13th July 2021
As part of its global approach to ensuring that companies and regulators take action on climate-related risks, ClientEarth is expanding this work to the United States.
We are bolstering our US team, and further developing close partnerships with other US organisations, to drive climate action by leveraging corporate, financial and securities laws.
After establishing a US presence in 2016, the team has worked to share program partnerships, experience and expertise across the Atlantic. Now, our freshly-expanded team includes experienced legal experts who will build on our track record of success in the UK and EU in driving companies and the financial system towards alignment with the goals of the Paris Agreement.
ClientEarth Americas Director Doug Ruley said: “Our team fills a unique niche in the US – incorporating litigation, advocacy and partnerships to help align corporate behaviour with the Paris climate goals.”
“Our team will submit legal opinions outlining how US regulations can better respond to climate risk. We are already engaging in advocacy with the Security and Exchange Commission on climate change disclosures, which would help companies remain resilient in the transition to a net zero economy.
“Strategic litigation is also being explored to ensure companies are fulfilling their legal obligation to monitor and manage climate risks and act in the best interest of their investors.”
ClientEarth’s focus on greenwashing – when companies mislead consumers and investors about their climate and sustainability commitments – will also extend to the US. The recently published Greenwashing Files examine the misleading climate advertising of nine major fossil fuel companies, but this trend extends beyond oil and gas giants alone.
Climate change poses a systemic risk to the economy both in the US and around the world. The Federal Reserve, Treasury Department, and other financial agencies have concluded that climate change poses a major risk to the stability of the entire financial system.
The US is the largest global financial market and contributes substantial financing and other support to coal and other fossil fuel industries. At $21 trillion, it has the highest GDP of any country – in comparison the European Union amounts to around $15 trillion.
As such, the US is an incredibly important country for triggering the corporate and financial transitions required to meet the goals of the Paris Agreement.
The Biden administration named the climate crisis one of its top three priorities, with President Biden re-signing the Paris Agreement on his first day in office. This reaffirmed the Government’s commitment to reaching net zero carbon emissions by 2050.
But US companies and regulators still have a long way to go for this ambition to translate into meaningful action.
ClientEarth’s US team is calling for companies, investors and regulators to better manage and mitigate climate risk.
If companies do not align their activities with the goals of the Paris Agreement, not only will they contribute to climate change – they also risk stranded assets and financial losses.
Doug said: “Companies have a fiduciary duty, or a legal obligation, to act in the best interests of their shareholders.
“It’s now clear that these fiduciary duties include monitoring and managing the risks posed by climate change considerations.”
Investors are increasingly recognising the dangers of climate inaction – a trend that is set to continue. For example, in ExxonMobil’s recent Annual General Meeting, three climate knowledgeable board members won seats on the board in a landmark shareholder vote.
ClientEarth believes regulators also have an important role to play. The US team will advocate for stronger enforcement mechanisms to both guide companies to determine how climate change will affect them, and to hold businesses to account when they don’t take appropriate and timely action.
Photo by Patrick Tomasso on Unsplash