Environmental, Social and Governance (“ESG”) issues continue to be prevalent in the disputes space, and claimants are continuing to employ creative legal tools to hold companies accountable for their actions.

Applicants have tried – and in 2023 twice failed – to bring derivative claims against directors in relation to climate change issues. In ClientEarth,[1] the Applicant alleged that Shell’s directors had failed to set an appropriate emissions target and had failed to manage climate risk to reasonably achieve Shell’s own net-zero targets and, thereby, had breached some of their directors’ duties under the Companies Act 2006. The High Court refused to grant ClientEarth permission to pursue its claim.[2] Importantly, after a hearing on costs, ClientEarth was also ordered to pay the company’s and the directors’ costs in connection with all aspects of the action.[3]

In McGaughey & Anor v Universities Superannuation Scheme Limited,[4] the applicants alleged, among other things, that the defendant Scheme’s directors had breached their duties under the Companies Act 2006, in that they invested in fossil fuels in spite of the Scheme’s commitment to be carbon neutral by 2050. The High Court and Court of Appeal dismissed the application, largely on the basis that (i) they lacked standing and (ii) the derivative claim against directors should not be used to circumvent direct actions.

Following these judgments, similar claims will now carry significant financial risks for applicants. That being said, by pointing out the shortcomings of the various applications noted above, the Court might have provided guidance to future litigants regarding how such claims must be framed to overcome the procedural hurdles applicable to derivative claims.

Another trend has been an increased scrutiny of companies’ listing particulars. For example, multiple investors have filed claims for compensation against Glencore under section 90 of the FSMA, alleging that they have suffered loss as a consequence of misleading or untrue statements Glencore made in certain of its listing particulars. The claims were brought in the wake of bribery admissions on Glencore’s part. ClientEarth explored a different avenue, bringing an application for judicial review of the Financial Conduct Authority’s decision to approve a prospectus of Ithaca Energy. ClientEarth alleged that the prospectus did not adequately describe the climate-change related risks Ithaca’s business faced. However, the High Court has refused ClientEarth permission to bring the claim.[5]

Another area to watch going forward in the UK will be greenwashing. So far, attention in this area has been focused on the actions of regulators, in particular, the Advertising Standards Authority,[6] the Competition and Markets Authority,[7] and the Financial Conduct Authority.[8] It may well be, however, that companies will face a broader range of claimants in greenwashing-based disputes. In California, for example, Delta Airlines is facing a new class action based on allegedly misleading claims that it is a “carbon-neutral” airline.[9] More specifically, the claimants argue that Delta’s claims were based on its participation in voluntary carbon offsets, but that the projects on the basis of which these offsets had been issued did not achieve the alleged carbon removals (and, accordingly, that the claims as to the emissions that were offset were false). Similar actions are seen in Europe, for example in the Netherlands,[10] and a claim challenging the validity of carbon-credit based carbon-neutrality claims was upheld in the Düsseldorf Regional Court in Germany.[11] That greenwashing claims can, in principle, give rise to civil liability in courts was shown several years ago by the class action brought by Altroconsumo against VW before the Court of Venice.[12] We expect that it is only a matter of time before similar issues arise before the English courts.

Lastly, there are a number of international developments (including outside the realm of private enforcement) that could have significant implications in this area in the UK. For example, the State of California filed cases against several major oil companies,[13] alleging that these companies have misled consumers and the public about climate change for decades. If California is successful in obtaining discovery in those proceedings, this could elicit potentially damaging material and could herald a new era of litigation globally against oil majors, akin to key cases brought against tobacco companies. Likewise, there is a rapidly developing body of research on modelling climate change scenarios, including the attribution of specific extreme weather events to climate change,[14] and the increasing availability of such evidence may prove critical in enabling litigants to establish causal connections necessary to succeed in courts. A number of requests for advisory opinions on climate-change related matters have also been put to international tribunals. For example, the United Nations General Assembly has requested an advisory opinion from the International Court of Justice,[15] including on the scope of States’ obligations under international law in connection with climate change / greenhouse gas emissions, and what liability exists where States have caused significant harm to the climate and the environment. Similar requests have been submitted to the International Tribunal for the Law of the Sea (on specific obligations to prevent, reduce and control negative impacts on the marine environment resulting from climate change),[16] and the Inter-American Court of Human Rights (on the scope of the state obligations for responding to the climate emergency).[17] Developments such as these generate the kind of momentum that, for example, allowed the Dutch court in Milieudefensie et al. v Royal Dutch Shell plc to interpret Dutch tort law to require Shell to reduce its scope 1, 2, and 3 CO2 emissions,[18] and we expect that these international developments may, in time, impact climate change litigation in the UK.


