Updated: Sep 22
Can the Law Challenge Business' Abysmal Environmental Footprint?
On a habitually grey Dutch winter day in January 2021, four Nigerian farmers celebrated an unlikely victory in the Hague Court of Appeal. The plaintiffs hailed from Nigeria’s Niger Delta, which harbours one of the world’s largest and most pivotal mangrove ecosystems. The region’s economic riches, though, lie hidden deep underneath the lush forests in enormous oil reservoirs.
Since the 1950s, Royal Dutch Shell — Europe’s largest company by revenue — has profited massively from the extraction of this ‘black gold’, repeatedly sparking conflict along the way. In the early 2000s, a series of leaks in Shell’s installations allowed large quantities of crude oil to disseminate into the local environment, with catastrophic consequences for the materially and politically marginalised communities living in the vicinity. As one of the claimants described the situation:
“Before the oil spill, people here ate well, the fishing was good. Not only enough for themselves, but we could also earn money by selling fish. That’s all over now. The oil is in everything – it’s in the air we breathe, in our drinking water and in the food we eat. Our people eat, drink and breathe crude oil; that’s why they die young.”
Distrustful of Nigeria’s public institutions, who had violently suppressed environmental protests just over a decade earlier, the plaintiffs had turned towards the Dutch courts in 2008 in their quest for justice. Supported by the NGO Milieudefensie, the four farmers defied Shell’s zealous advocates and persisted throughout a court process that stretched over thirteen years. Finally, on 29 January 2021, the Hague Court of Appeal ordered Shell to compensate the plaintiffs for the damage incurred and to install an improved leak detection system so as to prevent future spills.
Although the Dutch litigation was ultimately successful, it represents an outlier in the current legal landscape. Its replicability in different legal and factual contexts is uncertain at best, invariably posing larger questions about the potential of legal mobilisation. Can the law really tackle the environmental footprint of large companies? Can courts and legislators put the corporate genie back into the bottle of sustainable development?
The corporate Anthropocene
Some of the Anthropocene’s key culprits are not natural persons, but inventions of the human imagination: corporations. In our capitalist political economies, corporate actors occupy the nods of power. Their annual revenue sometimes outweighs the GDP of several smaller countries. Governments perform obscene displays of courtship to attract corporate investments and fuel business expansion, often at the expense of their own constituents. But while profits tend to be internalised and distributed among a small class of shareholders, the dizzying environmental costs of many corporate activities are left for the public to bear. It is no coincidence that the multinationals with the largest revenue are also among the most ecologically damaging.
The corporate impact on our planet is well-documented. For instance, only twenty companies have caused more than one third of all greenhouse gas emissions since 1965, the year when the dangers of climate change first became known. Extractive industries have permanently altered entire landscapes through deforestation and pollution on massive scales. The widespread use of corporate-produced and aggressively marketed pesticides has decimated flora and fauna, both in terms of quantity and diversity. Similarly, the flood of plastics wreaking havoc across the globe can be traced to a few global players. Overall, the economic costs of environmental degradation by the hands of largest 3000 firms amounted to $2.2 trillion in 2008 alone, a number that has likely increased over the course of the past decade.
Legal mobilisation against corporate predation
Corporations are merely creatures of the law; their legal personhood is what scholars call a ‘legal fiction’. Their very existence is owed to a complex mesh of legal modalities, and the law has long provided a nurturing cradle for the corporate accumulation of wealth and power. But communities, activists and civil society organisations alike are increasingly mobilising legal institutions to challenge the corporate Anthropocene. Over the course of the last years, this mobilisation has taken shape in three distinct, but overlapping fields: climate change litigation, environmental cross-border lawsuits, and so called ‘supply chain’ legislation.
Climate change has featured prominently in court dockets for at least two decades. But it is only recently that attention has shifted from public actors to the role of private companies, fuelled by several high-profile decisions. On 26 May 2021, a Dutch court ordered Shell to reduce its carbon emissions by 45% by 2030 as compared to 2019. Although the case will likely be appealed by the defendant, this was the first time one of the largest global carbon emitters was officially instructed to change course towards a more sustainable future.
In addition to litigation aimed at curbing prospective emissions, lawsuits play a crucial role in addressing loss and damage resulting from global warming, as demonstrated by another case currently pending before the German courts. In 2015, Peruvian farmer Saúl Luciano Lliuya sued the German energy company RWE over the latter’s contribution to climate change. Mr. Lliuya lives in the city of Huaraz, which is threatened by a flood outburst of the nearby Palcacocha lake. The lake has grown dangerously in size as a result of the surrounding glaciers melting in a warming climate. Taking RWE’s estimated share of historic greenhouse gas emissions of 0.47 per cent as a yardstick, Mr. Lliuya sought to recover an equivalent percentage of the costs incurred for protecting his property against a flooding event.
Although the district court dismissed these claims in the first instance, a 2017 interlocutory judgement on appeal confirmed their overall admissibility. While the case is presently undecided at the evidentiary stage, the 2017 ruling was widely seen as a significant development in the legal treatment of climate change damages.
Climate change is a highly specific environmental problem with unique structural characteristics. Much environmental damage still occurs locally, though, through pollution, resource extraction and habitat destruction. These activities—sometimes also referred to as ‘toxic torts’—often hurt local communities and impinge on their environmental rights. Cases such as the aforementioned Nigerian oil leaks often wind up in European or North-American courts because access to environmental justice may be blocked at home. Just a month before the Nigerian claimants’ victory in the Hague, a group of Zambian plaintiffs settled similar claims against the UK-based mining company Vedanta for an undisclosed amount, after the UK Supreme Court had ruled that the dispute could be heard in England.
Such transnational lawsuits have not always resulted in a happy ending. In the 90s, several Ecuadorian communities sued to recover damages from US-based oil giant Chevron after the latter negligently polluted large parts of the local rainforest through its oil extraction operations. The destruction was so devastating that the event is now known as ‘Amazon Chernobyl’. After many years of litigation in the US, the courts remanded the claims to the Ecuadorian judiciary, where the plaintiffs obtained a $9 billion award in 2011. In the meanwhile, Chevron had retired all its assets from Ecuador, preventing local enforcement of the judgement. International enforcement efforts were curbed by allegations of fraud and corruption in obtaining the damages award, and the plaintiffs have not seen a single dollar to this date.
While cross-border lawsuits are a daily routine for transnationally active companies, they usually tend to focus on contract law, corporate restructuring, or intellectual property. Transnational environmental litigation is still a nascent field, but recent developments suggest that it may soon become an important element of litigated practice.
Many years of intense pressure from civil society have led several European legislatures to draw up laws that impose stringent duties on companies to monitor and prevent adverse impacts along their global value chains. Although the discourse surrounding these ‘supply chain’ laws has mostly focused on human rights violations, environmental damage is usually addressed as well. For instance, the French Duty of Vigilance Law of 2017 requires companies to safeguard against severe environmental transgressions. The latest draft of a proposed EU directive to the same effect includes a similar provision. Violations of these rules are enforced through administrative fines and civil complaints to be lodged by affected parties to ensure compliance.