There is increasing scope for human rights to form the basis of ESG litigation, according to Jus Mundi senior legal officer Alexandre Vagenheim.
In October this year the United Nations Human Rights Council adopted a resolution recognising the human right to a clean, healthy and sustainable environment. This, said Vagenheim, could lead to legal ramifications for many companies.
“That was the first time we actually have such a high institution, a worldwide institution, recognising the right to sustainable environment as a human right. That’s something that will give basis for action in litigation or arbitration,” said Vagenheim.
Meanwhile, a case is underway at European Court of Human Rights where a group of children and young adults from Portugal are suing multiple states for damaging the climate following the wildfires and heatwaves the country has experienced in recent years. Part of the claim is that the polluting countries are breaching their right to exercise outdoors and live without anxiety.
Vagenheim commented: “It’s really showing there is room for climate justice through the lens of human rights protection, and that’s very, very new and a foreseeable trend for the future.”
Ready to rule
Jus Mundi provides free access to an online database of international legal rulings with the intention of building the global rule of law.
Tracking developments in international law, Vagenheim (pictured left) said he is seeing shifts in the mindsets of the individuals within the legal system. He noted cases in Europe in which judges are now more ready to use human rights law to hold governments accountable to the commitments they made in the Paris Agreement.
In France this year, the French state was found guilty of failing to meet its climate commitments, while in the Netherlands in 2019 a decision was upheld that the Dutch government must reduce carbon emissions in line with its human rights obligations.
“This is very interesting because it shows how judges are now ready to actually hold their own government accountable for their legal commitment made under the Paris agreement.
“This is the beginning of something and we’re seeing more and more cases following those examples,” said Vagenheim.
Shareholder risk
Asked if the pressure to comply with ESG poses a litigation risk to shareholders as well as states and companies, Vagenheim said they could also be affected.
He added that bilateral trade agreements increasingly include clauses on the promotion of ESG issues.
“This might have an impact in future litigation. It could be said, ‘Does this impose an obligation even on shareholders of companies?’ Because obviously the big investment cases [included in bilateral treaties] are also brought by shareholders of the investment.”
Vagenheim said, following COP26, there will be a proliferation of international and domestic climate change and sustainability policy and regulation coming through. He argued this will lead to a corresponding increase in the number of related disputes globally.
On a practical level, it becomes important for corporates to stay on top of such trends so they can budget appropriately. Vagenheim said financial questions they should consider include how big the risk is to a particular company and how much it would need to put aside in provision of an arbitration and litigation.