The following post was originally included as part of our recently published memorandum “Looking Forward Into 2024 and Beyond: Seven Trends in UK Disputes

[1] ClientEarth v Shell plc & Ors [2023] EWHC 1137 (Ch); ClientEarth v Shell plc [2023] EWHC 1897 (Ch)

[2] See Cleary Gottlieb, High Court Reaffirms Decision to Refuse Permission for Derivative Claim Against Shell’s Board of Directors (31 July 2023), https://www.clearygottlieb.com/-/media/files/alert-memos-2023/high-court-dismisses-clientearth-claim-against-shell-board-of-directors.pdf.

[3] See Cleary Gottlieb, ClientEarth Ordered to Pay Shell’s Costs After Dismissal of Derivative Claim Against Shell’s Board of Directors (6 September 2023),  https://client.clearygottlieb.com/63/3002/uploads/2023-09-06–clientearth-ordered-to-pay-shell-s-costs-after-dismissal-of-derivative-claim-against-shell-s-board-of-directors.pdf.

[4] McGaughey & Anor v Universities Superannuation Scheme Ltd & Ors [2023] EWCA Civ 873.

[5] R (on the application of ClientEarth) v Financial Conduct Authority [2023] EWHC 3301 (Admin)

[6] See Advertising Standards Authority, ASA Ruling on Shell UK Ltd t/a Shell (7 June 2023), https://www.asa.org.uk/rulings/shell-uk-ltd-g22-1170842-shell-uk-ltd.html.

[7] See, e.g., Competition and Markets Authority, CMA to scrutinise ‘green’ claims in sales of household essentials (26 January 2023), https://www.gov.uk/government/news/cma-to-scrutinise-green-claims-in-sales-of-household-essentials; and the recent announcement by the CMA that it would scrutinise ‘green’ claims made by Unilever: Competition and Markets Authority, Unilever’s ‘green’ claims come under CMA microscope (12 December 2023), https://www.gov.uk/government/news/unilevers-green-claims-come-under-cma-microscope.

[8] See, e.g., the FCA’s recent consultation on guidance on a new anti-greenwashing rule: Financial Conduct Authority, Guidance on the Anti-Greenwashing rule (28 November 2023), https://www.fca.org.uk/publication/guidance-consultation/gc23-3.pdf.

[9] Berrin v. Delta Air Lines Inc., https://climatecasechart.com/case/berrin-v-delta-air-lines-inc/#:~:text=(Delta)%20filed%20a%20class%20action,%E2%80%9Ccarbon%2Dneutral%E2%80%9D%20airline.

[10] FossielVrij NL v. KLM, https://climatecasechart.com/non-us-case/fossielvrij-nl-v-klm/.

[11] Deutsche Umwelthilfe v. TotalEnergies Wärme & Kraftstoff Deutschland GmbH, https://climatecasechart.com/non-us-case/deutsche-umwelthilfe-v-totalenergies-warmekraftstoff-deutschland-gmbh/#:~:text=This%20case%20is%20part%20of,of%20climate%20neutrality%20were%20misleading.

[12] Altroconsumo v. Volkswagen Aktiengesellschaft and Volkswagen Group Italia S.p.A, https://climatecasechart.com/non-us-case/altroconsumo-v-volkswagen-aktiengesellschaft-and-volkswagen-group-italia-spa/.

[13] See Complaint for Abatement, Equitable Relief, Penalties, and Damages, https://oag.ca.gov/system/files/attachments/press-docs/FINAL%209-15%20COMPLAINT.pdf.

[14] See, e.g., the World Weather Attribution initiative, https://www.worldweatherattribution.org/.

[15] See UN General Assembly Resolution, Request for an advisory opinion of the International Court of

Justice on the obligations of States in respect of climate change (1 March 2023), https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2023/20230301_18913_na.pdf; and the ICJ’s order fixing deadlines for submission of written statements and comments by the UN and its Member States: Obligations of States in Respect of Climate Change (Request For Advisory Opinion) (20 April 2023), https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2023/20230420_18913_order.pdf.

[16] See Request for an Advisory Opinion submitted by the Commission of Small Island States on Climate Change and International Law (Request for Advisory Opinion submitted to the Tribunal)”, https://www.itlos.org/en/main/cases/list-of-cases/request-for-an-advisory-opinion-submitted-by-the-commission-of-small-island-states-on-climate-change-and-international-law-request-for-advisory-opinion-submitted-to-the-tribunal/.

[17] See an unofficial translation of the advisory opinion request by Colombia and Chile: https://climatecasechart.com/wp-content/uploads/non-us-case-documents/2023/20230109_18528_petition-2.pdf.

[18] See Cleary Gottlieb, Dutch Court Orders Shell to Reduce Emissions in First Climate Change Ruling Against Company (30 June 2021), https://www.clearygottlieb.com/-/media/files/alert-memos-2021/dutch-court-orders-shell-to-reduce-emissions-in-first-climate-change-ruling-against-company.pdf.