I. Introduction
The last decade has witnessed a consolidating consensus in the international community about the need to treat climate change and its consequences as a human rights issue.Footnote 1 As underlined in 2015 by John H Knox, the former UN Special Rapporteur on human rights and the environment, human rights obligations relating to the environment duties of States to adopt legal and institutional frameworks that protect against environmental harm that interferes with the enjoyment of human rights, including harm caused by private actors’.Footnote 2 Preventing and redressing the human rights harm deriving from manmade climate change arguably also falls under both the ‘state duty to protect’ (Pillar I) and the ‘business responsibility to respect’ (Pillar II) articulated by the United Nations Guiding Principles on Business and Human Rights (UNGPs). Current policy and judicial developments show that a ‘climate due diligence’ is increasingly taking shape as a dimension of the human rights due diligence (HRDD) obligations of both states and corporations. The number of climate change-related lawsuits, while still relatively low and uncertain as to the outcomes, is growing, and is taking new and creative legal avenues. At the same time, in addition to HRDD legislation already adopted by some countries, the European Union (EU) is considering the adoption of legislation establishing human rights and environmental due diligence obligations for corporations. These developments provide unprecedented opportunities to clarify the specific obligations of public and private actors in relation to anthropogenic climate change and its human rights impacts.
This article begins in section II with an up-to-date picture of the current state of climate change-related litigation, with special focus on the European context. The analysed cases illustrate the emerging features of a ‘climate due diligence’ of corporations. It is argued that corporations should start integrating the climate change dimension into their processes and policies to be best prepared for likely regulatory and judicial developments. Section III makes the case for a ‘holistic’ approach to HRDD as defined in the UNGPs, arguing that the relevant standard of conduct must be interpreted in the light of mutually reinforcing principles of environmental law, climate law and human rights law. The concept of climate due diligence is explored both as a standard of conduct and as a business process. Section IV presents some concluding thoughts.
II. Climate Change Litigation and the Emergence of a ‘Climate Due Diligence’
This section reviews a series of climate change-related cases, filed either in the EUFootnote 3 or abroad, which can potentially add pieces to the developing definition of a corporate climate due diligence as a dimension of HRDD. The selected pool of cases was drawn from the Sabin Center’s databaseFootnote 4 and integrated with some relevant complaints filed with Organisation for Economic Co-operation and Development (OECD) National Contact Points (NCPs). This selection of cases includes most of those that have been filed by individuals, groups or non-governmental organizations (NGOs) against corporations, EU institutions and governments. Significantly, although older examples exist, it appears that the majority of relevant cases have been filed between 2013 and 2019, confirming the climate change litigation in the European region as a recent phenomenon. While the trend is growing,Footnote 5 the numbers in the European continent are still relatively low. At the time of writing, a total of 91 cases have been filed in 12 EU member states.Footnote 6 However, in line with the global trend,Footnote 7 a relative majority (47 per cent) of the court cases filed in EU member states were initiated by corporations against public bodies,Footnote 8 typically to challenge individual assignment of emissions allowances or the denial of a licence based on environmental considerations.Footnote 9 The importance of climate change litigation, both at the global level and in the European continent, therefore, does not lie in the absolute numbers, but has more to do with the possible outcomes of strategic litigation, including against corporations, and with an increasingly frequent resort to human rights arguments.Footnote 10
This section primarily deals with cases promoted against corporations with the aim of showing how judicial and non-judicial bodies, besides holding corporations accountable, may contribute to defining the standard of due diligence required of businesses in relation to climate change. In addition, it reviews some cases aimed at challenging the relevant policies of public bodies. While not directly concerning the accountability of private actors, these lawsuits contribute to identifying the main tenets of an emerging climate due diligence and may prompt new regulation of business activities contributing to greenhouse gas (GHG) emissions.Footnote 11
A. Strategic Litigation Against Corporations
1. Lawsuits Drawing the Link Between Climate Change and Human Rights Due Diligence
At present only a limited number of lawsuits directly targeting the climate change impacts of corporations, and an even narrower sample with an explicit human rights dimension, exist. As an example of the latter, in April 2019, Milieudefensie and other NGOs submitted a court summons against Royal Dutch Shell alleging the corporation’s violation of its duty of care anchored in Dutch law, human rights law and the Paris Agreement.Footnote 12 This approach proposes an integrated interpretation of corporate HRDD based on both human rights law and climate law standards.Footnote 13 The plaintiffs clearly aim at riding the long wave of the Urgenda judgment (see section II.B below) and extending its conclusions, mutatis mutandis, to private actors.Footnote 14 The allegations against Shell include its insufficient action to reduce GHG emissions and the active attempt to mislead the public about the sustainability of its operations.Footnote 15 The summons reference the main business and human rights instruments, including the UNGPs (publicly endorsed by Shell), to argue that climate change impacts must be accounted for in the HRDD processes of corporations, which also have a responsibility not ‘to undermine the ability of States to fulfil their own human rights obligations’.Footnote 16 The summons refer to the Dutch law social standard of care successfully invoked in Urgenda to argue that ‘Articles 2 and 8 of the ECHR also colour the duty of care we should be able to expect from Shell’, given ‘the extent of the control Shell – like the State – has over [the fate of] individuals on account of its substantial share in global emissions and the solutions to climate change.’Footnote 17 The plaintiffs maintain that Shell has a duty to adjust its policies and practices to the Paris Agreement targets with due regard to the precautionary principle.Footnote 18
In early 2020, an action against Total under the French Duty of Vigilance Law was filed in France by fourteen French cities and four NGOs.Footnote 19 This Law requires corporations to put in place and implement a ‘vigilance plan’ to address human rights and fundamental freedoms risks, severe physical or environmental harms or health risks.Footnote 20 For the first time, a lawsuit was filed under the Duty of Vigilance Law to target the ‘climate inaction’ of an oil corporation.Footnote 21 The plaintiffs, representatives of local communities and organizations, hold that identifying the risk of contributing to global warming and taking measures to reduce emissions is an integral part of the corporation’s ‘duty of vigilance’.Footnote 22 Total was targeted as one of the world’s bigger emitters, being responsible for 1 per cent of the world’s total GHG emissions and for two-thirds of France’s emissions.Footnote 23 The corporation is accused of failing to include concrete climate-related objectives in both its first and second vigilance plan. Instead of taking the required steps towards the 2°C goal established by the Paris Agreement,Footnote 24 the corporation allegedly increased its oil production and continues to invest in exploration for new oil deposits.Footnote 25 While the lawsuit is in its initial phase, it shows how the open-ended duty of vigilance contained in the French Duty of Vigilance Law potentially allows for an integrated interpretation of the corporate duty of care informed by a variety of international human rights, environmental and climate standards.
