Climate litigation surge: Businesses must address risks and reputational challenges

  • 15 Dec 2023
  • 2 Mins Read
  • 〜 by Brian Otieno

Given the global surge in lawsuits addressing climate-related concerns, ranging from inadequate state carbon reduction targets and strategies to corporate inaction and misinformation, and other claims for climate-related damages, corporations must remain vigilant and attentive to this next frontier of reputational risk. Records from a database run by Columbia University’s Sabin Centre for Climate Change Law indicate that globally, more than 2,500 climate-related lawsuits have been lodged since 2015. This number is bound to soar even higher with the climate change phenomenon gaining increased traction and acceptance globally.  

Courts are increasingly becoming the battleground for climate-related disputes. In one of the sessions during COP28, Climate Change and Courts: Judicial Perspectives on Climate Litigation, bringing together Chief Justices, Supreme Court Justices, and experts, it was writ large that courts are now adapting their expertise towards hearing and determining climate change-related disputes.

The session designed to explore approaches and solutions to climate change-related disputes arising before domestic courts across the globe, noted that climate change is now an issue of global concern, requiring the attention and action of institutions and stakeholders at every level worldwide. The high-level meeting reiterated that national and international courts are key stakeholders in action towards tackling climate change as they are often tasked with deciding disputes with complex, temporal and spatial environmental ramifications.

Whilst such lawsuits, on the one hand, are helping rewrite the public narrative on climate change and, in some cases, are resulting in a real shift in government and corporate policy – whether they win or lose, companies cited for corporate inaction and possibly misinformation during sustainability reporting, on the other hand, are bound to face the probable damage to their reputation and brand.

Stakeholders are increasingly taking great cognisance of environmental threats since they are now the more dominant global risk, especially in terms of likelihood and the appreciation that it is the second most dominant in terms of impact (behind weapons of mass destruction). As a result of the devastating effects that are not only well known but also hard to ignore, pressure is mounting on governments and businesses to take responsibility towards tackling climate change.

For businesses, inaction does not only pose environmental safety risks but also comes with a unique outlay of reputational and financial threats. Important to note that these risks are cross-cutting and will potentially affect any business with a public profile, as entities will be held accountable for how their operations impact the environment.

With this looming frontier, businesses can shield themselves by being strategic in their approach towards climate change. To do so, entities can:

  1. Take deliberate steps and demonstrate commitment towards sustainability,
  2. Periodically assess their operations and devise ways of reducing liability and limiting risk, and;
  3. Communicate in a transparent and accountable manner to forestall cases of greenwashing.