A Sustainable Future: Amy Rose, ClientEarth, on How the Courts are Reshaping Climate Action

 

How are the courts reshaping client action? Listen to Jason Mitchell discuss with Amy Rose, Global Director of Litigation, Governance and Legal Services for ClientEarth, about what strategic impact litigation represents; how constitutional and human rights theories are providing a framework for climate legal action; and why the courts, not policymakers, may well end up reshaping definitions of ESG and greenwashing.

Recording date: 20 March 2023

Amy Rose

Amy Rose is Global Director of Litigation, Governance and Legal Services for ClientEarth. She specialises in strategic impact litigation and oversees the strategy and management of ClientEarth's diverse and growing litigation portfolio. Amy headed the ClientEarth Strategic Litigation Programme which laid the groundwork for bringing litigation at scale across Europe. She focuses on supporting our legal teams to bring a wide range of climate and environmental cases across Europe and around the world. Amy also manages ClientEarth's organisational Monitoring, Evaluation and Learning framework, and sits on the Risk and Compliance Committee, ensuring compliance with ethical and practice of the law obligations of ClientEarth lawyers licensed in over 15 countries.

 

Episode Transcript

Note: This transcription was generated using a combination of speech recognition software and human transcribers and may contain errors. As a part of this process, this transcript has also been edited for clarity.

Jason Mitchell:

Welcome to the podcast, It's great to have you here today and thank you for taking the time.

Amy Rose:

Thank you so much for having me. It's wonderful to be here. And thank you for your interest in ClientEarth and our work.

Jason Mitchell:

Yeah, you can guarantee that I've been really interested in the litigation side for a long time, so this is going to be a great conversation. I'd like to start with a little bit of scene setting though. What is strategic impact litigation? What are its motivations beyond that of individual litigants, and probably the most important question, what's at stake?

Amy Rose:

Yeah, so strategic litigation refers to this practice of selecting and bringing lawsuits in the public interest. The effect of those lawsuits is broader, more societal change beyond the individual case and the individual litigants desires for that case. It's primarily focused on changing the law or governmental policy or governmental and corporate behavior and decision making by clarifying the law, enforcing the law, or challenging whether a law is legal and enforceable. It can also aim to raise public awareness. This is a big part of litigation. It can be used to encourage and mobilize new supporters. In my prior life as a commercial litigator, I actually did a lot of pro-bono work in the marriage equality space in California, representing same sex couples in some groundbreaking family law cases. And at the time those cases which were all about human dignity and equality before the law, those felt like the most important thing I could be doing.

But now working in the environmental movement, what we're trying to do here is we're trying to prevent the worst anticipated effects of the climate and biodiversity crisis. And I don't want to go too dark in our first question, but we feel that we're fighting for the survival of human civilization as we know it. And leaving a world to our children that looks and feels somewhat like the world that is recognizable to some of us. When we take these cases, we're looking at of course the individual litigant, whether that's us or in the case of some of our other litigation, an individual who's been impacted by climate change, or in the case of the Torres Strait Islanders, a people who are impacted by climate change and you care about their individual issue and their individual demand. But the broader context of the case, the broader goal of the case is to shift the law or shift behavior for society at large.

Jason Mitchell:

Yeah, thanks. I think that really describes the what's at stake question. According to the LSE Grantham Research Institute the number of climate change focused cases has more than doubled since 2015 to 2000. A quarter of these were filed between 2020 and 2022 alone. What does all that activity look like from inside ClientEarth? How is ClientEarth capacity building around this litigation momentum?

Amy Rose:

You can absolutely feel this increase within the walls of ClientEarth. Just to give you some dates and times for context, as you mentioned, I joined in 2016. And at the time we were working under a proof of concept grant to demonstrate that strategic impact litigation could be effective for climate in Europe. And at that time ClientEarth had a handful of cases. One in the UK, one in Germany, a couple at EU level, and today in 2023 it's my seventh anniversary of joining ClientEarth, we have over 170 cases pending and we're working in 50 countries. We have another probably similar amount pending in our pipeline pending launch. And we've gone from, in that same time period 70 employees in three offices to almost 300 employees in nine offices on three continents.