The climate change responsibilities of 47 ‘Carbon Majors’ – including some European corporations such as BP, Shell, Total, RWE, Repsol, LaFarge, Heidelberg Cement and EniFootnote 26 – were notoriously raised in a petition filed with the Philippines Commission on Human Rights by Greenpeace Southeast Asia and a number of organizations and individuals.Footnote 27 The petitioners asked the Commission to investigate the human rights impacts of climate change in the Philippines and the responsibility of ‘investor-owned Carbon Majors for human rights threats and/or violations in the Philippines, resulting from climate change and ocean acidification’.Footnote 28 The petition builds on studies that trace anthropogenic GHG emissions to specific corporations,Footnote 29 and largely relies on the UNGPs. Referring to HRDD, it argues that, by taking investment decisions incompatible with the 2°C goal, the corporations are ‘failing to prevent human rights impacts that are directly linked to their operations, products, or services’ by their business relationships.Footnote 30 A joint summary of amicus curiae briefs also stresses that corporations, under the UNGPs, are responsible for assessing and addressing the climate change impacts of their operations, which translates into a responsibility to reduce their GHG emissions, at a minimum, in line with the temperature goals of the Paris Agreement.Footnote 31 It also stresses how the carbon producers have long known of the adverse impacts of their operations but failed to act upon such knowledge, and even actively misrepresented the connection between fossil fuels and climate change.Footnote 32
In December 2019, at COP25, the Commission on Human Rights announced its findings (unpublished at the time of writing), stating that the carbon majors can be held liable for their contribution to climate change and that access to justice must be ensured for victims of the related human rights impacts.Footnote 33 The statement also specified that criminal liability might arise ‘where they have been clearly proved to have engaged in acts of obstruction and willful obfuscation’.Footnote 34 Although the Commission does not have strong coercive and enforcement powers, its final findings might shed a light on the link between climate due diligence and HRDD, and could be taken into account in the elaboration of new regulatory instruments, as well as in future litigation.Footnote 35
2. Emerging Features of the ‘Climate Due Diligence’ of Corporations: Risk Mitigation and Integration
None of the cases noted above has reached its final stage yet. However, the legal reasonings adopted by their proponents highlight some possible features of an emerging concept of ‘climate due diligence’. These tend to revolve around two main themes, namely, ‘risk mitigation’ on the one hand, and ‘integration’ on the other. While the former is concerned with the reduction of GHG emissions in corporations’ activities and projects, the latter requires corporations to integrate climate-related objectives in their policies and processes.
A rather clear indication that can be extrapolated from existing cases concerns the risk mitigation responsibilities of the so-called ‘big emitters’. As the corporations targeted in the examples discussed above are connected to major amounts of emissions, the proponents argue that a necessary step in their due diligence process is to commit to and carry out a significant reduction of the GHG emissions directly produced or ‘linked to’ the corporations’ operations by their investments. All these cases rely on climate science and the Paris Agreement as benchmarks against which the adequacy of a corporation’s action should be assessed. The argument that big emitters bear a specific responsibility for the adverse impacts caused by climate change also emerges from a 2015 German lawsuit that does not explicitly reference the concept of HRDD. The lawsuit, which targets the German utility RWE,Footnote 36 rests on a provision of the German Civil Code on nuisance abatement.Footnote 37 The promoter of the caseFootnote 38 is a Peruvian farmer whose town is facing the costs of protecting its population from the adverse effects of melting glaciers.Footnote 39 The exponential volume increase of a glacial lake located above the town is allegedly a product of climate change caused by global GHG emissions, to which RWE is the largest European contributor.Footnote 40 The lawsuit alleges that RWE has contributed nearly 0.5 per cent of global manmade emissions since the industrial revolution, therefore being liable to compensate the plaintiff, in the same portion, for the costs of protecting his town from floods or mudslides.Footnote 41 After the first instance court dismissed the claim, the appeals court allowed the case to proceed to the evidentiary phase.Footnote 42 The court will assess the threat to the defendant’s property due to the expanding volume of water of the Palcacocha lagoon, as well as the extent of RWE’s contribution to that risk.Footnote 43 One of the case’s legal counsels, Roda Verheyen, declared that one of the strategic goals of the lawsuit has already been achieved, namely establishing that ‘climate damages could give rise to corporate liability’.Footnote 44 The next challenges lie in proving that RWE’s emissions contributed to an imminent risk faced by the plaintiff and in establishing the relevant standard of proof.Footnote 45 The recent declaration of Vanuatu’s foreign minister shows that, in the future, similar allegations might be made against corporations by the governments of countries that are particularly prone to the adverse effects of anthropogenic climate change.Footnote 46
Big emitters are also the target of a lawsuit filed in San Francisco by a large US-based fishing association against oil and gas producers, including Europe-domiciled Shell, Eni, Total and BP.Footnote 47 The activities of these corporations are put in a causal relationship with the global warming-induced algae blooms that are forcing the closure of crab-fishing waters in the Pacific, damaging the industry.Footnote 48 The defendants are not only accused of negligence and nuisance, but also of having concealed the dangers for decades, working ‘to undermine public support for greenhouse gas regulation’.Footnote 49 Once again, albeit not framed in human rights terms, the lawsuit insists on the nexus between the contribution of big emitters to global warming and the resulting adverse impacts, as well as on their failure to honestly communicate to the public the climate-related risks of their activities.
