Climate change: risks and recommendations for companies and their boards illustrated by an analysis under Swiss law

ABSTRACT

Climate litigation against companies has increased significantly in the past couple of years. At the same time, regulation with respect to climate change is developing rapidly, such that it may be difficult for companies to identify which laws apply to them and how they should address the legal risks relating to climate change and climate litigation. This paper discusses court rulings which could be considered ‘landmark cases’ since they are the first to assess questions around the responsibility for climate-related damages and the curbing of CO₂ emissions, and highlights climate litigation proceedings that are still pending, illustrating the types of claims which may be expected going forward. It then outlines the risks for companies or their boards of directors to be sued for alleged damages relating to climate change or greenwashing, illustrated by an analysis under Swiss laws, and provides concrete measures for boards of directors and the management of companies to minimise these risks.

KEYWORDS:

• Climate change
• climate litigation
• directors liability
• greenwashing claims

Acknowledgements

Special thanks to Prof. Dr. Rolf Watter and Dr. Vera Naegeli for their review, to Prof. Dr. Aline Darbellay for the inspiration to write this article, and to Prof. Dr. Kern Alexander for the platform and support with its publication.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 For example, The Guardian has a dedicated section on the ‘Climate Crisis’ (see <https://www.theguardian.com/environment/climate-crisis> accessed 5 September 2023), and the Economist publishes a newsletter on climate change on a bi-weekly basis (see <https://www.economist.com/newsletters/the-climate-issue> accessed 5 September 2023).

2 For example, Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector [2019] OJ L317/1; Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment [2020] OJ L198/13; Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks [2019] OJ L317/17.

3 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 on establishing a scheme for greenhouse gas emission allowance trading within the Community [2003] OJ L275/32. Since 1 January 2020, it is also connected to the Swiss ETS (Agreement between the Swiss Confederation and the European Union on the linking of their Greenhouse Gas Emissions Trading Systems of 23 November 2017, SR 0.814.011.268), hence the European emission allowance trading market is since then open to Swiss companies and vice versa.

4 Directive 2022/2464/EU of the European Parliament and of the Council of 14 December 2022 as regards corporate sustainability reporting [2022] OJ L322/15.

5 Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 as regards disclosure of non-financial and diversity information by certain large undertakings and groups [2014] OJ L330/1, art. 1.

6 This is a non-exhaustive exemplary list.

7 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector [2019] OJ L317/1.

8 See art 6(1) and (2).

9 Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks [2019] OJ L317/17. The Regulation sets forth uniform definitions for indices, based on which an index can no longer be referred to as ‘low carbon’. Instead, if the prerequisites are fulfilled, an ‘EU Climate Transition Benchmark’ or a ‘EU Paris-aligned Benchmark’ must be disclosed.

10 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment [2020] OJ L198/13.

11 Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 (CSDDD).

12 The CSDDD proposal does not only cover environmental matters, but also human rights (particularly child labor and the exploitation of workers). For the purposes of this article, the focus will be on environmental matters.

13 Art.2(2) and cons. 23 and 24 of the proposal for the CSDDD. The directive is intended to apply to companies from third countries which, in the financial year preceding the last completed financial year, have achieved a net turnover in the European Union of more than EUR 150 million or a net turnover of between EUR 40 million and EUR 150 million in one or more of the sectors with a high potential of adverse impacts.

14 Art 1(1)(a) of the proposed CSDDD. The terms ‘established business relationships’ and ‘value chain’ are defined in art 3(f) and (g), respectively.

15 See art 4(1) of the proposed CSDDD.

16 Art 15(2) of the proposed CSDDD.

17 See art 17 in conjunction with art 18 and art 20(1) of the proposed CSDDD.

18 Art 20(3) and (4) of the proposed CSDDD.

19 European Parliament, Press Releases, ‘Companies to be more accountable for their social and environmental impact’ of 15 March 2022 <https://www.europarl.europa.eu/news/en/press-room/20220314IPR25409/companies-to-be-more-accountable-for-their-social-and-environmental-impact> accessed 5 September 2023.