We've really felt that rapid growth and I hope we've contributed a lot to that building momentum, that sense of exponential growth and the urgency behind that growth, it really resonates with us. And I think an important thing to note about ClientEarth in the context of this momentum is that a huge part of our work, it's not just bringing our own cases, it's also supporting other NGOs, building their capacity to bring these cases themselves. Supporting them and bringing these cases from behind the scenes, either with our input or with funding or both. And helping to build up other NGO's ability to do more of this. Because obviously 300 people are not going to be able to do what needs to be done on a global scale. And so we're really about empowering the movement to do this. And so we're just thrilled to see this kind of momentum and increase in case volume.

Jason Mitchell:

Yeah, you've mentioned a few of those, but maybe can you dig in a little bit deeper into some of these. As you mentioned, the Torres Strait Islanders complaint, the Shell filing, which is currently going on, or even the high court win against the UK government for its net-zero strategy being in breach of the Climate Change Act. And also, how do you think about a legal tipping point in terms of precedence like these, or does one even exist?

Amy Rose:

Yeah, it's a really good question. These three cases that you've mentioned here are actually three really different kinds of cases. And I'll try to speak about them as briefly as I can. The Torres Strait Islander case is a very different kind of case. It's probably not even in the numbers that you're seeing coming out of Grantham and the Saban Center in the U.S., because it's not a court action, it's a UN Human Rights Committee communication is what it's called. And so decisions that come out of that body are not legally binding, but of course it's the UN, ai its rulings have huge international political power. And you could argue that its effect is global, as opposed to a ruling in the UK where of course it would be binding but only within the UK. You're talking about a very different strategy in bringing this communication versus bringing a UK net-zero case, which I'll talk about in a minute.

But in this case, what we argued was that Australia's failure to act on climate change, either adaptation and or mitigation, was already beginning to and would inevitably deprive these islanders of their lives, their land, their cultural and religious heritage, all of which are tied to the islands that they've inhabited for generations. And the committee agreed with us, pointing out that the way that these people live so connected with the land meant that they were already seeing the effects of climate change in impacting their livelihood, their cultural practices. And that just moving them was not going to be an option, it was still going to deprive them of these rights. What that means is in practice, in that case, what the UN committee's talking about and what we were arguing for was adaptation. Support, monetary support, to allow the islands to be protected from sea level rise.

And we often get questions about, why do we argue for adaptation? But adaptation is hugely complicated, its infrastructure, it's very expensive, it's the Thames Barrier in London, right? And of course, financially it makes absolute sense for the UK government to invest in the Thames Barrier to protect London. But what the UN committee has said here is that the government owes that obligation to all of its citizens. And that kind of ruling really forces governments to start doing their accounting a bit differently, to realize that it's cheaper to invest in mitigation, to avoiding climate change, rather than adaptation. It's better to cut fossil fuel subsidies, invest more in renewable energy, invest more in insulating homes and installing solar panels and heat pumps, rather than continue to build barrier walls and these massive infrastructure projects that are going to be required to protect their citizens from the ever increasingly damaging effects of climate change.

The UK net-zero cases is actually a more of what we might call a traditional environmental challenge. There is a objective that has been set by the government. The net-zero strategy is a decision by the government that seeks to achieve their obligations. And this is just an argument that that decision did not comply with their obligations. It's not reasonably calculated to meet their obligations. There's a big gap between the individual policy decisions, the individual financing decisions that they've made, where they're going to spend the money, how they're going to invest, what CO2 reduction that's going to result in, and what their obligations are. And we actually set the groundwork for this ruling in our clean air cases. Starting back in the early 2000s, culminating in the major decision in the UK courts in 2016, where the court basically said that the government has an obligation to come up with plans that are reasonably calculated to achieve their obligations.

They can't rely on fancy accounting, they can't pin the plan on hopes and dreams based on fanciful predictions that have never held up in the past. They have to have concrete, verifiable actions that when taken as a whole are reasonably likely to achieve the obligations that they've set for themselves in law. That's a bit more of a traditional environmental challenge. Of course, in a very different context of the Climate Change Act and climate change obligations. It's not the same challenge as the Torres Strait case, which is a human rights challenge, which is a very different environmental challenge.

You mentioned the Shell case, and yes, as you noted, what we're talking about here is the Shell filing that we made last month in February. Which is different from the already successful Shell case in Dutch court that was brought by Friends of the Earth Netherlands. Our case is a world-first shareholder derivative claim where ClientEarth as a shareholder in Shell has sued the board of directors of Shell for failing in their fiduciary obligations to manage Shell appropriately. It's a commercial claim, it's not a claim against a government under a regulation, it's not a human rights based claim, it's a commercial claim arguing Shell's board of directors are not acting in the best long-term financial interests of Shell in the strategy that they've adopted.

