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Litigation over relationship between greenhouse gas emissions and global warming likely for companies

Posted by gmarkets on 9 October, 2007

Recent cases, when judges had to consider climate change issues, highlighted the thorny issue of causation between greenhouse gas emissions and global warming, according to The Australian Financial Review (5/10/2007, p.59).

Contributions difficult to prove:
“It will always be difficult to prove how a single company has contributed to greenhouse,” Baker & McKenzie global climate change group head Martijn Wilder said. “But that is what people used to say about smoking. The law and science will have to develop further before that area will be a fruitful area of litigation. It is my view that it is going to be harder for large companies to say they are not causing global warming.”

Shareholder actions possible: Despite such problems, both Taberner at Freehills and Wilder at Baker & McKenzie predicted that climate change issues would still cause headaches for companies if they failed to tackle them properly. Mr Taberner said there were prospects for actions brought by shareholders of a company alleging a diminution of share value because of the company’s conduct in relation to climate change. This could include a failure by the company to respond adequately to existing regulatory requirements or inadequate anticipation of direct exposure to climate change-related liabilities, for example by insurance companies. “The prospects of such actions are increased by the passage through [federal] parliament this month of the National Greenhouse and Energy Reporting Bill 2007,” he said. “The bill will require corporations which emit prescribed levels of greenhouse gases, or which produce or consume prescribed amounts of energy, to apply for registration with the National Greenhouse and Energy Register and to report specified (and publicly available) information under the bill.”

Misleading claims could lead to litigation: Wilder said another area of possible litigation was over misleading or deceptive claims about the environmental impact of a company’s products or services. “A lot of our advice at the moment is around the Trade Practices Act,” Wilder said. “At the moment, there are a lot of people bringing new ‘carbon offset’ and ‘carbon neutral’ products into the market. With a lot of the claims being made you have to be very careful about what you are saying. If you look at some of the claims of carbon neutrality, you need to ask to what extent there is a methodology or science behind them.”

The Australian Financial Review, 5/10/2007, p. 59

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