Regarding the integration of the climate change dimension into business processes and policies, several of the cases discussed in section II.A.1 insist on the business responsibility to perform an adequate risk assessment and set concrete climate objectives, which are also key tenets of the HRDD concept articulated by the UNGPs. Those cases stress the responsibility of corporations to communicate externally their climate-related impacts and actions in an honest and accurate manner. Other clues to what integration means derive from at least two climate-related complaints that have been filed with the NCPs. It is worth recalling that the OECD Guidelines for Multinational Enterprises, besides a chapter on human rights reproducing the UNGPs’ concept of HRDD, contain a separate chapter on Environment (chapter VI).Footnote 50 Chapter VI requires corporations to perform an environmental due diligence process whose steps – risk assessment, establishment of measurable objectives, prevention based on the precautionary principle, mitigation actions, ongoing monitoring – closely recall the steps of HRDD. The OECD Guidelines specifically encourage corporations to disclose accurate information on GHG emissionsFootnote 51 and work towards their reduction.Footnote 52 Honest and accurate communication of climate change impacts constitutes the main focus of a pending complaint filed against BP before the UK’s NCP. ClientEarth’s complaint alleges that a BP advertising campaign gravely misrepresents the corporation’s efforts towards a transition to sustainable energy supply, while misleading consumers as to the seriousness of the climate change consequences that BP contributes to through its expanding fossil fuel business.Footnote 53 The complaint does not reference chapter IV on ‘Human Rights’, but it alleges a breach of the Guidelines’ chapters on Environment and Consumer Interests.Footnote 54 In doing so, it highlights elements of environmental due diligence that the corporation allegedly failed to observe, namely the duty to provide accurate and verifiable information to the public on its potential environmental impacts.Footnote 55
Another NCP complaint calls into question the responsibilities of investors for being linked to the adverse impacts of climate change by their investment relationships. It was filed before the Dutch NCP by three NGOs alleging that ING bank’s policies did not align with the climate and environment norms of the Guidelines.Footnote 56 The NGOs requested the disclosure of the bank’s GHG emissions and the establishment of concrete targets to progressively align ING’s indirect GHG emissions with the objectives of the Paris Agreement.Footnote 57 The NCP did not accept the bank’s justification that there are not, at present, reliable data or international standards to measure the carbon emissions of a bank’s lending portfolios.Footnote 58 It stressed the financial institution’s responsibility, even in the absence of internationally accepted methodologies, ‘to seek measurement and disclosure of environmental impact in areas where reporting standards are still evolving’, particularly in the case of GHG emissions.Footnote 59 Commercial banks are thus required, under the OECD Guidelines, to take steps to define targets for the purpose of aligning their impact, as much as possible, ‘with relevant national policies and international environmental commitments’, such as the Paris Agreement.Footnote 60
The cases (before both judicial and non-judicial bodies) presented in this section, albeit still embryonic, show some features of an emerging notion of climate due diligence requiring corporations to assess and address risk, as well as to integrate the climate change dimension into vigilance planning, corporate reporting, external communication and investment decisions. As the next section shows, these themes emerge as fundamental also in the currently available examples of litigation against public authorities.
B. Climate Change Litigation Against Public Authorities and its Relevance for Businesses
Climate change strategic litigation is finding a ‘a novel and unique anchorage’ in the Paris Agreement and in the related national commitments.Footnote 61 The Paris Agreement implies two clear obligations on the part of states: (i) to prepare, communicate and maintain ‘nationally determined contributions’ (NDCs); and (ii) to ensure that each successive NDC will represent a progression beyond the previous one, reflecting the state’s ‘highest possible ambition’.Footnote 62 The Agreement, therefore, staves off claims that an individual country’s impact on climate change is too marginal to give rise to specific responsibilities, while prohibiting any retrogression in the ambitiousness of national mitigation and adaptation targets.Footnote 63 Although not legally binding under international law, national commitments in the framework of the Paris Agreement can be resorted to in strategic litigation to define the state’s due diligence obligations with respect to climate change. This type of litigation, which in some cases leverages the state’s due diligence obligations under international human rights law, might have tangible consequences for businesses in that it has the potential to accelerate and inform policy developments such as the transition to a low-carbon economy or the regulation of certain types of business activities.