And we argue that by continuing to invest in fossil fuels at this late stage, by failing to seize the opportunity to invest in more renewable and alternative energy sources and batteries and all of these other ways that they could move forward as an energy company, that Shell's directors are essentially condemning it to be the blockbuster of energy. Shell will, we predict face massive stranded assets from continuing to invest in oil and gas infrastructure and fields. And they'll eventually have huge write downs and major profit losses, maybe not today, maybe not tomorrow, but soon and very seriously.

What this case really gets at is what a board's obligations are in managing a company and on what time horizons does a board have to think when managing the company? Can the Shell board take decisions that it thinks allow it to maximize profits today, knowing that those same decisions will very soon potentially be the financial death now for Shell as a company? These are the questions that need to be answered legally for directors. If we expect them to take the medium, really medium to long-term view necessary to manage their company's prudently in an era of climate change. And we need to insist that directors are taking decisions not just to maximize profits today, but to maximize profits and longevity in financial health for the company over the medium and long term of that company's life.

Jason Mitchell:

Super interesting. I mean, given all this case backdrop is the question of whether climate change is justiciable? Is it still being debated with the excuse that courts aren't the right forum? I guess critics would argue that what's really needed is policy solutions not a legal one?

Amy Rose:

Absolutely, this is still a very hot issue, and one that we are continuing to watch. Particularly in the United States. One case there that we have our eyes on is Juliana v. United States. Which is a case brought by the NGO Our Children's Trust, and it's actually pending in federal court in my home state of Oregon. And I think any studied student of politics or political scientists would tell you that climate change should be an issue resolved by legislatures. It should not be being resolved by litigation. Of course, governments and legislatures are best placed to know to conduct the inquiries, to commission the science, to know where to invest, to allocate the resources to solve these issues and to do so at speed. They can work much more quickly than a litigation case can itself take 10 years when you think about all of the appeals and all of the process involved in that.

The fact is that we're at a place where governments have either failed to do what needed to be done or they are currently failing or not going far enough in what needs to be done. They are political bodies, they get lobbied and even when they're doing their best. Let's just accept for the moment that something like the Green Deal in the EU represents the best, it's the best action of a legislature against climate change. Even when they do their best, they do things like include fossil gas as a sustainable fuel in their taxonomy, legally labeling it green, which makes it really difficult for NGOs like us to challenge. It's been officially legally labeled as a green fuel. Why would they do that? Well, basically because you can't get elected if you allow the lights to go out. And the energy lobby has done a really great job scaring our legislatures national and supernational like the EU into thinking that that's what will happen if we get rid of fossil fuels on the time scales necessary.

And that's just not the case. We have the science, we know that that's just not the case. But that's the fear and that's why the political policy solutions have failed or have not appeared or are inadequate. I don't want to go too much down that rabbit hole into the political discussion pathways, because I leave that mostly to my colleagues and our political and public affairs teams, I focus more on the litigation. But I agree, courts are not here to write policy. They're not set up for it. They're never going to tell the government how to achieve the objectives. But what we are finding and what other NGOs are finding and creating opportunities for, are for the courts to tell the government that they aren't doing their job, or they aren't doing their job properly, to push them to do more. We can challenge the decisions that are not made following proper procedures that don't have the right evidentiary support.

Where the plans don't match the objectives, where the duties and the obligations are not being met. And these are the types of challenges that we are bringing and that we are able to bring. We're not able to say to the court, "Court, craft a plan, fix climate change." That's never going to happen. But we can get the courts, we can find these inroads to allow the courts to order the governments and the companies to do more and to do better.

Jason Mitchell:

Interesting. Do you mind if I pull out a little bit, what are the advantages of litigation over traditional forms of activism in your view? To what degree is the increase in climate litigation a sign or even a view that traditional forms of activism, I think filing shareholder resolutions and voting out directors are proving less effective? Let me add on to that. Are these competing or complimentary forms of activism?

Amy Rose:

Yeah, absolutely complimentary in my view. I mean, I think litigation is a powerful tool because companies and governments like certainty. They need to manage their costs, their risk in order to function and fulfill their purposes. And a well-founded piece of litigation just creates a lot of costs, a lot of risk, a lot of uncertainty. And it distracts focus and resources from business as usual. It demands immediate attention. Obviously, companies and governments are really keen to avoid that uncertainty and they will do their best to manage their behavior to minimize that risk. But that's of course competing with all the other obligations and all the other risks. You really do have to have to make sure that what you're doing is the uppermost risk, the most scary risk that you're creating in order to gain their attention.

