Climate Change and Litigation The NZ context. Government or business off to court what for and how real is the risk in New Zealand?

Transcription

1 Climate Change and Litigation The NZ context Government or business off to court what for and how real is the risk in New Zealand? 10 October 2017 Duncan Currie LL.B. (Hons.) LL.M.

2 Risks for national and local Government States & local Government have duty to avoid harm to their citizens under a range of constitutional, common law and legislative bases. Litigation may seek: Prevention/ mitigation Adaptation Compensation Areas of Law Resource Management Act 1991 (RMA) Public Law / judicial review Bill of Rights Public Trust Doctrine Damages 2

3 Risk to Business (1) Non-disclosure, fiduciary duties to corporation and shareholders (2) risk to investments, need to take preemptive action, stranded assets (3) risk of damages and injunctive relief, (4) insurance risk (5) human rights Some causes of action RMA Tort Companies Act

4 Causation Figure 1 The Lancet , DOI: ( /S (15) ) Copyright 2015 Els Lancet

5 Some NZ Cases RMA Stratford Board of Inquiry 1995, Greenpeace NZ v Genesis Power [2008] NZSC 112 SC 94/2007. West Coast ENT Inc v Buller Coal Ltd [2013] NZSC 87, [2014] 1 NZLR 32. Weir v Kapiti Coast District Council [2013] NZHC Greenpeace New Zealand v. Northland Regional Council, [2007] NZRMA 87. Public Law Thomson v Minister for Climate Change Issues. Ioane Teitiotoa v MBIE [2015] NZSC 107. In re AD [2014] NZIPT New Zealand Climate Science Education Trust v National Institute of Water and Atmospheric Research Limited [2012] NZHC 2297(7 September 2012); 1 NZLR 75. Waitangi Tribunal Mataatua District Māori Council - Waitangi Tribunal 5

6 Stratford Board of Inquiry 1995 Board of Inquiry proposed air discharge conditions for Taranaki Combined Cycle (Gas) Power Station Condition 4: The consent holder shall establish a carbon sink sufficient to eventually store in perpetuity the equivalent quantity of carbon emitted from the site over the term of consent. No trees were planted. Found: The stations operation would significantly increase New Zealands emissions of carbon dioxide and make it more difficult for the Government to meet its obligations to reduce the emission of greenhouse gases to their 1990 levels as committed to under the UNFCCC 6

7 Greenpeace NZ v Genesis Power S 104E RMA Applications relating to discharge of greenhouse gases When considering an application for a discharge permit relating to the discharge into air of greenhouse gases, a consent authority must not have regard to the effects of such a discharge on climate change, except to the extent that the use and development of renewable energy enables a reduction in the discharge into air of greenhouse gases, either in absolute terms; or relative to the use and development of non-renewable energy. Sian Elias CJ: intention was to mandate consideration of renewable energy which enables reduction in GHG Majority: the exception applies only to applications involving the use and development of renewable energy. Subsequent to Greenpeace New Zealand v Northland Regional Council [2007] NZRMA 87 The benefit of reduction in greenhouse gases through use of renewable energy was a consideration to be taken into account in all applications for a discharge permit, whether or not they proposed the use of renewable 7 energy.

8 West Coast Ent v Buller Coal Can climate change effects be taken into account in consenting coal mine? SC: No, except when the council is considering the advantages of a renewable energy development project. [172-3] Sian Elias CJ dissent: Resource Management (Energy and Climate Change) Amendment Act 2004 only removed the possibility of local government contemplating activities effects on climate change in relation to air discharge permits as opposed to all types of consent.(69, 85) 8

9 Mataatua District Māori Council- Waitangi Tribunal Breach of active protection to Māori in the use of their land and resources Art 2 Treaty of Waitangi Allege the Crown through the New Zealand Government has obligations of active protection to Māori to take adequate steps to ensure that New Zealand bears its fair share as a developed nation in reducing greenhouse emissions so as keep global temperature rises below dangerous levels that will threaten Māori in the use of their land and resources Effects include natural ecosystems, water, agriculture & horticulture, fisheries, forestry, health & wellbeing Claim ineffective ETS, inadequate emission targets, lack of other policies to reduce emissions 9

10 Thomson v Minister for Climate Change Causes of Action Failure of the Minister to review New Zealand s 2011 GHG emission reduction target (50% below 1990 by 2050) in accordance with s 225 of the Climate Change Response Act 2002 (CCRA) Failure to consider relevant factors when setting New Zealand s INDC (30% below 2005 by 2030) + An irrational INDC decision + unlawful INDC decision MFE

11 Ioane Teitiota v. MBIE Ioane Teitoiota sought refugee status on basis that rising ocean levels and environmental degradation made retuning to Kiribati economically unviable. Court of Appeal noted the gravity of climate change but found that the refugees Convention does not address the issue. [41] No-one should read this judgment as downplaying the importance of climate change. It is a major and growing concern for the international community. The point this judgment makes is that climate change and its effect on countries like Kiribati is not appropriately addressed under the Refugee Convention. IKiribati King Tides flooding 2011 Greenpeace 11

12 In Re AD It is also widely accepted that the impacts of climate change can adversely affect the enjoyment of basic human rights. That such impacts may affect enjoyment of human rights was expressly acknowledged in AF (Kiribati) [2013] NZIPT at [63]. [28] The evidence in appeals such as this must establish not simply the existence of a matter of broad humanitarian concern, but that there are exceptional circumstances of a humanitarian nature such that it would be unjust or unduly harsh to deport the particular appellant from New Zealand. [32\ Tebunginako Village 12