In the European context, the most notable example of this approach is currently represented by the lawsuit promoted by the Urgenda Foundation on behalf of 886 individuals against the government of the Netherlands.Footnote 64 The lawsuit concerned the alleged inadequacy of the measures adopted by the country to reduce GHG emissions, and the plaintiffs claimed that the Netherlands, both under domestic law and under international law, was required to work towards more ambitious targets. The plaintiffs argued that the Netherlands’ reduction objectives were below the standard deemed necessary by climate science to hold the increase in the global average temperature ‘to well below 2°C above pre-industrial levels’.Footnote 65 They requested that the government reduce GHG emissions in the Netherlands ‘to a level of 40%, or at least 25%, below the level of 1990 before 2020’.Footnote 66 This request was formulated based on current climate science, in particular on the work of the Intergovernmental Panel on Climate Change (IPCC).Footnote 67 Urgenda identified the legal bases for its claims in international climate instruments such as the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, in domestic legislation (including the Dutch Constitution), and in the European Convention on Human Rights (ECHR), arguing that the Netherlands’ insufficiently ambitious action on climate change constituted a violation of its human rights obligations.Footnote 68
After rejecting some of the plaintiffs’ arguments,Footnote 69 the District Court found international climate instruments and principles, such as the precautionary principle, to be particularly relevant in defining the required standard of conduct.Footnote 70 The court recognized the state’s duty to ensure that the joint volume of Dutch annual GHG emissions will be reduced by at least 25 per cent at the end of 2020 compared with 1990.Footnote 71 The Court of Appeals (CA) essentially confirmed these findings, and, contrary to the District Court, found that Urgenda could also directly invoke Articles 2 and 8 of the ECHR.Footnote 72 It derived the state’s duty of care from the positive obligation under the ECHR to take concrete actions to prevent a future violation of the relevant interests.Footnote 73 Thus, the Court of Appeals concluded that the state had done ‘too little to prevent a dangerous climate change’ and was doing too little to catch up.Footnote 74 On 20 December 2019, the Supreme Court at The Hague confirmed what can undoubtedly be termed as a landmark decision in the realm of climate change and human rights.Footnote 75
The Supreme Court judgment confirms that climate law and environmental law principles are to be read as integral elements of the due diligence obligations that states have under international human rights law. As discussed in section III below, a similar integrated approach is necessary to interpret the standard of conduct expected of businesses under the UNGPs. Importantly, the District Court found no merit to the Netherlands’ defence that the state could not be seen as ‘one of the causers of an imminent climate change’ because it did not itself emit GHG.Footnote 76 In fact, the state has ‘the power to control the collective Dutch emission level’ and is therefore required ‘to take on a high level of care’ to facilitate a transition to a sustainable society.Footnote 77 This obligation, which stands regardless of the relatively small contribution of a state to the global emissions volume,Footnote 78 also entails increasing the availability of nonfossil energy sources.Footnote 79 Here lies the key to the political ‘intractability’ of the climate change problem, as the measures required to make even the 2°C target (not to mention the 1.5°C aspirationFootnote 80 ) realistic require phasing out fossil fuels as the basis of the modern industry.Footnote 81 In spite of the high political sensitivity of the matter, the Urgenda lawsuit led the Netherlands to accelerate the closure of a Vattenfall coal-fired power plant,Footnote 82 to impose more stringent emission caps on the remaining four coal-fired power stations (due to close by 2030),Footnote 83 and to adopt a package of measures promoting a shift to cleaner energy.Footnote 84
Urgenda has not remained an isolated case in Europe. In Ireland, the Supreme Court decided in 2020 that the National Mitigation Plan adopted by the government fell short of the specificity required by the Climate Action and Low Carbon Development Act, although it did not confirm the existence of a constitutional right to a healthy environment.Footnote 85 A number of cases with an explicit human rights dimension are pending in BelgiumFootnote 86 and France.Footnote 87 In Germany, two lawsuits invoke the fundamental rights protected by the German Constitution to allege the German government’s insufficient action on GHG emissions and climate change.Footnote 88 A lawsuit promoted against the UK government by the NGO Plan B did not succeed in compelling the authorities to raise the emission reduction targets, but it did spur a recommendation by the Climate Change Committee to review the 2050 target in light of the Paris Agreement.Footnote 89 At the EU level, the 2018 ‘People’s Climate Case’ alleged the inadequacy of the EU climate targets referencing several EU and international instruments, including the EU Charter of Fundamental Rights, the UNFCCC and the Paris Agreement.Footnote 90 The European General Court dismissed the claim based on the plaintiffs’ lack of standing.Footnote 91 In March 2019, another lawsuit was filed at the EU Court of Justice by the US and EU plaintiffs who challenge the EU’s characterization of wood burning as a renewable energy source through the 2018 EU Renewable Energy Directive.Footnote 92 The plaintiffs allege that the Directive will prompt the burning of forests with devastating effects for the environment, violating the plaintiffs’ rights under the EU Charter of Fundamental Rights.Footnote 93 If successful, the lawsuit might have an impact on corporations operating in the industry, including foreign corporations willing to export wood pellets to Europe.Footnote 94
A series of lawsuits targeted the climate change responsibilities of state-owned enterprises. In Sweden, PUSH and other NGOs attempted to leverage human rights and other international standards to impact the operations of state-owned Vattenfall. The lawsuit, which mentioned the Urgenda judgment and the RWE case,Footnote 95 claimed that the sale by Vattenfall of coal-fired power plants and mining assets located in Germany to a foreign corporation posed an immediate risk of increase in GHG emissions.Footnote 96 The plaintiffs, referencing the UN Global Compact and the OECD Guidelines, claimed that the German corporation did not meet the criteria of a responsible buyer, lacking clear environmental policies and probably aiming at expanding the mining and burning of lignite.Footnote 97 PUSH argued it was irrelevant that the increased emissions would be produced in a country other than Sweden, given the global dimension of the climate change phenomenon.Footnote 98 The case was dismissed by the court, which found that the plaintiffs had failed to demonstrate that they had suffered an injury from the governmental decisions.Footnote 99