But litigation, frankly, it can be a really slow tool. As I mentioned, a case for example, the Shell case in the Dutch courts. That case has been in the planning and in the preliminary proceedings for years now, and it will continue on an appeal for years more. Litigation takes a long time, and it's quite a blunt tool. You can't always predict what's going to come out of it, even if something good comes out of it. It might be broader than you intended or narrower than you intended or less enforceable than you had hoped. And I absolutely think we need all of these forms of activism to create the systemic change we're looking for. And especially when trying to resolve a problem on the scale of climate change. We need direct action. We need protests, people to write letters to their MPs.

The Fridays for Future children's movement has had a huge impact in the field. It's absolutely raised the bar, raised the momentum, heightened the sense of urgency, so it's all kind of symbiotic. These are effective forms of activism in and of their self, and when they come together with litigation, they're even more powerful. They feed off of each other in a real virtuous cycle.

Jason Mitchell:

Out of the more than 2,000 climate change focused lawsuits in the world, an overwhelming number, more than 72%, have been filed in the United States. What does that say about the jurisdictional opportunities and challenges when filing inside and outside of the U.S. particularly in terms of the court's receptiveness to this litigation?

Amy Rose:

This question actually gets right at the heart of why ClientEarth exists. ClientEarth was founded by an American environmental litigator who came to Europe for family reasons and was surprised to find that there was a lack of litigation to enforce environmental laws. Somewhat ironically in fact, because Europe and the UK have and have always had some of the best environmental laws, much better than some of the laws that we had in the United States at various points in time. But James Thornton, our founder, found that the culture and the infrastructure to allow civil society to enforce those obligations was just really not there or not there at scale. I mean, I don't want to say that no one was bringing litigation, but not the kind of litigation that ClientEarth is bringing now at scale, the volume.

And there are many challenges to filing environmental and climate litigation both inside and outside of the U.S. There are all kinds of standing and other financial barriers such as adverse costs that get awarded in the UK that make our cases very difficult to budget for and manage, which make them hard for an NGO to bring. There are things like deference to governmental agencies that are a bit more heightened in the EU than in the U.S., and there are some jurisdictional challenges to suing at EU level. Which mean that we often have to go through these very complex, lengthy and convoluted processes at member state level before we can get a reference to the EU court on an EU law matter. There are all these complications, absolutely. But you see there is now a rapid growth in the number of non-U.S. cases, in particular in the last 10 years. And we think there's been an unlocking of the non-U.S. cases, seeing these other avenues.

And also, I think building the field, as I mentioned, a huge part of our work has been to help build national level and local level NGOs in Europe to be able to bring these cases themselves to support them, or sometimes we don't even need to support them. Sometimes we have a case and we get an interested lawyer call us about the case and we just give them our information and they go file a repeat case in another country. And that's great. That's what we want to see. We want to see the volume that we need to achieve our objectives needs to be achieved by NGOs acting at local and national level.

Jason Mitchell:

If most cases have been filed in the Global North, where does the Global South figure in into all this, especially in light of the disproportionately high climate adaptation financing pressures they face?

Amy Rose:

Yeah, I mean it's absolutely a huge issue. There are a few reasons we see more litigation in the Global North. Of course, a lot of the companies and the governments that are on what we would refer to as the demand side of climate change, so the ones causing the harm, or engaging in the activities or doing the exploiting, one might say, they're in the Global North. Of course, if you're going to try to hold those governments and those companies to account, that's going to be in the Global North. Even if their activities are in the Global South, the companies themselves are often headquartered in the Global North. And for example, Shell gets sued in the Netherlands or in the UK, even though it's a global company.

But it is also fair to say that the Global North has more jurisdictions where there's a strong rule of law, let's say strong enough to see a judge ruling against governments and powerful corporations. We do bring some cases in the Global South, and that is increasing. And we are working on improving the rule of law and strengthening rule of law and access to justice in Global South communities alongside local NGOs. This was a starting point for our work in Europe as well, so it's not like this work doesn't need to happen everywhere. Rule of law and access to justice are huge issues everywhere, but they're the foundation for this work. They're the foundation for this legal litigation approach.

Jason Mitchell:

Can you speak to the degree to which government net-zero commitments have made litigation easier for NGOs like ClientEarth and the ability to causally link climate change to damages?

