Litigating Corporate Responsibility for Climate-Related Loss and Damage

Every time damage occurs, the simple question arises: Who should pay for it? For lawyers, the answer is frequently found in the time-tested principles of tort law. It is widely acknowledged that it is neither equitable nor viable for a society to impose the financial burden on the individual who has sustained harm due to another’s culpable actions. Legal traditions across time and space have consistently attributed this responsibility to the perpetrator of the harmful act. In international climate negotiations, on the other hand, recognition of responsibility for loss and damage caused by climate change has been a protracted and difficult topic (see Martínez Blanco / Toussaint in this symposium).

However, the distribution of the burden of loss and damage is not just a matter of fairness, but also of human rights, which are impacted by anthropogenic climate change at an unprecedented scale. With COP29 on the horizon, it is thus imperative to find solutions which recognize human rights and deliver climate justice. Insights can be gained from people at the very front lines of climate change: the plaintiffs from the lawsuit Asmania et al v Holcim (“Asmania”).

Current Lack of Accountability Under UNFCCC

States and civil society from the Global South have been warning about climate-induced loss and damage for decades. Although the Alliance of Small Island States (AOSIS) argued for insurance against damages caused by sea level rise as early as 1991, it was only at COP27 in 2022 that the UNFCCC community finally agreed to set up a fund for this purpose (for more on this “Fund for responding to Loss and Damage“ (FRLD), see Toussaints / Martinez in this symposium).

Leading up to COP29, however, important questions such as the future governance of and access to the Fund still need to be clarified. Most importantly, it is still completely unclear how the international community will secure sufficient funding for the FRLD (see see Martínez Blanco / Toussaint in this Symposium for more details on the aspect of finance under the New Collective Qualified Goal). To illustrate: While it is estimated that climate change will cause a staggering $290 billion to $580 billion in damages per year by 2030 for developing countries alone, COP28 only saw a measly $700 million in pledges.

This glaring inadequacy is in large part explained by the fact that contributions to the FRLD have, thus far, been considered entirely voluntary, even for those countries that have played a disproportionally large role in causing climate change. Despite pressure from Global South countries and civil society, industrialized states have to date avoided a clear acknowledgment of responsibility for loss and damage, let alone “climate reparations” (which goes beyond financial compensation, see here). In addition, the role of large companies from emission-intensive industries in climate change has so far been largely ignored in international negotiations.

Climate Litigation

The COP, however, is not the only forum in which climate change obligations are decided. While political negotiations may allow to avoid accountability, the law does not. Plaintiffs (at least in theory) do not need to have political influence, economic resources or bargaining power – they simply need to have a case.

This in part explains the rise of climate litigation, exemplified best by this year’s landmark judgment in KlimaSeniorinnen by the European Court of Human Rights. In a similar vein, Small Islands Developing States (SIDS), led by Vanuatu, have successfully championed a request for an advisory opinion from the International Court of Justice that enquires specifically about the “legal consequences … where [States] have caused significant harm to the climate system”, including with respect to “people and individuals … affected by the adverse effects of climate change”. The unprecedented level of participation of States and organisations in these proceedings demonstrates the role of the law in addition to political negotiations.

In KlimaSeniorinnen, ITLOS Advisory Opinion No. 31, Neubauer et al v Germany (“Klimabeschluss”), and other cases around the world, courts have been unequivocal that political hesitation does not preclude legal determinations. Alleged gaps in, for example, the Paris Agreement do not preclude the application of other existing legal norms with their own distinct principles and objectives (see also here and here). In light of the necessity to address the climate crisis, a compelling case emerges for the existing legal frameworks to respond in a manner that is commensurate with the urgency of the situation.

Front Line Individuals Taking Action: Asmania

Against this background, four inhabitants of a small island near Jakarta – Asmania, Mustaqhfirin (“Bobby”), Arif, and Edi – decided not to wait until the funds of the FRLD would eventually reach their heavily impacted island.

Part of a community of traditional fisher folk who are also engaged in small-scale tourism, they are confronted with rising sea levels, recurring tidal floods, and increasing water temperatures. These phenomena have led to, among others, the destruction of property, booking cancellations by tourists, decreased fish stocks, and salinization of ground water. Not least, it has led to all-pervasive anxiety of how to put food on the table today, and where the family will live tomorrow. As Bobby explains:

“We in Pari Island know exactly what awaits us, and that we are in a tough situation. The sea level is rising constantly. We are extremely worried about it, as no one knows where we could go, if our island is submerged.”