In 2007, the European Social Committee found Greece in violation of several provisions of the European Social Charter for failing to comply with its obligation to protect public health against air pollution by authorizing the Public Power Corporation to operate lignite coal mines and coal-fired power plants without adequate impact assessment and mitigation measures.Footnote 100 The UNFCCC, the Kyoto Protocol and the Aarhus Convention were referenced among the relevant legal bases.Footnote 101 Another interesting example, although not including an explicit reference to human rights, lies in the formal objection filed by the government of Micronesia under the Czech Republic’s environmental impact assessment law to ask for a Transboundary Environmental Impact Assessment (TEIA).Footnote 102 For the first time a TEIA was requested in relation to the climate change effects of a project, namely the proposed expansion of the Prunéřov II coal-fired power plant.Footnote 103 The government recognized Micronesia as an affected state and requested the state-owned corporation CEZ to put in place a compensation plan with the aim to offset five million tons of CO2.Footnote 104
There are other examples in Europe of litigation targeting specific business projects on the basis of their impact on climate change. These include the challenges to airports expansion filed in the UK,Footnote 105 AustriaFootnote 106 and Ireland,Footnote 107 where plaintiffs considered the construction of new airport runways as contrary to the mitigation targets binding the respective governments under international climate law. The UK and Ireland lawsuits explicitly referenced international human rights law, besides climate and environmental standards. While unsuccessful, the UK lawsuit contributed to pressure the government into reconsidering the viability of the Heathrow airport expansion, which it committed to do, also in light of the Parliament’s recognition of a climate and ecological emergency.Footnote 108 The Irish lawsuit did not succeed either, although it led an Irish court to recognize that the Irish Constitution implicitly enshrines a right to a healthy environment that constitutes ‘an essential condition for the fulfilment of all human rights’.Footnote 109
Important indications concerning the climate change dimension of states’ responsibility under international human rights law are likely to come, in the near future, from the UN human rights treaty bodies.Footnote 110 Currently, the Human Rights Committee is dealing with the first individual petition explicitly addressing the state’s duty to address climate change and its adverse human rights impacts,Footnote 111 and the Committee on the Rights of the Child will soon examine a communication against several states that frames climate change as a ‘children’s rights crisis’.Footnote 112 The European Court of Human Rights has often sanctioned states for failing to act upon available scientific knowledge to prevent or stop harm deriving from industrial pollution and accidents.Footnote 113 While a climate change action popularis could not be heard by the Court, the due diligence standards its jurisprudence has elaborated could apply to cases of climate-impacting industrial plants, provided an interference with the applicants’ private sphere can be demonstrated.Footnote 114 Currently, the Youth for Climate Justice case is pending before it, filed by six Portuguese youth against 33 countries accused of failing to take sufficient action on climate change.Footnote 115
Although existing case law on the climate-related responsibilities of public authorities is at a relatively early stage and still underdeveloped, it allows us to draw some initial conclusions regarding the emerging concept of climate due diligence. In particular, this case law seems to confirm the central importance of the two main themes identified in section II.A, namely, risk mitigation and integration. Public authorities, which, in the words of the Urgenda court, have the power to control the collective emission level, are increasingly called upon to integrate adequate climate targets into their own policies, and, at the same time, not to allow corporate activities and projects to frustrate the objectives of the Paris Agreement. The transition towards a more sustainable society could then imply stricter regulation of corporate emissions and of projects that would raise their level. Some of the cases referenced also insist on adequate impact assessments taking climate into account. Thus, existing examples of litigation, both against corporations and public authorities, confirm the importance for corporations to integrate the climate change dimension into their processes and policies, as well as to work towards a mitigation of their climate impacts. While it is not possible to predict how the case law will evolve, with many relevant cases still pending and new ones being filed,Footnote 116 it is becoming clear how corporations failing to take action in the two key areas of integration and risk mitigation are increasingly at risk of incurring complex litigation and reputational loss.Footnote 117 In addition, given the changing regulatory and financial landscape, further pressure is likely to come from a corporation’s own shareholders.Footnote 118
Some questions remain as to the features and scope of climate due diligence as a component of HRDD, given that a fully-fledged definition cannot be extrapolated from existing jurisprudence, yet. Such a definition can be better articulated by reference to the normative categories of the UNGPs. It should look beyond the responsibilities of big emitters, which are often the target of strategic litigation, and conceptualize the climate-related responsibility of corporations of all sizes and sectors. This question is addressed below in section III.
III. A Holistic Approach to Human Rights Due Diligence
Climate change is a direct and serious threat to the enjoyment of human rights,Footnote 119 and as such, a relevant dimension of both the state duty to protect and of the corporate responsibility to respect human rights.Footnote 120 The Office of the High Commissioner for Human Rights (OHCHR) was clear in affirming that businesses ‘must be accountable for their climate impacts and participate responsibly in climate change mitigation and adaptation efforts with full respect for human rights’.Footnote 121 Climate change-related human rights impacts are, therefore, a necessary dimension of the HRDD processes that businesses are required to put in place in order to fulfil their responsibility to respect.Footnote 122
HRDD is an open-ended standard, and as such it carries an inherent degree of flexibility. Precisely because climate, environmental and human rights challenges are fundamentally interrelated, a holistic approachFootnote 123 to HRDD is needed, one in which the standard of conduct is interpreted in the light of environmental law, climate law, as well as international human rights law. This approach, as illustrated in section II.B, has been successfully adopted in the Urgenda case against the state of the Netherlands, and should arguably be applied, mutatis mutandis, to corporate HRDD. As Olawuyi notes, Article 31 of the Vienna Convention on the Law of the Treaties requires states to consider all relevant rules of international law applicable between the parties when interpreting specific treaty obligations, a principle that ‘underpins the significance of reading international law instruments in mutually supportive ways’.Footnote 124 Similarly, the fact that the UNGPs do not expressly refer to environmental rights or international environmental law as part of the minimum business responsibility does not bar a holistic interpretation of the due diligence standard.Footnote 125 Indeed, environmental law and human rights law principles are not only compatible, but, in many respects, mutually reinforcing. Both under environmental law and human