Environmental litigations are on the rise and drive the fight against climate crisis

A ruling of the Court of Justice of the European Union will fundamentally change the rules for protecting international energy investment in the EU. Member states will thus be in a much better position in terms of shutting down old energy sources. Environmentally friendly policies are an important issue in the EU, which is also manifested by a fine of EUR 875 million imposed on a car manufacturers’ cartel that did not comply with the agreement on the use of eco-friendly technologies to reduce emissions from combustion engines. The global number of climate litigations is in general rising significantly and becoming a key instrument in pushing states and private companies to take climate change seriously.

Take a look at other topics that we address in our EnviLaw newsletter #7:

If you do not want to miss any important news, subscribe to the EnviLaw newsletter!

Litigations between EU countries and energy investors from other member states 

In September, the Court of Justice of the European Union ruled that the international Energy Charter Treaty was contrary to the EU law. What may at first glance seem like a mere legal framework, however, entails far-reaching implications for the energy sector. The Charter allows foreign energy investors to sue governments in cases where the government’s decision has affected their investment. According to the Court, litigations between a member state and an investor from another member state regarding an investment made by the respective investor in the former member state cannot be settled under arbitration under the Charter. At a time of great pressure on a rapid energy transformation and the shift away from fossil fuels, this is crucial news. It puts member states in a much better position to take bold decisions with reduced financial risks.

Environmental protection and protection of competition go hand in hand 

Environmental protection and the Green Deal do not exist “in a vacuum”, but they affect all aspects of society. And since a green transformation will also mean a fundamental economic transformation, sustainable goals will bring major impacts in the area of ​​competition protection. Therefore, the Commission informs that competition rules will need to be put in line with the Green Deal’s goals. Public support will therefore shift from fossil fuels and a new feature should be the introduction of a calculation of the costs of environmental support –  the amount of support per tonne of CO2  emissions saved. The greening of the economy also has significant effects in the antitrust field, as competition and innovation are a basic requirement for development. At the same time, however, with such major economic changes, cross-market cooperation is needed, which is why the Commission clarifies some of the rules for horizontal and vertical cooperation in the light of sustainability.

And the Commission proves in practice that this is an important area. A car manufacturers’ cartel was fined EUR 875 million for failing to use more eco-friendly technologies to reduce emissions from combustion engines than required by regulation, even though the technologies were available. These manufacturers were thus not only able to protect the environment more, but also reduced competition due to their approach. Greening also forms a part of the competition. The cooperation of competitors must therefore be observed very carefully and the result must bring clear benefits to consumers.

Climate litigations are on the rise

According to a new study on Global Trends in Climate Litigation, the number of cases related to climate change has more than doubled since 2015. The number of “strategic” cases aimed at bringing about wider social change is also on the rise. The cases most often concern insufficient action taken by states in mitigating climate change and the effects of climate change on human rights. There are also more and more lawsuits against private companies, in which plaintiffs demand corporate liability and compensations, e.g. in cases of greenwashing or insufficient transparency. However, there has also been an upward trend in lawsuits with focus on financial risks, fiduciary liability and insufficient due diligence, which are directed at the financial sector. A smaller portion of lawsuits targets governments for insufficient adaptation to climate change. A significant increase in similar cases is expected in the future, with an increased diversity. New cases will also emerge (e.g. concerning companies that have committed to certain objectives but do not comply with them).

Environmental crimes: a lucrative and secure source of income for offenders

By their nature, environmental crimes represent low risk and high profit. A new study of the Financial Action Task Force (FATF) shows that although profits from environmental crimes are similar to those from  other financial crimes, sanctions for money laundering in environmental cases lag behind. Environmental crimes generate about USD 110-281 billion a year. Three areas have the largest share in this: forestry crime, illegal mining and waste trafficking. However, AML issues are often not part of discussions about environmental protection. Therefore, governments often draw the short straw and view this issue from a protectionist perspective rather than from the point of view of serious financial crime.

The climate crisis is a crisis of children’s rights

A new UNICEF study introduces a new Children’s Climate Risk Index. It provides a comprehensive view of how children are exposed to climate risks, particularly in terms of water availability, health, education or protection, and how vulnerable they are to these risks. Children are naturally more sensitive to climate and environmental shocks for many reasons. The index shows that approximately 1 billion children (i.e. about half of all children) live in countries with an extremely high risk of climate change impacts. The index also shows that more than 99% of all children are exposed to at least one major environmental risk. The only long-term solution is to reduce emissions and reduce the effects of climate change. At the same time, however, it is essential to increase investments in climate change adaptation in key services for children (access to water, sanitation, healthcare and education). Children have to be educated on environmental issues in order to cope with the effects of climate change in the future.

EnviLaw newsletter

Upcoming events

Seminars, webcasts, business breakfasts and other events organized by Deloitte.

    Show morearrow-right