Legal Aspects of Climate Change for Businesses in Massachusetts
Climate change is increasingly a component of litigation in the United States. With the incoming Biden administration expected to take an increasingly stronger stance on climate change mitigation and legislation, it seems likely that businesses, wherever they are in the U.S., need to take a more pro-active approach to minimizing their legal exposure to risk. This includes businesses in Massachusetts.
How businesses could be at risk of climate change litigation
So far, the majority of the some 1,000 odd global climate change related lawsuits have been directed at government entities, from local to federal level. An increasing minority of lawsuits is directed at companies and corporate. They allege companies have been responsible for changes in the Earth’s atmospheric composition and therefore have indirectly caused negative climate related effects. Lawsuits are also now being seen directed at companies that have failed to include climate change mitigation, emission reduction and identifying business risk as integral parts of their company policy.
The nature of some of these lawsuits is beginning to take similar lines to the major lawsuits that have taken place in the recent past against companies involved in the tobacco industry and more recently against pharmaceutical companies for manufacturing and distributing potentially carcinogenic products lie baby powder or against herbicide manufacturers for manufacturing potentially carcinogenic herbicides e.g. Roundup.
The key difference between these often high profile lawsuits and those which are being brought against businesses for failure to act on climate change risks is that climate change potentially affects the whole world and its entire population, not just a group of consumers. The negative effects of climate change are still disproportionately distributed around the world. There is a prospect of small island nations such as the Marianas or the Maldives initiating lawsuits against U.S. multinationals because of the link between fossil fuel production and sea level rises that have and are adversely affecting these nations more than most.
The Paris Accord and state legislation on climate change policy
The most recent international agreement that most of the world signed up to, albeit without binding targets, was the 2015 Paris Accord on climate change. The most important aim agreed to was to attempt to restrict the global temperature rise above pre-industrial levels to preferably below 1.5 degrees Celsius and definitely below 2 degrees Celsius. Although the U.S. Trump administration renounced the agreement as too harmful to U.S. businesses, this hasn’t stopped many U.S. states, including Massachusetts, from endorsing the principles of the Paris Agreement. The incoming Biden administration has already stated its aim of rejoining the Paris Agreement in line with the rest of the world and has already announced a bevy of initiatives that acknowledge a shift in emphasis from the federal government that will bound to have an effect down the line on U.S. states and individual businesses.
An increasing number of countries around the word and individual U.S. states have made pledges to be carbon neutral by 2050. Many leading corporates have also now endorsed the same aims and have pledged to reduce their carbon emissions to zero by the same date. Examples in Massachusetts include leading energy corporate like Biogen and Novartis. Whether this is due to a genuine realization that those businesses have been having a negative effect on the climate or a shrewd reaction to the possibility of future litigation is a moot point.
Climate change legislation in Massachusetts
In Massachusetts, both houses of the state legislature passed a landmark climate change bill entitled “An Act Creating a Next-Generation Roadmap for Massachusetts Climate Policy (S.2995)” on January 4th this year. The bill has yet to be signed by Governor Charlie Baker, but commits the state to a wide ranging number of climate change goals including net-zero carbon emissions by 2050, state targets every five years and several other key initiatives. These could affect the way state based companies go about their business and in particular how they adapt long term business plans to not only reduce their own emissions but also mitigate potential climate change litigation risk.
Climate change litigation cases
So far, few lawsuits brought against companies (mostly fossil fuel related) have had any success. Plaintiffs have had to show evidence that the negative environmental effects they have experienced area direct result of the companies’ activities. Cases have been dismissed because they have been regarded as political or that climate change policy must be directed by the federal government or that there has been not sufficient link between cause and effect.
One recent case involved a lawsuit by the state of Rhode Island against Chevron Corp. (2018). The allegation is that the defendants have caused or will cause in the future climate change impacts that have led to a rise in sea level, increased incidence of flooding, heavier rainfall, drought and deterioration in oceanic conditions. Note that the lawsuit includes predicted future effects not just ones that have been documented.
False green advertising claims by companies have also been the focus of legal action. In Australia, the state consumer watchdog fined General Motors and Goodyear Tires for advertising that claimed that their products were ‘low-emission’ and ‘carbon-neutral.’ General Motors was forced to plant trees as a penalty to compensate for the profits made during its false advertising phase.
A new development has been the determination by activist shareholders to sue companies for a failure to disclose climate change related investment business risks inherent in their business plans, e.g. continuing investments in the coal industry when coal as a fossil fuel is being phased out as an energy source.
Massachusetts businesses need to take climate change risk seriously
It’s been a hard year due to the sacrifices that all sectors of society have had to make because of the pandemic, but sooner or later this nightmare will be over. Looming behind the pandemic is the ever growing threat of climate change. Climate change isn’t likely to go away quite so quickly. Both the state and federal governments are taking climate change response seriously, as is an increasingly vocal public. Businesses in Massachusetts that don’t incorporate climate change risks, including the possibility of litigation or fines if they don’t demonstrate corporate responsibility, are doing a disservice to their shareholders and risking long term damage to their business viability.
Should you have any concerns contact the Law Offices of Richard Mucci for a free initial legal consultation.