30 August 2018
Directors of companies have been put on notice of climate risk and liability during the world’s first national inquiry into the human rights impacts of climate change, in the Philippines today.
Delivering expert evidence to the Philippines Commission on Human Rights (CHR), ClientEarth lawyer Sophie Marjanac highlighted how fossil fuel company directors need to consider the impact of business decisions under the framework the United Nations Guiding Principles on Business and Human Rights.
The commission hearing could set a global precedent if it links the human rights impact of climate change in the Philippines to the actions of 47 of the largest fossil fuel companies – including ExxonMobil, BP, Shell and Total.
Marjanac said: “As climate science improves and the human impacts driving climate change become clearer, it is no longer acceptable for the largest fossil fuel companies to turn a blind eye to the devastating human rights effects of climate change.
“Directors must take the lead and consider human rights and the environment in their business decisions. If they fail to act, they could face mounting risks of legal action as members of the public seek compensation for losses from extreme weather caused or made worse by climate change.”
In this, its third hearing, the case will hear from experts in climate science and the law, who will present their views about how the biggest fossil fuel companies affect extreme weather events in the Philippines, and how much responsibility they should take.
In 2013, Typhoon Haiyan devastated the Philippines killing thousands of people and displacing millions more. The communities then called on the commission to investigate.
In her evidence, Marjanac highlighted how climate attribution science – showing how human greenhouse gas emissions increase the severity of extreme weather events – can open the door to increased litigation.
This science links the increased chance of extreme weather events like heatwaves, droughts or storms, to greenhouse gas emissions. The legal consequence of this is that decision-makers from business and government that fail to include climate change in their planning are at risk of future litigation.
Climate change poses a number of financial risks to companies, from physical risks to assets, supply chains and employees to transition risks from new technologies and new regulations protecting the environment.
Directors of major fossil fuel companies are legally required to act in the best interests of their company. It is an open question as to whether continuing to invest in fossil fuel projects that lead to economy-wrecking climate change breaches that duty.
Under existing laws, companies must disclose how climate change affects their business and under the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), companies should disclose their plans to manage this climate risk under the two-degree temperature goal set by the Paris Agreement.
If they do not, and the fossil fuel majors continue to ignore climate change and take no responsibility for their effect on people and the environment, then lawsuits seeking compensation will only continue to emerge.