Amy Rose:

As I mentioned before, a more traditional environmental approach is to take a regulation that exists or a statute that exists and to demonstrate that the government is not complying with it. That is environmental litigation 1.0, that is environmental litigation that's been happening since the '70s in the United States. Here's the obligation and the government's not meeting it. If the government sets its own obligation, sets its own objective to meet its commitments under the Paris Convention, or even more particularly such as the UK government has done in the Climate Change Act, and by declaring its commitment to net zero, you now have adopted a standard. You have said, "This is the standard we're holding ourselves to." And if the government doesn't walk the walk, the ultimate plan that comes out does not seem reasonably calculated to achieve that objective. You've made it much easier in the sense of a simpler environmental challenge to be able to hold that government to account.

And that's a good thing. I mean, we want transparency in these matters. We don't want to have to come up with these very convoluted, complicated, creative forms of litigation to enable us to hold companies and governments to account if we don't have to. We have to, so we are. But where there are these governments that have made commitments and have put those in writing, that leads to a simpler form of litigation to just argue, "Look, the evidence shows you're not meeting your obligation, meet your obligation." Court order the government to meet their obligation, and then that's a simpler form of litigation, for sure.

Jason Mitchell:

It's a little bit disheartening, isn't it? Which is to say that litigation in itself, I guess what you're saying is an admission of failure, a part of the point of framework on climate change was supposed to avoid litigation. The implication is that the framework convention is essentially toothless without litigation in the courts.

Amy Rose:

Yeah, I mean, to a certain extent I feel that that is very much a universal truth. Litigation is a failure. I mean, I've worked in litigation my entire life. And we always say, "No one wants to end up in litigation. You want to find the win-win solution for everyone. You want to negotiate a resolution that allows each party to feel they walked away with something they wanted." No one really likes to be in litigation, as I mentioned, because it's uncertain, it's risky, it's incredibly expensive and stressful for everyone. Absolutely, it's fair to say that getting to the point of needing litigation is to a certain extent an admission of failure. But at the same time, it is really heartening that litigation is now having some teeth and having some impact. Because I think for so long so many people felt so helpless. The laws were in place, but they weren't enforced or enforceable. The commitments were in conventions, but they weren't adopted at national level, and so they couldn't be enforced against government.

And so yes, to have to be there is to an extent an admission of failure. But as I said, it's the failure of the political side really, it's the failure of governments to have the political will to make the hard decisions in the face of elections and lobbyists. What litigation comes in and does is it provides that counterbalance. It says, "Look, the court's ordering you to do this." And you can stand behind that government. You can stand behind that before your citizens and say, "The court's ordering us to do this. We're obligated to do this."

Is it unfortunate that we have to bring litigation? To a certain extent, yes, it is. But on the other side of the coin, as a lifelong litigator and seeing how these things do play out, I'm not really surprised that we got here. And I'm really hopeful that the impact that we're hoping to have can now shift the needle in a meaningful way and increase the momentum and the sense of urgency to fight against climate change and the biodiversity crisis.

Jason Mitchell:

How do you see ClientEarth's efforts aligning with litigation finance funds, some who actually have a socio environmental focus? Are these approaches complimentary or potentially in conflict with one another? I guess I'm wondering, how should we weigh the strategic merits of establishing far-reaching legal precedents relative to realizing shorter term monetary gains for plaintiffs that potentially come at the expense of legal precedent?

Amy Rose:

Yeah, it's a really interesting question. We are seeing more and more of these socio environmental funds coming into the scene and trying to work with us or asking if we're interested in working with them on cases. I should clarify here that ClientEarth is funded exclusively by foundations and philanthropists. And we typically bring our litigation using the expertise of our in-house lawyers as well as by hiring either pro bono or what we call low bono support from like-minded private practitioners. We do not currently use private litigation funders of any kind. And we don't bring class action lawsuits and take a commission or a percentage. That's not something that we're doing. And typically our cases actually don't tend to seek compensation. The exception being, as I described earlier, the Torres Strait Islanders case where we sought funding for adaptation. Most of our cases were literally just trying to change the law or change the behavior or the process or the standards, or enforcing existing obligations.

But to answer your question, actually there's not really an inherent conflict between these two types of litigation. Because compensating victims does have the impact, as I mentioned before in the adaptation conversation, of forcing a change in the calculation of governments and companies. If you force companies to internalize those costs that they have been externalizing onto society, you change the financial calculation of where they need to invest to and avoid those outcomes. We talk about this a lot in the environmental field. The internalization of externalized costs. And litigation is a good way to do that. And if private litigation funders want to fund solicitors firms or law firms to bring class action lawsuits to seek compensation, that financial impact will change the economic analysis, the financial calculations that governments and companies are making, and that will have impact.

