Climate litigants should be allowed their day in court
As climate change impacts escalate, so do legal efforts to hold companies accountable for the damage. With reference to Smith v. Fonterra, currently pending resolution in the New Zealand courts, Sam Bookman argues that moves by governments to shut down such cases leave victims and taxpayers to bear the costs – without any contribution from the companies that have profited most from greenhouse gas pollution.
For the last few years Mike Smith has been asking New Zealand courts to consider his argument that several of the country’s largest companies, including the dairy giant Fonterra, have contributed to climate change by emitting large amounts of greenhouse gases into the atmosphere. In doing so, Smith, who is an elder of Ngāpuhi and Ngāti Kahu (Indigenous Peoples) and the climate change spokesman for the Iwi Chairs Forum, is arguing that these companies have harmed his property and cultural interests in Wainui Bay, located in New Zealand’s far north. As waters warm and rise, fisheries are damaged and pā (fortified villages) and Wahi Tapu (sacred) sites are increasingly being flooded. Greenhouse gases are the main cause of climate change, and many of those gases are emitted by private companies.
Climate litigation is advancing against companies globally
Smith’s case is one of many similar claims being brought around the world. Litigants in these cases point out that they have experienced harm related to climate change and want polluting companies to cover some of the costs, or to reduce their level of emissions, or both. Typhoon victims in the Philippines, farmers in Peru and families of heatstroke victims in the United States have all made similar arguments. For Smith and many others, climate-induced harm is not hypothetical or a vague future threat: it is real and happening already.
In 2024, New Zealand’s highest court agreed that Smith had a case. In a unanimous decision, the justices cleared the way for Smith to have his day in court to argue that the companies had violated longstanding tort law principles of public nuisance and negligence. A full trial has been planned for April 2027, and the parties are busy preparing.
Yet seemingly out of nowhere, on 12 May, New Zealand’s government announced it will introduce legislation to stop any current or future court action against companies contributing to climate change. Justice Minister Paul Goldsmith claimed that the legislation would bring greater “legal clarity and certainty”, and that tort law claims such as Smith’s are “not well-suited to respond to a problem like climate change which involves a range of complex environmental, economic and social factors”.
Shutting down litigation does not resolve questions of responsibility
The problem with this argument is that while climate change may be a complex problem, there still needs to be a way to address the crucial question of who is responsible for climate-related damage. The proposed legislation would shield companies from any share of responsibility.
There are many different ways in which corporations could be held accountable. One way is to require polluting companies to reduce their emissions. Another is to require companies to compensate those affected. In many cases, both of these approaches rely on some kind of litigation. In Smith’s case, he was asking the New Zealand courts to clarify his rights and order the companies to reduce their pollution. In other cases, plaintiffs have asked for monetary awards for damage already suffered.
If not litigation, then what?
There are also ways businesses can be held accountable outside the courts. In New York and Vermont, for instance, state legislatures have passed ‘Superfund’ legislation requiring companies to contribute to climate adaptation and damage costs (though the constitutionality of these bills has been challenged by businesses, conservative states, and the Trump administration). Similar legislation has been suggested in Pakistan and the Philippines. Such legislation follows a common approach: some complex problems are better dealt with through regulatory schemes rather than litigation.
This is the kind of argument New Zealand’s Justice Minister is also trying to make. The problem is that New Zealand’s existing climate laws leave no avenues for claimants like Smith to receive a remedy. It is short-sighted legislation: it will mean that greenhouse gas pollution continues, climate-induced damage increases and the taxpayer will have to pick up the tab. Many changes to the global climate system are likely irreversible. That means that people are experiencing personal and property damage, and will continue to do so. The question is not whether there are costs involved, but rather how they should be shared.
Shielding companies from liability without a legislative path forward is misguided
Laws like the proposed New Zealand legislation make it harder to share those costs with high-emitting companies. People who are affected by climate change might still be able to receive support from their insurers. But insurers are already starting to shrink away from high-risk areas, a trend that will only continue. Climate change victims will be left with only their governments to turn to, who in turn will face costs in propping up insurers (and responding to claims from them).
These laws are also problematic for another reason: they cut off the ability of the courts to consider these claims and develop civil and tort law responses. These responses might not always be perfect and legislators are well within their rights to amend them. But courts should at least be given a chance to apply centuries-old principles – such as the nuisance and negligence arguments developed in Smith’s case – to the present-day problem of climate change.
Further, New Zealand’s law is retrospective. It applies even though Smith has already started his claim, and the case is due to start being heard on the merits. Changing the rules of the game after it has started is a significant problem for access to justice and the rule of law, and only leads to greater uncertainty.
Comprehensive regulatory solutions are needed in a warming world
It would be bad enough if the New Zealand legislation were an isolated incident. But there are many legislatures around the world who have enacted or considered similar liability shields. In the United States, at least one state legislature has passed a similar law, and liability shields are being proposed in Congress. Other countries have also made it more difficult for claimants to take climate cases to court, for instance by making it harder for them to recover their costs. These moves are damaging and short-sighted.
If governments like New Zealand’s are committed to finding solutions to a complex problem like climate change, they should be able to provide their own answers. Existing regulatory approaches, such as emissions trading schemes, are not always up to the task. They are often underinclusive: New Zealand’s emissions trading scheme, for instance, exempts agriculture, by far the highest-emitting sector in the country. It has been repeatedly weakened and is unlikely to keep New Zealand on track to meet its own emissions targets. To be effective, such schemes must be significantly improved and combined with other forms of accountability.
If governments want to shield companies from litigation, they should find regulatory solutions to spread responsibility for responses to climate change. Liability shields, being proposed in New Zealand and notably at the federal level in the US, are not real solutions. Legislation like the ‘Superfund’ laws in New York and Vermont might be a good start. But rather than trying to tell courts what they can’t do, it is time for governments to tell us what they can.
Sam Bookman is a Lecturer at Melbourne Law School.
The views in this commentary are those of the author and do not necessarily represent those of the Grantham Research Institute. The author thanks Kate Higham, Jameela Joy Reyes and Tiffanie Chan for their feedback on this commentary.
About this commentary series
This commentary is part of a series coordinated by the Grantham Research Institute’s climate law and governance team exploring corporate climate litigation and the boundaries and interactions between science, the law and policy. The series contains contributions from legal scholars, economists and other social scientists, reviewed by practising lawyers. It is co-hosted with the Global School of Sustainability at LSE.