Now Reading
Skadden, Arps and Slate have sued large German companies to reduce their CO2 emissions | Skadden, Arps, Slate, Meagher & Flom LLP

Skadden, Arps and Slate have sued large German companies to reduce their CO2 emissions | Skadden, Arps, Slate, Meagher & Flom LLP

Takeaways

  • Four large German companies have been sued by environmental groups to modify their products and activities in order to meet climate goals.
  • The cases derive in part from a decision last year by Germany’s Federal Constitutional Court, which found a major environmental statute unconstitutional in part, saying its near-term emissions were too lax, thereby constraining the options of future generations to combat climate change.
  • By asking courts to impose the plaintiffs’ detailed environmental prescriptions on businesses, the suits present significant separation-of-powers issues.
  • The plaintiffs will have to prove that the defendants were a major contributor to the harm and are in a position of altering overall emissions by others.

Current Environmental Suits: From BMW, Wintershall

Last year, members of environmental groups filed numerous lawsuits against BMW and Mercedes in an attempt to set deadlines for companies to stop creating greenhouse gases. Members of Deutsche Umwelthilfe (Environmental Action Germany), a German non-governmental organization (NGO), filed lawsuits against BMW, Mercedes and Greenpeace in September 2021. All the lawsuits seek court orders to order automotive manufacturers to cease worldwide sales of cars with internal combustion engine engines by 2030. In the meantime, they must sell only cars that emit less than certain levels of carbon dioxide.2. Deutsche Umwelthilfe also sued Wintershall Dea (a gas and oil producer) to stop it from developing new gas and oil fields after 2026. The NGOs aim to use Germany’s courts to impose new obligations on domestic companies related to climate change even though the defendants have complied with German law.

These suits differ from another pending climate change litigation: a Peruvian farmer’s suit against German utility RWE seeking damages to cover the cost of building a dam to protect his home from potential flooding from a glacial lake. He contends that RWE should bear 0.47% of his construction costs because this allegedly corresponds to RWE’s share of global greenhouse gas emissions since the beginning of industrialization.

Federal Constitutional Court Defends Private Climate Suits

Royal Dutch Shell ordered by a Dutch court in 2021 to reduce its CO emissions2The German cases used emissions as a model. However, the German suits draw directly from a March 2021 ruling of Germany’s Federal Constitutional Court that found parts of the Federal Climate Change Act (the Act) unconstitutional on the ground that its emissions standards did not adequately protect the rights of future generations. Climate-related suits seek to apply this ruling to private civil suits against corporations.

The CO was used by court2 budget approach followed by the United Nations’ Intergovernmental Panel on Climate Change and the German Advisory Council on the Environment, which caps CO2Based on the Paris Climate Accords’ maximum permissible temperature threshold, contributions are calculated over time. The court found that the remaining national residual budget of 6.7 gigatons in 2020 will be nearly exhausted by 2030, at the allowed emissions rate under the Act. The court raised serious concerns about constitutionality of the CO based on this finding.2Emissions allowed to 2030, because it allowed too much CO2to be emitted within this decade, creating an irreversible risk that would limit constitutionally protected freedoms in the future. The court only refrained from a constitutional ruling on the effectiveness of the law’s requirements for this time period because of the uncertainties inherent in the calculation of the residual budget, but it expressly reserved the right to demand even more strict reductions from legislators.

The court ruled that CO2The legislation did not adequately regulate reductions after 2030 and was therefore unconstitutional. In response to this ruling, legislators strengthened the Climate Protection Act.

Separation of Powers and Suits may Conflict

Deutsche Umwelthilfe and Greenpeace’s claims are based on the emissions budget approach applied by the court. The plaintiffs calculated a residual CO2 budget for German automakers.

The suits, however, call on the courts for certain enterprises to limit their sales or other activities. This raises serious questions about the separation of power. If legislation to fight climate change is found to be insufficient, it is the legislator’s responsibility to amend it.

In fact, the Federal Constitutional Court cited the separation between powers in a similar case. The court stated that nuclear energy policy was a fundamental question that could only be addressed through the legislature due to the many effects of nuclear power on citizens. The same applies to the weighing of constitutional rights in relation to the fight against climate change.

Proving Causation and Defendants’ Control Over the Nuisance May Pose a Challenge

Environmental suits will likely have difficulty meeting basic civil law principles, including causality.

Like the case against RWE, the cases against BMW, Mercedes and Volkswagen are based on civil law protection of absolute rights like life, property, and privacy. German law requires that the person against whom the claim is asserted must be a “disruptor” (Störer). In the current cases, this can only be a person who (a) sufficiently causes the nuisance directly or — in the case of vehicle emissions — indirectly through third parties and (b) is able to prevent such disruptions.

The plaintiffs must prove that the threatened disruption wouldn’t have been possible without the contribution of these businesses.

Given the global emissions, the relatively small contributions of defendants to total emissions as well as other factors like the storage of CO, are all important.2It is not clear whether plaintiffs can prove causation.

See Also

The second aspect of controllability of nuisance is also highly doubtful. Automakers cannot control the emissions of vehicles that have been sold. This is only within the reach of car owners. Imposing restrictions on the three defendant automakers could also cause consumers to shop at other manufacturers.

Finally, the plaintiffs’ calculations do not consider the effects of disproportionate CO2Because they are unable to forecast technical progress in the emission reduction of CO, savings can be made in other sectors2Many years into the future. Furthermore, the calculation is based on a fixed allocation for the CO2Different industries can be budgeted.

Potential Litigation

Deutsche Umwelthilfe declared that it selected the defendants because (a) they are among the largest corporations in Germany, (b) they are active on a global scale and (c) they allegedly have not provided any (or sufficient) statements as to how they intend to adjust their activities to adequately protect the climate and individuals’ constitutional rights.

The transportation sector is the focus of all environmental suits filed so far. This sector is a major contributor to CO2.2Emissions on a large scale. However, according to the German Federal Ministry for the Environment, transportation’s contribution is significantly smaller than that of energy and industry, and the building sector contributes nearly as much as transportation. This suggests that large Germany-based corporations from these other sectors — as well as the banks financing them — may soon find themselves facing similar suits.

See “Climate-Related Securities Suits Could Increase with New SEC Standards.”

Download PDF

View Comments (0)

Leave a Reply

Your email address will not be published.