Instead of submitting to their fate, the four Pari Islanders went to court, seeking accountability from one of the world’s biggest polluters: Holcim, a Swiss-based company and former market leader in the cement industry. The company does not operate (anymore) in Indonesia, yet it plays a significant part in the fate of the Pari Islanders. It is one of the so-called carbon majors, a “club” of 108 cement and fossil fuel companies that collectively have contributed almost 70% of global industrial greenhouse gas (GHG) emissions since 1751. As such, Holcim has singlehandedly emitted 0.42% of all industrial CO2 emissions.

Supported by three NGOs (WALHI in Indonesia,HEKS HEKS in Switzerland, and ECCHR in Germany), the plaintiffs filed a lawsuit in January 2023 before the Cantonal Court of Zug. Based on Swiss tort law and personality rights, and grounded in human rights, they demand that the company (1) reduce its absolute and relative CO2 emissions, (2) contribute to climate change adaptation measures on Pari Island, and (3) partially redress the plaintiffs’ climate change induced damages (for more detail, see Duarte Reyes / Burri, p. 97).

The case is hence the first to adopt a comprehensive approach to climate change, addressing mitigation, adaptation, and compensation for loss and damage that has already materialized. While the District Court of The Hague had famously obliged Shell to reduce its current and future CO2 emissions (editorial note: On 12 November 2024, after the editorial deadline for this blogpost, the judgment in Milieudefensie v Shell has been overturned by The Hague Court of Appeal. Unlike the first instance court, the Appeal Court found it was unable to establish the exact percentage of the emissions reductions required by the company. However, the Appeal Court confirmed that Shell had “an obligation to limit CO2 emissions in order to counter dangerous climate change”, para. 7.27. The decision can still be appealed.), the Pari Islanders also demand responsibility for Holcim’s historical emissions.

The Pari Islanders’ “Call for Climate Justice”

The lawsuit thus puts into sharp focus a fundamental injustice of the climate crisis, experienced very distinctly by the plaintiffs: Those who have contributed least to global warming and who have benefitted least from the industrial and political processes causing it, are effectively made to bear the consequences. This entails not only economic but also non-economic losses, and grave consequences for the plaintiffs’ human rights. For the women and girls of Pari, the burden is often particularly palpable, as Asmania explains:

“Family incomes are falling steadily, yet women must still manage to look after their families.”

In addition, despite the immense impact of climate change on their lives, the plaintiffs as well as others most vulnerable to its effects have little access to the processes of relevant decision making.

On the other end, the biggest emitters have effectively been able to externalize the real costs of fossil fuel extraction and cement production until today. Companies engaged in emissions-intensive practices also decisively shape the decision-making at fora like the UNFCCC COP and put great effort into preventing any steps that could be detrimental to their business models. In some cases, corporations even have actively deceived the public.

In the US, this has led to   several states, counties and cities suing carbon majors for climate damages. Meanwhile, the State of Vermont has passed a law requiring carbon majors to pay into a “climate superfund” that will finance adaptation measures. Corporate accountability is thus advanced through judicial and political avenues simultaneously.

The Asmania case further demonstrates the global aspect of climate justice. Following the case of Lliuya v RWE, it is the second transnational litigation in which plaintiffs from the Global South are suing a carbon major based in the Global North for its contribution to the climate crisis. In doing so, Asmania, Bobby, Arif and Edi demand recognition of their reality, protection of their rights, and corporate accountability. That emitters like Holcim accept responsibility, however, is not just a matter of fairness; ultimately, it is a question of survival on Pari. As Bobby explains:

“I have spent my entire life on this island. And I would also like my children and grandchildren to be able to live here.”

Conclusion

When global leaders meet in Baku this month to discuss who should pay for loss and damage, they should draw some lessons about climate justice from the example of Asmania: First, the voices of those at the front line of the climate crisis must be heard, and their rights recognized. Second, the question of responsibility must be addressed head-on in political discussions on loss and damage, guided by the time-tested principle of tort law that a person who (culpably) causes damage must pay for it. Third, while it is primarily up to states to find answers to the climate crisis and its impacts, carbon majors cannot continue to avoid accountability for their emissions, both past and present.

Both authors are currently working as Legal Advisors at the European Centre for Constitutional and Human Rights (ECCHR) and the Hilfswerk der Evangelisch-reformierten Kirche Schweiz (HEKS) respectively, which – together with the Indonesian Forum for Environment (WALHI Friends of the Earth Indonesia) – are supporting the applicants in the Asmania v. Holcim case in the Swiss proceedings with a public awareness campaign. The views expressed in this article are solely those of the authors and do not represent any institutional affiliation.