rights law, due diligence requires ensuring information and participation rights, fundamental conditions of the legitimacy of state action and of the corporate ‘social licence’ to operate.Footnote 126 Key tenets of environmental law such as the precautionary approach and the prevention principle largely align with the UNGPs, as they require preventing irremediable harms and prioritizing interventions based on the severity of risks.Footnote 127 The Oslo Principles on Global Obligations to Reduce Climate Change state that there is ‘clear and convincing evidence’ that anthropogenic GHG emissions are altering the climate in a way that poses ‘grave risks of irreversible harm to humanity’.Footnote 128 Accordingly, the precautionary approach requires GHG emissions to be reduced at a pace and level ‘based on any credible and realistic worst-case scenario accepted by a substantial number of eminent climate change experts’.Footnote 129 The Principles also remark that no country or enterprise is relieved of its responsibility, however small its contributions to total GHG emissions.Footnote 130 In the same way, the UNGPs’ HRDD standard applies to all business enterprises, regardless of their size, sector, location, ownership and structure.Footnote 131
Keeping climate due diligence and HRDD in separate silos could lead to ineffective or inconsistent actions, yet, as noted by Olawuyi in relation to carbon investments, corporations that adopt internal carbon footprint and GHG policies often fail to pay equal attention to human rights risk management policies.Footnote 132 A 2019 report by the Alliance for Corporate Transparency analysing disclosure of 1,000 corporations pursuant to the EU Non-Financial Reporting Directive found that ‘the vast majority of corporations fail to have specific risk mitigation strategies’.Footnote 133 Less than 32 per cent report on such a strategy, while only 23 per cent address specific climate risks.Footnote 134 Moreover, the progress made since 2011 should not overshadow the fact that HRDD is not fully implemented or comprehended by businesses yet. A 2019 CHRB assessment of the human rights performance of 200 of the world’s largest publicly traded corporations identified HRDD as a key weak performance area, with nearly half of the surveyed corporations scoring no points across the relevant indicators.Footnote 135 In part, these shortcomings are compounded in Europe by the increasingly fragmented regulatory landscape, which might be a source of legal uncertainty,Footnote 136 and is leading some businesses to support the option of a EU-wide HRDD framework introducing uniform standards.Footnote 137 The contribution of this section is twofold. First, building on the UNGPs’ normative framework, it argues that climate due diligence as a standard of conduct binds all businesses as an inherent dimension of the HRDD standard. Second, based on the UNGPs’ articulation of HRDD as a corporation processFootnote 138 and in light of emerging climate change litigation, it explores the main components of a fully-fledged process of climate due diligence.
A. Climate Due Diligence as an Inherent Dimension of Human Rights Due Diligence
To pinpoint specific responsibilities in the case of climate change is particularly complex, in that the phenomenon as such is brought about by the cumulative effects of acts (and omissions) carried out by a large number of public and private subjects over the span of decades. A case for ‘cumulative contribution’ can be made, as ‘multiple firms each contribute a relatively minor amount to the creation of a substantial impact’.Footnote 139 The UNGPs’ notion of contribution entails an element of causality,Footnote 140 which, in the case of climate change, is typically a double causality, as pointed out by Birchall: ‘is climate change causing human rights impacts, and are businesses contributing to climate change?’.Footnote 141 These questions are particularly tricky when the goal is to attribute liability, as the plaintiffs might need to show both that climate change is the cause of a specific impact (e.g., the melting of a glacier endangering a community) and that the defendant has contributed to climate change in a certain measure. While fraught with obstacles, this path is being explored by lawyers, as shown by the Lluya v RWE lawsuit mentioned earlier and by some non-EU cases.Footnote 142
However, in the UNGPs, ‘contribution’ broadly indicates ‘an action or omission that assists or helps bring about the underlying violation, or increases the likelihood of the event’,Footnote 143 and does not correspond to a ‘but for’ standard. In addressing the applicability of the UNGPs to the banking sector, the OHCHR makes it clear that even minority shareholding in a project that harms human rights can constitute contribution, when the investor does not take adequate steps to mitigate the impact.Footnote 144 The size of the investment, or, in the case of climate change, the amount of a corporation’s GHG emissions, is only one of the factors that need to be considered on a case-by-case basis in assessing whether a corporation has discharged its responsibility to respect. The severity of the impact – defined as the impact’s scale and irremediable character – needs to be given primary consideration.Footnote 145 Other essential factors include the predictability of the harmFootnote 146 and ‘the quality of any mitigating steps’ taken by the corporation to address it.Footnote 147 A corporation contributing in a small percentage to global GHG emissions might be seen as just ‘linked to’ the adverse impacts caused by climate change, and not necessarily ‘contributing’ to them. However, in light of the severity of climate change and of the widely available knowledge about its likely and actual consequences,Footnote 148 many of which are large scale and irremediable, a corporation that fails over time ‘to take reasonable steps to seek to prevent or mitigate the impact […] could eventually be seen to be facilitating the continuance of the situation’, thus eventually finding itself in a position of ‘contribution’.Footnote 149 As recognized by the OHCHRFootnote 150 and Ruggie,Footnote 151 direct ‘linkage’ and ‘contribution’ to human rights impacts are placed on a continuum, and a corporation can shift from the former to the latter if it fails to exercise HRDD. Thus, regardless of any current and future developments on the litigation front, the UNGPs do not allow corporations to disregard their climate due diligence based on the relatively small size of their emissions. A teleological reading of the UNGPs reinforces this finding, as it would be incoherent, within a framework premised on the need to close the persisting gaps in the interlinked responsibilities of states and corporations, to allow for a ‘responsibility void’Footnote 152 in relation to large-scale human rights impacts brought about by the cumulative negligence of multiple actors.Footnote 153
1. Climate Due Diligence as a Business Process