Now, that's not the kind of lawsuit we're bringing, and to be honest with you, I'm not entirely sure whether we would ever bring cases like that. If there is a private market for a case and there is a profit to be had for that case, and that case will have impact, those are all great things. We will let those cases go forward and those will be great cases. But what we're really trying to do is to bring the cases that there isn't someone with a profit motive to bring it, that it needs to be made, the case needs to happen, the right needs to be protected, or the law needs to be enforced. But there isn't a big company or industry on the other side pushing for that to happen, or maybe there's an industry or a company pushing against it. And so we have to provide the counterweight to support the government in upholding that law. Those are really the cases that we're bringing. But again, I see these as complimentary approaches. And we'd love to see an increase in this kind of litigation in the private sector if and as it becomes profitable to bring forward.

Jason Mitchell:

That's really helpful. Can you talk about the fascinating trend where in the absence of climate frameworks courts are starting to apply human and constitutional rights theories and other doctrines to argue for governmental obligation to reduce GHG emissions? And I think within that, why was the Urgenda case in the Netherlands such a significant precedent in this context?

Amy Rose:

This concept of what the government owes you has really radically changed across the last, let's say three, 400 years. And this modern shift is incredibly remarkable. Because I studied law not that long ago, just 20 years ago. And at that time we talked very clearly about what the government owes you in terms of, I studied in the U.S., so under the U.S. Constitution, and I was a student in California, so under the California Constitution. But there's this very clear delineation between what the government owes you, vis-a-vis the government's actions. If I'm going to come in and arrest you, I have to read you your Miranda rights. If I'm going to search your home, I need a warrant. What I owe you against my own actions, versus what the government owes you kind of against the world.

Here we're talking about what many people characterize as a natural phenomenon. We know it's not natural, we know it's manmade. But we're asking governments and we're saying under these theories that governments are legally obligated to protect their citizens from the disasters that are arising due to government and corporate behavior and decision making over the last several centuries. Now, of course, this is much more complicated because of the science. Because of the long history of how we got to this point. The long centuries of burning fuels and putting spewing GHGs into the atmosphere. It's a very complicated situation scientifically as well. But this whole concept of what does the government owe me, either under a human rights theory or a constitutional law theory or a tort theory, is at the heart of all of these cases. And it is absolutely fascinating to see that relationship shifting in the modern age.

Urgenda, of course, was just a watershed moment for the movement for the NGO. We work closely with Urgenda around the world. We're big fans of there. This was obviously just an incredibly significant precedent. Now, it is just a Dutch ruling at this moment in time. There are very few other jurisdictions that have followed that analysis. But it's incredibly helpful in other courts and other jurisdictions to argue the rationale of Urgenda. And we do see Urgenda, the NGO going out and trying to replicate that ruling in other countries. It's a slow slog. There's a lot of countries out there that would need to replicate that case in order to achieve vis-a-vis their governments what the Urgenda case was able to achieve in the Netherlands. And of course, this gets back to the conversation we had earlier about just disability. Many courts would be probably less receptive to that argument than the Dutch court was.

You would maybe find that tort-based claim a little bit more difficult to make, for example, in the United States or the UK. Human rights, again is similarly an area where you're going to have jurisdictions that are more friendly to that and less friendly to that. Traditionally the U.S. is not a great place to bring human rights arguments, which is why you see constitutional arguments getting more traction there. As I mentioned earlier in the Juliana v. United States case, those are all constitutional arguments and what's known as the trust doctrine. Which is a different theory about the relationship between governments and citizens in terms of preservation of the land and the environment. They're all really interesting theories that all come down to this relationship, and it's going to be important to radically transform that relationship in order for us to achieve what we want to achieve and avoid the worst effects of climate change and the biodiversity crisis.

Jason Mitchell:

I wanted to change lanes just a little bit and talk about the debate around ESG. In the U.S. it's currently being fought in both the courts and obviously in Congress. How do you see the courts weighing in? I'm simplifying this a little bit, but the anti ESG side argues that ESG is a non-pecuniary factor while the pro-ESG camp deposits that ESG is pecuniary and indeed consistent with fiduciary duty. If there is no clear policy path, do you seek court opinions ultimately having to define what ESG represents in a legal context?

