LEGAL ACTION FOR THE CLIMATE GOAL: TOWARDS EQUITY, SURVIVAL AND THE RULE OF LAW
“PRESIDENT TRUMP MAY HAVE HIS ALTERNATIVE FACTS,
BUT ALTERNATIVE FACTS DO NOT WORK IN A COURTROOM”
Corporate and Investor Responsibilities
Excerpts from Petition to Philippines Human Rights Commission:
The corporate responsibility to respect human rights is articulated in the UN Guiding Principles on Business and Human Rights, which reflect norms and standards on the responsibility of corporate actors.
The Guiding Principles explicitly call on companies to respect human rights. As stated in the Guiding Principles, corporate responsibility to respect human rights is not optional—it arises from a global standard of expected conduct that is often reflected in national laws and regulations. The Guiding Principles set forth a number of foundational and operational principles concerning the corporate responsibility to respect human rights. Specifically, foundational Principles 11 and 12 are relevant to the Carbon Majors and the impacts of their global operations:
Foundational Principle 11: Business enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved; and
Foundational Principle 12: The responsibility of business enterprises to respect human rights refers to internationally recognized human rights.
These Principles recognize that the corporate responsibility to respect human rights applies to virtually the entire spectrum of internationally recognized human rights, including those expressed in the “Universal Declaration of Human Rights and the main instruments through which it has been codified: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights, coupled with the principles concerning fundamental rights in the eight ILO core conventions as set out in the Declaration on Fundamental Principles and Rights at Work.
As discussed in the Interpretive Guide, all businesses must not only comply with national laws and regulations incorporating international human rights standards, but also with a global standard of conduct:
In many cases the responsibility of enterprises to respect human rights is reflected at least in part in domestic law or regulations corresponding to international human rights standards.... The responsibility to respect human rights is not, however, limited to compliance with such domestic law provisions. It exists over and above legal compliance, constituting a global standard of expected conduct applicable to all businesses in all situations. It therefore also exists independently of an enterprise’s own commitments for human rights.
With respect to the manner in which companies should respect these rights, Foundational Principle 13 of the Guiding Principles provides that business enterprises are required to:
(a) Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur; [and] (b) Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.
The Interpretive Guide describes the ways in which a business’s activities may “cause,” “contribute,” or “be directly linked” to adverse impacts on human rights. For example, a corporation may be deemed to have caused an adverse impact if it is the “sole or main source” of environmental harm in a community. A corporation may have contributed to an adverse impact if it is one among other sources that have caused such harm or if it provides products or services to a third party that then causes harm. Business activities can be directly linked to adverse impacts if the corporation supplies products or services to an entitythat causes or contributes to adverse impacts. With respect to “cause” and “contribute”, a corporation that is responsible for the adverse impacts “should cease or change the activity... in order to prevent or mitigate the chance of the impact occurring or recurring;” and if an impact does occur, remediation is necessary “either directly or in cooperation with others (be it the courts, the Government, other enterprises involved or other third parties).” Whereas for “directly linked”, the corporation has a responsibility to use its “leverage to encourage the entity that caused or contributed to the impact to prevent or mitigate its recurrence.”
As part of their corporate responsibility to respect human rights, the Carbon Majors are required to exercise due diligence in their business activities or relationships. Guiding Principle 17 explains that businesses should “identify, prevent, mitigate and account for how they address their adverse human rights impacts” by carrying out human rights due diligence. The human rights due diligence process includes the following elements:
Assessing actual and potential impacts of business activities on human rights;
Acting on the findings of this assessment, including by integrating appropriate measures to address impacts into company policies and practices;
Tracking how effective the measures taken are in preventing or mitigating adverse human rights impacts; and
Communicating to the outside world about the due diligence process and results.
The scope of due diligence includes “adverse human rights impacts that the business enterprise may cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships.” Further, this process should be on-going and involve meaningful consultation with potentially affected groups and other relevant stakeholders.