20 Institute of Chartered Accountants in England and Wales (ICAEW), Insights, EU sustainability reporting and assurance rules move closer, 16 March 2022 <https://www.icaew.com/insights/viewpoints-on-the-news/2022/mar-2022/eu-sustainability-reporting-and-assurance-rules-move-closer> accessed 5 September 2023.

21 European Commission, Press release of 22 March 2023, <https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1692> accessed 5 September 2023.

22 Paris Agreement of 12 December 2015, SR 0.814.012.

23 Art. 1(1) of the Federal Act on the Reduction of CO₂ Emissions (CO₂ Act) of 23 December 2011, SR 641.71.

24 See art 10 et seq. CO₂ Act.

25 Art 29 et seq. CO₂ Act.

26 Art 9 CO₂ Act.

27 The operators of installations which are allowed and obliged to participate in the ETS are defined in the annexes to the Ordinance on the Reduction of CO₂ Emissions of 30 November 2012, SR 641.711 (CO₂ Ordinance). Obliged to participate are, e.g., operators of mineral oil refineries, production facilities for coke, pig iron or steel, primary aluminum and others (see Annex 6 of the CO₂ Ordinance).; See art 15 et seq. CO₂ Act.

28 The CO₂ Act has undergone a total revision in 2020 and the revised version should have entered into force in 2021. However, voters called for an optional national referendum against the revised CO₂ Act and rejected it in the vote of 13 June 2021 (Federal Chancellery (FC), Results on the Proposal No. 644 in the Vote of 13 June 2021 regarding the Federal Act of 25 September 2020 on the Reduction of Greenhouse Gas Emissions (CO₂ Act) <https://www.bk.admin.ch/ch/d/pore/va/20210613/can644.html> accessed 5 September 2023). Therefore, by amendment of 17 December 2021, the reduction goals for greenhouse gas emissions were lowered by a further 1.5% compared to 1990 and the measures which would otherwise have expired by the end of 2021 were prolonged until 2024 (see initiative of the parliament on the prolongation of the reduction goals in the current CO₂ Act of 23 August 2021, BBl 2021 2252 et seq., as well as the revision of the CO₂ Act of 17 December 2021, AS 2022 262 et seq.).

29 Federal Council, Climate Politics: Federal Council releases for consultation the revised CO₂ Act, Press release of 17 December 2017 <https://www.admin.ch/gov/de/start/dokumentation/medienmitteilungen.msg-id-86492.html#:~:text=Mit%20dem%20revidierten%20CO2%2DGesetz,Zeit%20von%202025%20bis%202030> accessed 5 September 2023.

30 See art 964a et seq. of the Federal Act on the Amendment of the Swiss Civil Code (Part Five: The Code of Obligations) of 30 March 1911, SR 220 (‘CO’).

31 In scope are companies (1) of public interest in the sense of art 2(c) of the Audit Supervision Act of 16 December 2005, i.e., public companies as per art 727(1) no. 1 CO or companies under the supervision of the Financial Market Supervisory Authority (‘FINMA’) as per art. 3 of the Federal Act on the Swiss Financial Market Supervisory Authority of 22 June 2007 (‘FINMASA’), which are obliged to have an audit performed by a licensed auditor in accordance with art 24 FINMASA; and (2) together with Swiss or foreign undertakings they control, have at least 500 FTE on average and exceed either a balance sheet total of CHF 20 million or sales revenues of CHF 40 million in two successive financial years (art 964a(1) CO).

32 Art 964b(1) CO.

33 See art 964b(5) CO.

34 Federal Council, ‘The Federal Council brings ordinance on mandatory climate disclosures for large companies into force as of 1 January 2024’, Press release of 23 November 2022 <https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-91859.html> accessed 5 September 2023.

