Filed under: climate change | Tags: America's Climate Security Act, bill, cap and trade, carbon, carbon footprints, climate change, Congress, Dell, emission, Google, investment, Lieberman Warner, market, Nike, Senator Joe Lieberman
National legislation on climate change appears to be inevitable. Some proactive companies are seeing the writing on the wall and have started taking the initiative to reduce their carbon footprints. Dell, Google, and Nike are just a couple of examples of forward thinking companies wanting to be ahead of the curve. These companies have voluntarily taken it upon themselves to become carbon neutral by buying carbon offsets in America’s voluntary carbon market. It is not just businesses who see the writing on the wall, as even those in the investment community are forecasting national climate change legislation in the near future.
What is prompting some companies to start looking at their carbon footprints is the forthcoming Congressional debate of the Lieberman-Warner bill, also called America’s Climate Security Act. Other reasons for businesses to jump into the voluntary carbon market are to gain experience in the carbon market “in order to increase authority and influence in policy discussions about climate change,” to prepare for potential regulatory requirements, to enhance brands and/or differentiate products, and to attract investors. Some states are not waiting on the outcome of the Lieberman-Warner bill and have passed climate change legislation. For example, power plants in 10 Northeast states “will face regional carbon cap-and-trade rules beginning next year.” Not one to be left out of the environmental movement, California is looking at legislating “a more extensive system [that] could affect virtually all businesses starting in 2012.”
Regardless of the outcome of the Lieberman-Warner bill, climate change legislation will continue to be in the national spotlight as all the remaining presidential candidates support some type of carbon market. If not already doing so it would serve a company well to begin looking at its carbon footprint and what it can do to reduce its environmental impact. As Henry Derwent, chief executive of the International Emissions Trading Association, put it “[y]ou don’t even have to believe all this climate change stuff, you just have to believe that all the politicians believe.”
Filed under: SEC, class action, climate change, lawsuits | Tags: carbon footprint, class action, climate change, climate impact, investor, lawsuit, SEC
In the past, climate change was a rallying cry for the environmental fringe, but recently Wall Street investors have been demanding information about climate change. Investors, including some heavy hitters such as JPMorgan Chase & Co., have started looking at climate change issues such as the carbon footprints of businesses. Some investors have even gone so far as to not invest in businesses with large carbon footprints, fearing future regulator restrictions and potential liability. Unlike environmentalists whom the businesses could easily ignore, investors are making businesses take notice of climate impacts. Other investors are demanding that businesses disclose climate risks as part of SEC filings. Currently businesses are fighting this request by investors, but as more investors demand such information eventually some sort of compromise will need to be worked out.
Recently the Attorney General of New York, Andrew Cuomo, initiated an “investigation of five large energy companies, questioning whether their plans to build coal-fired power plants pose undisclosed financial risks that their investors should know about.” Mr. Cuomo is using the same state securities laws that former Attorney General, Eliot Spitzer used to terrorize Wall Street with great success.
While it may be “rare, if not unique, for a securities law to be used for an environmental purpose” this is only because investors are just waking up to the potential liabilities facing businesses for failing to take environmental issues serious. According to Mr. Cuomo the purpose of using securities regulations to investigate environmental issues is to look at “the economic risks . . . being disclosed – the economic risks which are dovetailing with environmental concerns.”
It is just a matter of time before investors, based on SEC regulations, start filing class action lawsuits against businesses based on environmental issues. In fact, Mr. Cuomo may be laying the blueprint for future investor suits. While climate change lawsuits could become the next asbestos, they could also just as easily become the next class action securities nightmare for businesses. So it would be a prudent and wise move for a business to be ahead of the curve and start assessing its climate impact.