According to the UNGPs, all business enterprises must have in place a process of HRDD whose complexity will vary depending on an enterprise’s specific features and risk profiles.Footnote 154 This section shows that the process of climate due diligence, as a component of HRDD, should have a similar structure and be integrated as much as possible into the former.Footnote 155 The specific steps required by each corporation and investor will be heavily influenced by the size, sector, nature and context of its operations.Footnote 156 What has been referred to in section II as risk mitigation, for instance, might mean very different things for different corporations, depending on their risk profiles. Studies are starting to quantify the individual contributions of corporations to GHG emissions, showing that, in some cases, such individual shares are far from negligible.Footnote 157 The energy sector, for instance, is by far the main producer of GHG emissions, being responsible for 73 per cent of emissions worldwide.Footnote 158 Corporations belonging to high-risk sectors arguably have an enhanced due diligence responsibilityFootnote 159 to stop contributing to the human rights impacts – and, ultimately, to the existential threat – caused by anthropogenic climate change. In the case of some energy corporations, this responsibility might directly call into question their core business, especially as low-carbon options become more available.Footnote 160 Importantly, in the same way as, under the UNGPs, a corporation’s failure to address its human rights impacts cannot be offset by the corporation’s voluntary corporate social responsibility initiatives,Footnote 161 it is doubtful that purchasing a carbon offset would extinguish the corporation’s responsibility to stop its contribution to global warming.Footnote 162
Besides big emitters, all businesses, regardless of their size and sector, should have in place policies and processes capable of capturing and addressing their actual and potential climate-related impacts. Risk assessmentFootnote 163 constitutes, indeed, a necessary step to identify not only the level of a corporation’s GHG emissions, but also the climate change-related vulnerabilities of workers,Footnote 164 individuals and communities, for instance when deploying projects that could put a burden on local natural resources.Footnote 165 Failing to consider environmental and human rights impacts as interlinked might lead to ineffective or counterproductive actions and, ultimately, higher costs.Footnote 166 For this reason, while this step could be carried out through consolidated processes of impact assessment, Human Rights Impact Assessments (HRIAs) and Environmental and Social Impact Assessments (ESIAs) should be duly integrated and account for both actual and potential risks.Footnote 167 Importantly, the impacts to be considered are all those that the corporation might cause or contribute to, but also those directly linked to the corporation by its business relationship, as in the case of an investor holding shares in projects that produce high levels of emissions.Footnote 168 As shown by the complaint filed with the Dutch NCP against ING, it is a responsibility of the relevant corporation to find ways to measure its own impacts,Footnote 169 a task that is being facilitated by advancements in climate science and improved availability of climate data.Footnote 170 The corporation then needs to take steps to address the identified risks, performing actions of risk mitigation that are not necessarily concerned (only) with the mitigation of a corporation’s own emissions. When other due diligence steps prove to be impracticable or ineffective, a corporation might be required to take more radical steps, such as divesting from a project or severing a business relationship.Footnote 171 An interesting example, in this respect, is the 2020 decision of the Norwegian Government Pension Fund Global to divest from four corporations, for the first time, based on an ‘unacceptable level of greenhouse gas emissions’.Footnote 172 Crucial in the decision was the fact that the corporations had no specific plans to reduce emissions to at least the global average ‘within a reasonable period of time’.Footnote 173 The fact that the Canadian businesses concerned are subjected to a regulatory regime less stringent than the EU Emissions Trading System was not considered as a defence for their failure to exercise climate due diligence.Footnote 174
As climate litigation shows, corporations might be required to set concrete climate targets, especially when the risk assessment highlights the need for risk mitigation carried out through significant reduction of emissions. Climate targets should be integrated into the policy commitment that the UNGPs require to adopt at the senior management level, alongside human rights targets.Footnote 175 The UNGPs also require monitoring the results of steps takenFootnote 176 as well as communicating them to the public.Footnote 177 Disclosure, according to the International Bar Association (IBA) Task Force, should cover the risks associated to ‘all major subsidiaries and affiliates’ and, if practicable, to the corporation’s supply chain.Footnote 178 The examples of litigation above show how corporations who fail on climate change transparency increasingly risk being the targets of criticism and lawsuits. Moreover, a growing number of stock exchanges require mandatory environmental, social and governance (ESG) reporting, including disclosure on climate-related risks.Footnote 179 Finally, the UNGPs mandate that ‘where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation’.Footnote 180 This specific requirement arises when a direct contribution takes place, which, as discussed earlier, can be challenging but not impossible to establish, especially in the case of big emitters.Footnote 181
B. Climate Due Diligence and the Upcoming EU-wide Legislation on Human Rights and Environmental Due Diligence
Elements of environmental due diligence are embedded in some existing EU policies addressing the link between business activities and climate change. The EU has committed to support the ‘alignment of private investments with climate, resource-efficiency and other environmental objectives’.Footnote 182 In Spring 2019, a political agreement was reached by the European Parliament and EU member states on new rules mandating disclosure requirements on ESG issues for a number of large corporations.Footnote 183 The proposed regulation was saluted by the UN Environment Programme (UNEP) as the opportunity to clarify how ESG issues, including climate targets, are integrated in the fiduciary duties of investors.Footnote 184 The initiative is part of a package that follows up the EU Action Plan on Financing Sustainable Growth.Footnote 185 Other relevant instruments have been enacted in recent years by the EU, most notably the 2014 Non-Financial Reporting Directive on disclosure of non-financial and diversity information by large corporations.Footnote 186
More specific obligations might be about to arise from the commitment, confirmed by the European Commissioner for Justice, to introduce mandatory corporate human rights and environmental due diligence legislation at the EU level.Footnote 187 The European Parliament recommended in 2018 ‘an overarching, mandatory due diligence framework including a duty of care’ to be based ‘on the French Corporate Duty of Vigilance Law for corporations and investors, including banks’.Footnote 188 The Commissioner’s statement seems to indicate an ambitious approach on the part of the Commission, aiming at passing new legislation inspired by the French Duty of Vigilance Law, which is the first piece of legislation establishing certain big corporations’ duty to prevent human rights harm and environmental damage in its operations and commercial relationships.Footnote 189 The upcoming legislation ‘is set to identify, prevent, mitigate and account for human rights abuses and environmental damage linked to corporate operations, subsidiaries or value chains’.Footnote 190 Two aspects are especially notable in this commitment. First, like the French law, the new instrument might ‘offer access to remedy for victims and strong enforcement mechanisms’.Footnote 191 Although the EU, at the time of writing, is still examining the question of its own competence to regulate civil liability, the new instrument could address not only Pillar II of the UNGPs, but also Pillar III, the victims’ access to remedy, which has sometimes been described as the ‘forgotten pillar’.Footnote 192 Second, it is anticipated that the Commission will frame the new rules as part of its Green New Deal, directly linking it to the objective to achieve carbon neutrality.Footnote 193 This reinforces the expectation that the concept of human rights and environmental due diligence underlying the instrument will include, more or less explicitly, a climate change dimension. In its 2020 proposal for a Directive, the European Parliament defined due diligence as the process to identify and address several types of risks, among which are risks to the environment, ‘including through climate change’.Footnote 194