35 See art 1(2) of the Climate Disclosure Ordinance.

36 TCFD Recommendations <https://www.fsb-tcfd.org/publications/> accessed 5 September 2023).

37 Art 2(1) in conjunction with art 3 of the Climate Disclosure Ordinance.

38 For financial institutions, there are additional disclosure requirements based on FINMA Circulars 2016/1 ‘Disclosure – banks’ and 2016/2 ‘Disclosure – insurers’, and FINMA Guidance 03/2022 on the implementation of climate-related risk disclosures by category 1-2 institutions of 29 November 2022.

39 For example, the proposed CSDDD refers to the OECD Guidelines for Multinational Enterprises (cons. 39) and the Ordinance on climate reporting establishes the presumption that the obligations under art 964b CO are fulfilled if a company applies the TCFD recommendations (see section B.II above).

40 This is demonstrated, for example, by the fact that the European Supervisory Authorities (ESAs), which are tasked with developing technical assessment criteria (Regulatory Technical Standards, RTS’) with respect to the sustainability-related transparency obligations within the meaning of the Disclosure Regulation (EU) 2019/2088 and the Taxonomy Regulation (EU) 2020/852 postponed the application date by one year (see Updated Joint ESA Supervisory Statement on the application of the Sustainable Finance Disclosure Regulation of 24 March 2022, JC 2022 12 <https://www.esma.europa.eu/sites/default/files/library/jc_2022_12_-_updated_supervisory_statement_on_the_application_of_the_sfdr.pdf> accessed 5 September 2023.

41 See below Milieudefensie v. Shell, cons. 23 et seq.

42 UN, ‘Guiding Principles on Business and Human Rights’ [2011] <https://www.ohchr.org/sites/default/files/documents/publications/GuidingprinciplesBusinesshr_eN.pdf> accessed 5 September 2023.

43 See p. 6 NAP.

44 OECD, ‘OECD Guidelines for Multinational Enterprises’ [2011] <https://www.oecd.org/daf/inv/mne/48004323.pdf> accessed 5 September 2023.

45 See chapter IV of the OECD Guidelines for Multinational Enterprises, particularly art 6(c).

46 TCFD, ‘Recommendation of the Task Force on Climate-related Financial Disclosures’ [2017], <https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf> and the ‘Guidance on Metrics, Targets and Transition Plans’ [2021] <https://assets.bbhub.io/company/sites/60/2021/07/2021-Metrics_Targets_Guidance-1.pdf> both accessed 5 September 2023.

47 Global Reporting Initiative <https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/> accessed 5 September 2023.

48 SASB <https://www.sasb.org/about/> accessed 5 September 2023.

49 See <https://www.sasb.org/knowledge-hub/sasb-implementation-supplement-greenhouse-gas-emissions-and-sasb-standards/> accessed 5 September 2023.

50 UN, ‘Principles for Responsible Banking’ <https://www.unepfi.org/banking/bankingprinciples/> accessed 5 September 2023. This is a framework agreement whereby the signatory banks are obliged to align their policies and practices with the UN Sustainable Development Goals and the Paris Agreement. Over 270 banks, which hold more than 45% of bankable assets, have signed up to the agreement.

51 The European Public Real Estate Association (EPRA) first issued guidelines for consistent measurement and reporting of sustainability performance in 2011, based on the ‘GRI Supplementary Guidelines for the Construction and Real Estate Sectors’; the third edition was published in September 2017 (see <https://www.epra.com/sustainability/sustainability-reporting/guidelines>; the guidelines are available at <https://www.epra.com/application/files/3315/0456/0337/EPRA_sBPR_Guidelines_2017.pdf> both accessed 5 September 2023).

52 Joanna Setzer and others, ‘Climate change litigation and central banks’ (2021) in European Central Bank, Legal Working Paper Series 21/2021, 8.

53 Joanna Setzer and Catherine Higham, ‘Global trends in climate change litigation: 2022 snapshot’ (2022) Policy report 9 <https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2022/08/Global-trends-in-climate-change-litigation-2022-snapshot.pdf> accessed 5 September 2023.

54 ibid. 9.

