of those cases that allege misleading statements or inaccuracies are found in favor of the plaintiffs,” Higham said. The majority of those cases are brought by consumers, Higham said, but a handful have come from investors. 

Another legal area that saw significant growth over the past year, Higham said, was so-called transition risk cases. These are cases where companies are accused of bungling the transition to net-zero:

  • Higham highlighted a case in which Polish energy company Enea sued some of its former directors for leading an investment in a new coal plant project that was ultimately abandoned because it couldn’t find financing, and was eventually replaced with a liquid gas project.
  • “Fundamentally what we’re looking at is these directors deciding to keep going with investments in a fossil coal project when it looked clear that actually the writing’s on the wall for that, and would have made more sense to shift to a less high-emitting version of the project,” Higham said.

Higham said she expects to see transition risk cases become more prevalent “as we see more stranded assets and more of these kinds of challenges.” With the International Energy Agency predicting peak oil, coal, and gas demand by 2030, investing in new fossil fuel projects could carry mounting legal risk.

Americans Love Suing their Government: The report also found that in the US, where the majority of climate change cases are lodged, there is a different approach than in the rest of the world. While 40% of non-US cases are filed against companies, within the US 85% are filed against the government. “That doesn’t mean there aren’t lots of corporate cases in the US — there are just even more cases against the government,” Higham said. She added that the US is home to the most “polluter pays” cases, many of which have not yet reached the courts. “If we were to see a success in one of those cases, we would definitely see many more plaintiffs getting involved,” she said. Send in the lawyers.