Inconsistent with the requirement of due diligence in corporate responsibility, these companies are making long-term investments based on a scenario in which global consumption of fossil fuels continues to grow, thus warming the earth to levels that will lead to dangerous anthropogenic interference with the climate system resulting in human rights impacts. For example, Exxon publicly dismissed a “low carbon” scenario—stabilization of the global temperature increase to not exceed 2° Celsius by 2100—and continues to invest its resources contrary to the 2° Celsius goal. Similarly, according to Energy Transition Advisors and the Carbon Tracker Initiative, Shell is making its projections based on a scenario that puts the world on a pathway for a temperature rise of roughly 6° Celsius.
The Carbon Majors are ignoring the science and the harms related to the combustion and use of the coal, oil and gas that they produce. The companies have the technical and financial capability to prevent the harm. As a means to comply with the requirements of identifying, preventing, mitigating, and accounting for adverse human rights impacts, it is important that immediate steps are taken by the companies to eliminate the risk of further human rights infringements.
'The prudence standard ... can easily support a decision not to continue to hold or invest in fossil fuel companies. The risks and rewards now offered by such securities are asymmetric, in the sense that the foreseeable rewards are not likely to be equal to the foreseeable risks.'
'The risk that, at some unknown and unknowable, yet highly likely, point in the future, markets will begin to adjust the equity price of fossil fuel company securities downward to reflect the swiftly changing future prospects of those companies, is as serious as it is immense.'
Bevis Longstreth, 2016
"All corporations owe it to their shareholders to fully analyze and disclose risks they face including climate risks. Those who fail to do so should be held accountable. Democrats also respectfully request the Department of Justice investigate allegations of corporate fraud on the part of fossil fuel companies accused of misleading shareholders and the public on the scientific reality of climate change."
US Democratic National Convention, Platform Hearing, June 2016
EU DIRECTIVE 2014/95 of 22 October 2014 regarding disclosure of non-financial and diversity information by certain large undertakings and groups
CDP (formerly 'Carbon Disclosure Project')
Dominic Liswaniso Lungowe & others v Vedanta Resources Plc and Konkola Copper Mines Plc (2016): case confirming the potential liability of a parent company for the actions of its subsidiaries, and jurisdiction of the High Court of England and Wales over complaints brought by villagers in Zambia.
26 September 2016: A New Debate Over Pricing the Risks of Climate Change
21 September 2016: SEC Involvement Sharpens #ExxonKnew Focus on What Its Accountants Knew
19 August 2016: Exxon Mobil Fraud Inquiry Said to Focus More on Future Than Past
11 August 2016: Inside the mirage of good climate info at the SEC
'At least six companies, primarily coal firms, have told the U.S. Securities and Exchange Commission that the divestiture push threatens their business and has lead to at least 10 banks shutting off coal industry loans' Benjamin Hulac, E&E reporter, 27 June 2016
OECD Guidelines for Multinational Enterprises, 2011 Edition: Enterprises should ... take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development.
UN Global Compact 2000 (with 12,000+ signatories in 170 countries):
Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and
Principle 2: make sure that they are not complicit in human rights abuses.
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.
'The investigation found Peabody had repeatedly denied in financial filings that it had the ability to predict the impact of potential regulation, when in fact it and its consultants had actually made projections detailing severe impacts on the company. There was a clear discrepancy between the company’s public disclosures and private knowledge. The Attorney General concluded that Peabody’s public disclosures focused on the IEA scenario most favourable to coal demand but which assumes governments will fail to adopt any new policies or regulations with the omission of the IEA’s other two scenarios which provide a less favourable view on future coal demand.'
From Greenpeace UK Investor Briefing
In a departure from previous years, the U.S. Securities and Exchange Commission recently decided, over objections from the company, that Exxon must allow shareholders to vote on a number resolutions related to climate change at the upcoming annual general meeting.