55 ibid. 11. For example, German Federal Constitutional Court (‘Bundesverfassungsgericht’), Ruling of the First Senate of 24 March 2021, 1 BvR 2656/18, N 1-270 <http://www.bverfg.de/e/rs20210324_1bvr265618.html≥, or The Hague District Court, decision C/09/456689 of 24 June 2015, Urgenda Foundation vs. Netherlands, English translation <www.climate-laws.org>, both accessed 5 September 2023.

56 FSC 146 I 145 cons. A. Specifically, the applicants requested that (i) the emission reduction target pursuant to art 3(1) of the CO₂ Act should be corrected and for this purpose, a preliminary legislative procedure should be initiated with the aim of legally anchoring a reduction target of at least 25% by 2020 in conformity with the constitution, the law and international public law; (ii) the necessary emission reduction measures should be taken, such as the promotion of electric mobility, the enactment of building regulations, the introduction of a CO₂ tax on fuels, and agriculture should be included; (iii) a preliminary legislative procedure should be initiated and a reduction target of at least 50% for the year 2030 compared to 1990, including the necessary measures, should be recommended; and (iv) the measures for the reduction of greenhouse gas emissions already provided for by law should be implemented consistently such that the legally defined reduction target could be achieved by 2020.

57 FSC 146 I 145 cons. B and C.

58 Federal Act on Administrative Procedure of 20 December 1968 (Administrative Procedure Act, ‘APA’), SR 172.021. According to art 25a(1) APA, any person who has an interest that is worthy of protection may request from the authority that is responsible for acts that are based on federal public law and which affect rights or obligations that it (a) refrains from, discontinues or revokes unlawful acts; (b) rectifies the consequences of unlawful acts; or (c) confirms the illegality of such acts.

59 FSC 146 I 145 cons. 4.4.

60 Federal Constitution of the Swiss Confederation of 18 April 1999, SR 101.

61 European Convention on Human Rights and Fundamental Freedoms of 4 November 1950 (‘ECHR’), SR 0.101.

62 FSC 146 I 145 cons. 5.4.

63 FSC 146 I 145 cons. 5.5.

64 FSC 146 I 145 cons. 6.2.

65 European Court of Human Rights, Press release of 29 March 2023, ‘Grand Chamber hearing on consequences of global warming on living conditions and health’, ECHR 094 (2023).

66 Federal Constitutional Court, Ruling of the First Senate of 24 March 2021, 1 BvR 2656/18, 1 BvR 78/20, 1 BvR 96/20, 1 BvR 288/20 (hereinafter ‘Neubauer v. Germany’), cons. A.

67 Basic Law for the Federal Republic of Germany of May 25, 1949 (‘GG’). Art. 2(2) sentence 1 reads as follows: ‘Every person shall have the right to life and physical integrity’. This provision hence corresponds to art 10(2) of the Swiss Constitution.

68 Neubauer v. Germany (n 66) key ruling 1. Contrary to the Swiss Federal Supreme Court in the similar case brought by the association of climate seniors, the German Federal Constitutional Court also held that this was no inadmissible popular complaint; the mere fact that a very large number of people were affected did not preclude individual fundamental rights of the plaintiffs being affected (see Neubauer v. Germany, cons. 110).

69 Federal Climate Change Act of 12 December 2019 (Bundes-Klimaschutzgesetz).; Neubauer v. Germany, cons. 152 et seq.

70 § 3(1) sentence 2 of the Climate Change Act states that greenhouse gas emissions shall be reduced by at least 65% compared to 1990 until the year 2030. § 4(1) sentence 3 of the Climate Change Act in connection with annex 2 sets the annual reduction goals by setting emissions targets for the following sectors: energy, industry, transport, buildings, agriculture, waste management and others.

71 Neubauer v. Germany (n 66) cons. 184.

72 ibid, cons. 186.

73 ibid. cons. 266 et seq.

74 § 4(1) and (6) of the Climate Change Act state that for the periods from 2031 onwards, the annual reduction targets shall be updated by means of a statutory instrument which shall be consistent with the requirements of European Union legislation and require the consent of the Bundestag.