Filed under: climate change, lawsuits | Tags: Alaska, asbestos, climate change, global warming, Kirvalina, lawsuit
The above question is being debated among the legal and business communities. Ever since asbestos lawsuits burst onto the scene there has been debates about what will be the next lucrative mass tort. So far climate change lawsuits are not threatening to overtake asbestos. However, there are reasons for businesses to be concerned about climate change lawsuits. If climate change lawsuits ever gain ground in the courts and public perception, the results to business could be devastating. Think about it, the potential pool of plaintiffs would be endless because everyone living is affected by climate change. While plaintiffs have largely been unsuccessful in bringing climate change lawsuits, business executives should not feel invincible.
There are many hurdles that must be overcome by plaintiffs before a climate change suit will be successful. For example, a plaintiff must be able to identify a defendant and be able to apportion damages to that defendant. Finding a defendant or an industry is not a problem as plaintiff attorneys will go after the deep pockets. The problem here is that there are so many who have contributed to climate change and being able to distinguish between a single defendant or even an industry will be difficult. Taking a closer look at the recent suit brought by the Alaskan village of Kivalina illustrates these difficulties.
The complaint alleges that Kivalina will be destroyed by rising sea levels and the lack of coastal ice protecting the village’s shoreline. The suit is being brought against oil, coal, and power companies. The suit alleges that the defendants’ greenhouse gas emissions have contributed to global warming which in turn has melted away protective ice from around the village’s shoreline. Without the protective ice the entire village will be destroyed. So the people of Kivalina must move their entire village to avoid certain destruction from melting ice and rising tides. The plaintiffs clearly have identified defendants who are in the middle of the climate change debate. It will be interesting to see how the plaintiffs will attempt to apportion the defendants’ climate change contributions with all the other greenhouse gas emitters throughout the world.
The next major problem facing plaintiffs is the so-called lack of an identifiable injury. A common example is mesothelioma in an asbestos case. Mesothelioma is a form of cancer that is the direct result of exposure to asbestos. It is widely accepted that asbestos is the only cause of mesothelioma. Whereas in climate change some argue that there is no identifiable injury caused by climate change. On the face this argument looks solid, but look at the case of Kirvalina. The complaint alleges, among other claims, that the entire village will be destroyed by the lack of ice protecting its coast from the rising tide. There are numerous studies and prominent scientists that identify melting of polar ice and rising seas with climate change. It looks at first glance that the citizens of Kirvalina might just have the first example of an identifiable injury directly associated with climate change. If the plaintiffs can get by summary judgment and the court invoking the “political question” doctrine, it will be interesting to see how a jury will react to the alleged facts.
Ignoring climate change is foolish for businesses to do, just ask the asbestos industry how well it worked out for them ignoring the dangers of asbestos. Some businesses even see eerie similarities in asbestos and climate change lawsuits. Pacific Gas & Electric CEO Peter Darbee has voiced concern that:
We may face an experience 30 or 40 years down the road or maybe less where people concluded that CO2 was a pollutant and those companies that don’t get with the program could very well be held accountable at a later date and face billions of dollars of lawsuits as has been the case with asbestos. (Audio)
If not already doing so, businesses should start being good corporate actors by joining the debate and help fight climate change. A business that chooses to follow the example set by the asbestos industry of sticking its head in the sand and ignoring climate change is foolish.
Filed under: climate change | Tags: climate change, EPA, global warming, lawsuit
There has been an explosion of climate change related lawsuits within the last couple of decades. With the amount of national and international attention give to climate change, these types of lawsuits will continue to be filed at an increasing rate. Corporations, cities, states, and even individuals must now recognize and factor in climate change issues in daily decisions. This is especially so given the recent U.S. Supreme Court decision in Massachusetts v. EPA. Among other things held in this case, the EPA must now research greenhouse gases as they relate to climate change. If the EPA determines that greenhouse gases “endanger public health or welfare” it must regulate greenhouse gases. Where the EPA comes down on this issue will have a profound effect on climate change lawsuits.
There is no serious debate on whether the Earth is warming. Instead the climate change debate is over whether the warming is a direct consequence of human activity or natural processes. However, from a legal point of view, a second debate is over whether a jury can be convinced that a defendant is at fault for climate change. The purpose of this blog is to keep the reader informed of new developments in both the scientific and legal debates.