Many crucial questions remain concerning the announced new legislation, starting from the foundational issue of its legal basis in EU law. The intention of the Commission seems to put in place a mandatory HRDD framework imposing a duty of care on corporations that goes beyond the transparency and reporting requirements established by existing sectoral legislation. This is in line with the recommendations expressed by the European Parliament on multiple occasionsFootnote 195 and with the EU Fundamental Rights Agency’s Legal Opinion on improving access to remedy in the area of business and human rights.Footnote 196 In presenting its Agenda for Action, the Finnish Presidency of the EU explicitly linked the need for EU-wide mandatory HRDD rules to the ‘fragmented landscape of (existing and envisaged) regulatory measures governing responsible management of supply chains and due diligence’,Footnote 197 a fragmentation that is undermining legal certainty for businesses on the applicable human rights and environmental due diligence requirements.Footnote 198 Thus, it seems likely that the new legislation will have its legal basis in EU norms allowing the EU ‘to approximate legislation with the object of ensuring the proper functioning of the internal market’, namely rules regulating the functioning of the internal market (Article 114 TFEU) and freedom of establishment (Article 50 TFEU).Footnote 199 Other crucial aspects remain to be clarified, including the scope of the new instrument (e.g., which corporations it will apply to), and the characteristics of the enforcement mechanism(s) envisaged. Moreover, although the French law is a promising model for the new EU-wide framework, it also presents some flaws that must be critically addressed by the EU legislator, namely, the lack of clear guidance for businesses on the elaboration of a ‘vigilance plan’,Footnote 200 and the difficult burden on victims to show the causal link between the absence (or inadequacy) of the plan and the harm suffered.Footnote 201
While addressing these challenges, the EU has the unique opportunity to promote a shared understanding of the human rights and environmental law principles that underpin due diligence, including in relation to climate change, going beyond the element of disclosure and requiring full integration of climate due diligence across business policies and processes.Footnote 202 While HRDD remains an open-ended standard, its main elements should be clarified in law and possibly further explained in separate guidance documents. It should be made explicit that climate due diligence constitutes an inherent dimension of the standard of conduct required under the new legislation, and that its constitutive components reflect the structure of HRDD articulated in the UNGPs. Accompanying guidance documents could draw from a rich pool of sources to elaborate a shared definition of climate due diligence and clarify its link to HRDD. Such sources include not only the UNGPs, the OECD Guidelines, and the work of experts such as the IBA Task Force, but also the growing examples of case law in this field.
V. Conclusions
This article contributes to existing literature in the field of business and human rights, some of which has addressed the climate change dimension,Footnote 203 by proposing a conceptualization of the consolidating concept of climate due diligence based on emerging climate change litigation, as well as on a holistic interpretation of the HRDD notion enunciated in the UNGPs. It clarifies that climate due diligence is a necessary dimension of HRDD as a standard of conduct, as well as a component of HRDD as a business process. It argues that nothing prevents a holistic interpretation of HRDD under the UNGPs based on all relevant norms of international law, and that such a holistic approach, combining mutually reinforcing principles of international human rights law, environmental law and climate law, actually constitutes the most coherent in the light of the stated aims of the UNGPs’ normative framework. The proposed approach has the power to contribute to the consolidation of a coherent system of different but interrelated obligations for public and private actors in which crucial governance gaps can be bridged, particularly in relation to the scope and attribution of climate change-related responsibilities and to remedies for affected individuals and populations.
Most examples of climate change-related lawsuits initiated against corporations and states, some of which are successful, highlight that corporations are increasingly expected to take action in the two main areas: risk mitigation, which for some corporations might entail a significant reduction of emissions, and integration, which requires incorporating climate impacts across HRDD processes. Given the growing number of lawsuits, regulatory developments such as the upcoming EU-wide rules on human rights and environmental due diligence, as well as the increased attention of investors towards climate-related risks, corporations failing to take adequate action are exposed to legal, reputational and financial consequences.
This article builds on the UNGPs’ articulation of HRDD as a business process to enucleate the main features of climate due diligence, arguing that all corporations, regardless of the size and sector, are required to assess their ‘climate risk’ as part of their human rights and environmental risk assessment. In doing so, they are required to take into account not only the level of their emissions, but also the climate impacts linked to them by their business relationships (e.g., corporations in their investment portfolio or supply chains). An integrated approach to risk assessment should consider not only the level of GHG emissions of a corporation and its affiliates, but also, more at large, the climate-related vulnerabilities of territories and communities, especially when the corporation’s operations impact on local natural resources. The outcome of risk assessment will determine the type and complexity of the climate due diligence process, and has to be communicated externally. Big emitters accused of failing to honestly communicate their climate impacts are currently facing litigation in several jurisdictions. Climate due diligence might entail exercising leverage over the corporation’s business affiliates and, in extreme cases, pulling out from projects and investments whose climate-related impacts cannot be mitigated. Corporations can be best prepared for any upcoming legal and judicial developments by working on risk management and integration making full use of available guidance.
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