75 Catherine Higham and Honor Kerry, ‘Taking companies to court over climate change: who is being targeted’ [2022] LSE Business Review <https://www.lse.ac.uk/granthaminstitute/news/taking-companies-to-court-over-climate-change-who-is-being-targeted/> accessed 5 September 2023.

76 Australasian Centre for Corporate Responsibility (ACCR) v. Santos, Federal Court of Australia, pending since 25 August 2021 <http://climatecasechart.com/non-us-case/australasian-centre-for-corporate-responsibility-v-santos/> accessed 5 September 2023.

77 Barbara Metz et al. v. Wintershall Dea AG, Regional Court Kassel (Germany), pending since 4 October 2021 <http://climatecasechart.com/non-us-case/barbara-metz-et-al-v-wintershall-dea-ag/> accessed 5 September 2023.; Some other lawsuits due to planned investments in emission-heavy projects and alleged violations of climate rules are pending in the United States, see Higham / Kerry (n 75).

78 ‘TotalEnergies target of lawsuit to test “greenwashing” in advertising’ (Financial Times, 22 March 2022) <https://www.ft.com/content/bdef4e7a-7bc9-4061-968a-a68d9aa32771>; ‘Total Accused of “Sly Propaganda” in Clash Over Net Zero Claims’ (Bloomberg, 3 March2022] <https://www.bloomberg.com/news/articles/2022-03-03/total-accused-of-sly-propaganda-in-clash-over-net-zero-claims?leadSource=uverify%20wall> both accessed 5 September 2023.

79 Setzer and Higham (n 53), 14.

80 Envol Vert et al. v. Casino Group, Tribunal Judiciare de Saint-Étienne Judicial, pending since 2 March 2021, statement of claim <http://climatecasechart.com/non-us-case/envol-vert-et-al-v-casino/> accessed 5 September 2023.

81 Vegetarian Society of Denmark, Climate Movement and Green Student Movement v. Danish Crown, Danish Western High Court, pending since May 2022, see <http://climatecasechart.com/non-us-case/vegetarian-society-et-al-of-denmark-v-danish-crown> accessed 5 September 2023.

82 Deutsche Umwelthilfe (DUH) v. Bayerische Motoren Werke AG (BMW), Regional Court Munich, pending since 20 September 2021, statement of claim <http://climatecasechart.com/non-us-case/deutsche-umwelthilfe-duh-v-bmw/> and DUH v. Mercedes-Benz AG, Regional Court Stuttgart, pending since 20 September 2021 <http://climatecasechart.com/non-us-case/deutsche-umwelthilfe-duh-v-mercedes-benz-ag/> both accessed 5 September 2023.

83 See above section C.II.2.

84 Scope 1 emissions are the direct emissions that a company causes operating the things that it owns or controls; scope 2 emissions are indirect emissions created by the production of energy that an organisation buys; scope 3 emissions are indirect emissions created by the customers using the company’s products or those created by suppliers making products that the company uses (see World Economic Forum, ‘What is the difference between Scope 1, 2 and 3 emissions, and what are companies doing to cut all three?’ [2022] <https://www.weforum.org/agenda/2022/09/scope-emissions-climate-greenhouse-business/> accessed 5 September 2023).

85 ‘Climate change in court: German farmer sues Volkswagen over high emissions’ (Euronews, 20 May 2022) <https://www.euronews.com/green/2022/05/20/climate-change-in-court-german-farmer-sues-volkswagen-over-high-emissions>; ‘Volkswagen Faces Court Case to Eliminate Polluting Cars by 2030’ (Bloomberg, 20 May2022) <https://www.bloomberg.com/news/articles/2022-05-20/volkswagen-pitted-against-organic-farmer-in-climate-court-clash> both accessed 5 September 2023.

86 ‘European Parliament votes to ban combustion engine cars from 2035’ (Politico, 8 June 2022) <https://www.politico.eu/article/european-parliament-votes-to-ban-combustion-engine-cars-from-2035/≥ accessed 5 September 2023.

