Why your clients may be exposed to more climate change claims

Your business clients may face increased exposure to climate change liability claims, based on a recent decision by the Federal Court of Appeal (FCA).

“With strong language, the Federal Court of Appeal affirmed the ‘existential challenge’ posed by climate change and the courts’ willingness to hear claims that address its potential harms,” says a Torys LLP blog posting on Mondaq.

Jon Silver, Tyson Dyck, John Terry, Dennis Mahony, Andrew Bernstein, Yael Bienenstock and Gillian Dingle all co-authored the Torys LLP piece about the FCA’s December 2023 decision in La Rose v. Canada. The FCA overturned a decision by two lower courts, allowing a s. 7 Charter claim against the Government of Canada for not meeting its greenhouse gas (GHG) emissions targets.

“This decision follows the trend of courts’ willingness to entertain novel climate change claims,” the Torys lawyers observe. “These cases reflect the growing focus on whether companies or governments can achieve their GHG reduction or net-zero targets.

“They also demonstrate that setting a target and then failing to meet it increases the risk of environmental claims.”

Most recently, insurance underwriters have been asking pointed questions of their corporate clients regarding exposure to “greenwashing” claims. Greenwashing is giving the false impression, or publishing misleading information, about whether the company’s products are environmentally sound.

In La Rose, 15 children and youth filed a statement of claim against the federal government when they were between the ages of 10 and 19. They live across Canada in seven provinces and one territory. They allege Canada has failed to address the problem of climate change, violating their equality rights under S. 15 of the Canadian Charter of Rights and Freedoms.

Specifically, they argue, among other things, Canada has failed to meet its GHG targets as established in the 2015 Paris Agreement. The youth say this has interfered “with their physical and psychological integrity and their ability to make fundamental life choices.” The consequences of not dealing with climate change has a disproportionate effect on younger generations, they argue.

Also in La Rose, Indigenous groups argued the government’s lack of action on meeting climate targets constituted a “threat to their identity, to their culture, to their relationship with the land and the life on it, and to their food security.”

Among other things, the Indigenous groups argued this inaction violated their equality rights under S. 15 of the Charter because the impact of the government’s failure to meet its GHG targets affected the indigenous groups disproportionately.

Related: How brokers can prevent D&O clients from getting burned for greenwashing

The Government of Canada asked the courts to strike out the claims essentially because they were so broad, diffuse and political matters for lawmakers, and not suitable for the courts to address (i.e. they were not “justiciable”).

In most instances, the Federal Court of Canada upheld the lower courts’ decisions to strike the claims against the government. But the FCA allowed the S. 7 Charter claims to continue. Under Section 7 of the Charter, “everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.”

Courts have long debated whether the Charter’s Section 7 rights are “positive rights.” In other words, do they require governments to require certain actions or to provide goods to protect these Charter rights?

The Government of Canada argued they were not positive rights.

But the Federal Court found the question was still a matter for debate in the courts. Citing a decision in Kreishan, the FCA wrote: “This court has as well acknowledged the possibility that section 7 may some day impose positive obligations on the state, and noted that this may arise in the context of climate litigation.”

The FCA allowed the Section 7 claim to proceed, because it wasn’t so broad or vague that the courts couldn’t consider it.

“I do not agree, respectfully, that the claims are not justiciable simply because the question of climate change is complex or because the legislation reflects a political choice on how to address the problem,” FCA Justice Donald Rennie wrote for a panel of three judges in a unanimous decision. “While the legislation may be controversial, this does not efface the fact that the debate has been crystallized into law; legislative choices have been made…

“Political choice underlies all legislation and some exercises of executive discretion; both are invariably informed by a wide range of public policy considerations. But once the choices are made, the policy trade-offs considered and the legislative response crystallized, the law is not immunized from Charter scrutiny.”

Feature image courtesy of iStock.com/acilo