13 New Zealand Climate Science Education Trust v NIWA The trust challenged the scientific methods and conclusions reached by the Institute in its reports. The issue revolved around temperature records collated by NIWA indicating New Zealand had warmed over the last century. The challenges to the science failed. NIWA had used internationally recognised and credible scientific methodology 13

14 Weir v Kapiti Coast District Council Sealevel rise projections and lines on property LIM showing 50 and 100 year erosion Worst case scenario was reasonable possibility The Council was trying to warn the market about the potential local effects of a global phenomenon. [58]; contained information that relates to potential erosion. [65] Ultimately, lines were removed following expert review and general wording about erosion placed on plans. Mike Weir 14

15 Mitigating Risk for Local Government Managing coastal retreat The Local Government Act s 11 core services that Council must have particular regard to include the avoidance or mitigation of natural hazards. RMA: Functions, powers and duties for Regional Councils (s 30) and District Councils (s 31) include the avoidance or mitigation of natural hazards. General duty for local authorities to gather information and undertake monitoring (s 35) The RMA allows resource consents to be granted subject to conditions (s 108), including conditions relating to natural hazards. Civil Defence Emergency Management Act 2006 manage risks Building Act 2004 no building consent if subject to natural hazards unless can be protected (s 71) 15

16 NZ: Bill of Rights Act Section 8: no one shall be deprived of life except on such grounds as are established by law and are consistent with the principles fundamental justice Should legislation eg RMA should have been interpreted consistently with the right to life under s 8 NZBORA? Mandate to address risks to life from climate change as well? Osman v UK 1998 ECHR 101 (UK); Carter v Canada 2015 SCC 5 (Canada); Seales v A-G [2015] NZHC

17 Public Trust Doctrine Certain resources are so necessary for society survival that they are held in trust for the benefit of all citizens and future generations - Water, air and the sea the government must manage certain common natural resources on behalf of its citizens, both current and future accountability, access, stewardship [T]he public trust is... an affirmation of the duty of the state to protect the people s common heritage of streams, lakes, marshlands and tidelands, surrendering that right of protection only in rare cases when the abandonment of that right is consistent with the purposes of the trust National Audubon Society v. Superior Court, 658 P.2d 709 (Mono Lake) Magna Carta in force in NZ vs Supreme Court Act 2003 s 3(2) [n]othing in this Act affects New Zealand continuing commitment to the rule of law and sovereignty of parliament. 17

18 Sources of liability for Business Due diligence Write down of assets/stranded assets Physical risks Liability for adaptation climate related events e.g. severe storms, floods, droughtforeseeable Reputational risk Compensation Transition Stranded assets Divestment Non-Disclosure Climate-related vulnerability, carbon exposure of assets 18

19 Climate Risks Environmental change Resource landscapes Climate change; natural capital depletion and degradation; air, land, and water contamination; and freshwater availability Price and availability of different resources such as oil, gas, coal and other minerals (e.g. shale gas abundance, phosphate scarcity) Government regulations Carbon pricing (via taxes and trading schemes); subsidy regimes (e.g. for fossil fuels and renewables); air pollution regulation; the carbon bubble and international climate policy Technological change Falling clean technology costs (e.g. solar PV, onshore wind); disruptive technologies; and electric vehicles Social norms and consumer behavior Litigation and statutory interpretations Fossil fuel divestment campaign; product labelling and certification schemes; changing consumer preferences Carbon liability; litigation; damages Caldecott and McDaniels, 2014a 19

20 Directors and liability NZ Companies Act 1993 s 131: director must act in what director believes to be in the best interests of company s 137: must exercise care, diligence and skill of a reasonable director S 138: may rely on reliable & competent employee; competent adviser Can reliance on climate denial as advice be a basis for liability? NZX Corporate Governance Code Rec. 4.3 An issuer should provide non-financial disclosure at least annually, including considering material exposure to environmental, economic and social sustainability [ESG] risks and other key risks. It should explain how it plans to manage those risks and how operational or non-financial targets are measured. 20

21 Directors Liability Does the pollution exclusion in many directors and officers (D&O) policies exclude some climate liability? Shareholder suits derivative action (s 165 Companies Act) May climate litigation be excluded from policies? 2015 Marsh report identified climate change as # 8 as emerging risk issue 21

22 Risks: Stranded assets Carbon logic IEA: No more than one-third of proven reserves of fossil fuels can be consumed before 2050 if the world is to achieve the 2 C goal 2015 Citibank report: coal, oil and gas stranded assets could total $100 trillion Or $304 billion by 2035 (IEA 2014) or 25 trillion (CPI 2014) Climate policy, technology change can lead to stranded asset e.g. coal, oil assets Solar uptake lines, generation? Carbontracker.org 22

23 Some responses Due diligence scenarios, effects, options Divestment response to stranded asset, fiduciary liability selling subsidiary business interests or investments motivated by climate change-related risks Already $ 5 trillion in divestment (Arabella 2016) Avoid contributing to & offset emissions; implement sustainable strategies Disclosure monitor international developments eg TCFD (Task Force on Climate Related Financial Disclosures) Good advice including external Implement a corporate governance program to monitor activities, identify risks and opportunities, monitor developments 23