Amy Rose:

I do. In the absence of a clear policy determination on that point, the courts will have to step in and say whether these obligations, or I guess obligations isn't exactly the right word. But whether ESG concerns are fiduciary or are not. What we've always argued is that these are fiduciary obligations. Because we can see, especially now, especially since Paris, that there are very real financial ramifications to your environmental governance and your housekeeping. We have argued for a long time, since before Paris even, but certainly more strongly since then, that these are pecuniary matters. And they do need to be disclosed, they do need to be addressed. And in the era of the Paris Agreement, the EU Green Deal, the new vigilance law in France and the EU due diligence laws, these considerations, they absolutely affect the pocketbook. And courts will have to define that eventually if the government does not.

There's evidence that can be offered. A court can look at the evidence and can make the determination if there's no policy determination that holds it to one or the other. And in fact, we actually have a case right now pending in the UK high court that gets at some of these issues. It's a case that's challenging the FCA's decision to approve a prospectus for Ithaca's IPO last year. We argue in that case that the prospectus failed to make adequate disclosures related to Ithaca's business model and failed to adequately disclose exposures and risk that it faced due to its particular business model in terms of opening up new oil and gas opportunities.

And so, the court is going to have to make a determination in that case. And now of course, there's interesting procedural issues. In that case you have an administrative body that is owed a certain amount of deference. And so it's going to be a very interesting case in terms of the legality and where the court wants to go in terms of questioning the FCA's decision making. But it's a really interesting case that it gets at exactly that issue of what types of disclosures are necessary, what types of actions are necessary, and when do they have a pecuniary impact.

Jason Mitchell:

Along that vein, regulators are also cracking down on investment fund sustainability claims. How does this provide an entry point for ClientEarth to engage on greenwashing in the investment sphere given all the regulatory attention? We've seen the SEC weigh in against institutional investors like DWS, Goldman, and BNY. At the same time, retail investors are beginning to take action most recently with 1,400 retail investors, suggesting that Vanguard is in breach of its fiduciary duty following its de-listing from the Net Zero Asset Managers initiative. What's your read on this?

Amy Rose:

Yeah, we're actually following this development closely, alongside developments in the regulation of green and sustainability claims just in general. The enforcements that have been brought so far have already made significant ripples, let's say, in the sector. And they've brought legal and regulatory risks more into focus, for those that are making misleading sustainability claims, as it should be. It will be really interesting to see how regulators and other jurisdictions follow the SEC's lead in relation to greenwashing by investment funds and their managers. Including several regulators that have 'till now been really quiet in relation to greenwashing enforcement. We'll be really interested to see if that first move gets followed. I'll also note that while many of these enforcements concern the compliance by funds and institutions with their own rules and marketing claims, do they do what they promised to do basically? Claims and enforcement cases are actually now emerging that seek to ensure that sustainability claims in the financial sector are also faithful to the environmental and climate science that they represent or that they relate to.

For example, the recent complaint by Mighty Earth to the SEC in the U.S. regarding sustainability-linked bonds issued by JBS, which is the world's largest meat company. It's a really good example of this. And according to that complaint, the bonds excluded JBS's Scope 3 emissions from their emission reduction condition built into the terms of the financing. And so that makes the misleading. Because Scope 3 emissions, for listeners that aren't as up to speed, that's the emissions that come as the result of the use of your product. If I'm the petrol or the gas company, and I don't count the emissions that come when you put my gas in your car and burn it. I'm excluding a lot of emissions from my calculation. And that can make what I've claimed to be sustainable or green just not even remotely sustainable or green. And people rely on those statements. It'd be really interesting to see where these complaints lead.

Jason Mitchell:

Yeah. I saw recently the Australian Securities and Investment Commissioner, ASIC launched the first court action against Mercer superannuation for greenwashing in Australia. And I'm wondering, how effective do you see these litigations in pushing investors to be more stringent around providing more authentic sustainable products? Or is there a risk that it pushes investors to be less ambitious in fear of potential lawsuits?

Amy Rose:

Yeah, I mean, it's a good question. It's the same question about governments and net-zero policies. If they set the net zero policy, they can be held to account for it. If they set the ambition and market themselves sustainable, then they can be held to account for failing in that. Investors and the market really just need accurate information. Accurate, transparent, disclosed information on the sustainability and climate-related risks of their investments. The increasing regulatory scrutiny over sustainability claims in these investment products, it's absolutely necessary to achieve that. And investors' appetite for sustainable investments is going to drive product offerings. There's evidence already that investors increasingly want to see their money doing good, as well as generating a financial return, and we see that happening. I don't think that we see that demand is going to go away or that the demand will be lessened because of these fears. The answer is really in creating and identifying products that meet that demand, not tolerating false or misleading claims.

Jason Mitchell:

Yeah. The latest IPCC report recognized litigation is "affecting the outcome and ambitions of climate governance." And since then a number of central banks have even highlighted its value. And I'm wondering from a ClientEarth perspective, given our discussion, how do you measure the effectiveness of litigation as a tool?

Amy Rose:

It's an incredibly difficult thing to do, because as this conversation has demonstrated perhaps, and as you likely know from following other pieces of litigation, a court win is not the same as being effective or impactful. And a loss does not mean that the case has achieved nothing, right? You have to look beyond the win loss of the case statistic to assess the success of any piece of litigation in actually shifting behavior. As I mentioned earlier, you have the Dutch Shell case where yes, there was a huge win, but Shell is appealing and doubling down on their behavior, and they're not shifting their behavior to the extent required by that court decision. On the flip side of that, we've had several technical losses coming out of the court in the sense that we were determined not to have succeeded or won the claim, but we've then seen the government change their behavior or we've seen an improvement going forward.

What we try to look at is the knock-on effects of the litigation, not just the W or the L, but did the court ruling lead to a change in the behavior of the government, or the company, or the sector? At a practical nuts and bolts level, we have a quite sophisticated internal team of what we call Monitoring, Evaluation, and Learning experts, so MEL is what we call it in ClientEarth. And they try to help us set objectives, identify key performance indicators, monitor the outcomes of our cases, track changes where they're visible to us and where we can attribute them to our work or to our work as it sits alongside other NGOs acting within the field. But even in this area we're actually at the cutting edge. There's not a lot of other NGOs that have engaged in this level of assessment and trying to better understand the impact of litigation on our work.

There are a few other out there. We work closely with Greenpeace International and Friends of the Earth and others in terms of thinking about assessing how our work has impact. But it's a developing field in and of itself. It's a whole nother area where we have to be quite creative and draw on expertise of others that have gone before and other movements and work with experts. We work closely with an entity called New Philanthropy Capital and others to help us develop these frameworks for tracking not just what we do and who we do it with and what happens, but how far down from that can we track any impact in the real world.

Jason Mitchell:

Got it. Last question, how can investors work with ClientEarth on strategic impact litigation? And what should investors understand about, I guess, the terms of engagement when doing this?

Amy Rose:

Yeah, we've been engaging with investors since even before I joined ClientEarth. It was a really large part of this proof of concept program that I mentioned when I joined ClientEarth. And we want to work with investors because part of our objective, as I mentioned, is to achieve better transparency and accountability. And that's for the benefit of long-term viability of companies and taking the long-term view, not just the short-term highest profit motive or short-termism that has taken over the financial market. But really achieving that long-term viability and long-term success of an organization or a company. We've actually produced a guide for institutional investors. It's called the Law on Climate Related Shareholder Resolutions. And I don't know if you have a description box, but if so, I can send you that link to pop into your description box. And that really tells institutional investors how they can engage with us and what they can do with us.

We do have investors that, for example, back us in our litigation, for example, in the Shell case that we talked about earlier. And that's just hugely impactful as an NGO to go into a case like that having the backing of these institutional investors agreeing with us, agreeing with our view on the management of Shell. And the support of those investors and all of this work with investors has been one of the most impactful areas of our work. It's a little bit more behind the scenes until now, until the Shell case. But this engagement and this active work with investors has been a very impactful part of ClientEarth's work for the past almost 10 years now.

Jason Mitchell:

That's good to hear. It's been fascinating to discuss what strategic impact litigation represents, how constitutional and human rights theories are providing frameworks for climate, legal action, and why the courts, not policy makers, may well end up reshaping definitions around GHG and greenwashing. I'd really like to thank you for your time and insights. I'm Jason Mitchell, Head of Responsible Investment Research for Man Group here today with Amy Rose, global director of Litigation, governance and Legal Services for ClientEarth. Many thanks for joining us on A Sustainable Future, and I hope you'll join us on our next podcast episode. Thank you so much, Amy.

Amy Rose:

Thank you.

Jason Mitchell:

I'm Jason Mitchell. Thanks for joining us. Special thanks to our guests, and of course, everyone that helped produce this show. To check out more episodes of this podcast, please visit us at man.com/ri-podcast.