87 ‘The Climate Case: Saúl versus RWE’ (Germanwatch, 2023) <https://www.germanwatch.org/en/rwe> accessed 5 September 2023.

88 ‘Historischer Durchbruch mit weltweiter Relevanz bei “Klimaklage”’ (Germanwatch, 30 November 2017), <https://www.germanwatch.org/de/14794> accessed 5 September 2023.

89 ‘Klimaklage gegen RWE in der entscheidenden Phase: Ortstermin mit Gutachtern in Peru abgeschlossen’ (Germanwatch, 27 May 2022) <https://www.germanwatch.org/de/85437> accessed 5 September 2023.

90 ‘Saúl Luciano Lliuya against RWE: expert opinion expected in summer’ (climatecase, 2022) <https://rwe.climatecase.org/en/news-presse-releases/article/saul-luciano-lliuya-against-rwe-expert-opinion-expected-summer> accessed 5 September 2023.

91 Pascal Lago, ‘Inselbewohner fordern Entschädigung von Holcim’ (SRF News, 12 July 2022) <https://www.srf.ch/news/wirtschaft/klimakrise-in-indonesien-inselbewohner-fordern-entschaedigung-von-holcim>; Matthias Müller, ‘Der Klimawandel bedroht ihr Paradies: Vier Indonesier wehren sich und verklagen den Weltkonzern Holcim’ (Neue Zürcher Zeitung 1 February 2023) <https://www.nzz.ch/wirtschaft/klimawandel-vier-indonesier-aus-pari-verklagen-holcim-ld.1723520> both accessed 5 September 2023.

92 ‘Fischer verklagen Holcim AG’ (Capital, 11 July 2022) <https://www.capital.de/wirtschaft-politik/klimaklage-gegen-zement-riesen--fischer-verklagen-holcim-ag-32531190.html> accessed 5 September 2023.

93 See Engadin St. Moritz Mountains AG’s website <https://www.mountains.ch/de/nachhaltigkeit/nachhaltigkeit-im-schneesport-bergerlebnis/> accessed 5 September 2023.

94 Based on media articles from December 2022 stating that compensation was only mentioned in a side note, it is likely that the language was amended after complaints were raised, see e.g., ‘Complaint Against CO₂ Neutral Skiing’ (Konsumentenschutz, 9 December 2022) <https://www.konsumentenschutz.ch/allgemein/2022/12/beschwerde-gegen-co2-neutrales-skifahren/> and ‘Skigebiet behauptet, klimaneutral zu sein – für Experten “Greenwashing”’ [20 Minuten, 28 December 2022] <https://www.20min.ch/story/skigebiet-behauptet-klimaneutral-zu-sein-beschwerde-beim-seco-eingereicht-115246691783> both accessed 5 September 2023.

95 Art. 10(3) of the Federal Act on Unfair Competition of December 19, 1986, SR 241 (Unfair Competition Act, ‘UCA’); with respect to the status of the case see 20 Minuten (n 94).

96 Ewan McGaughey and Neil Davies v. Universities Superannauation Scheme Limited, UK High Court, pending since 29 October 2021, statement of claim <http://climatecasechart.com/non-us-case/ewan-mcgaughey-et-al-v-universities-superannuation-scheme-limited/> accessed 5 September 2023.

97 Ruling of the Hague District Court of 26 May 2021, Milieudefensie et al. v. Royal Dutch Shell PLC, ECLI:NL:RBDHA:2021:5339, English translation <https://uitspraken.rechtspraak.nl/#!/details?id=ECLI:NL:RBDHA:2021:5339> accessed 5 September 2023.

98 Shell is a company organised under laws of England and Wales with head office in The Hague and listed in New York, London and Amsterdam (see Milieudefensie v. Shell, ibid. cons. 2.2.1–2.2.3).

99 Shell plc, ‘Frequently Asked Questions (FAQ) on Dutch District Court Legal Case’ (2022), 4 <https://www.shell.com/media/news-and-media-releases/2021/shell-confirms-decision-to-appeal-court-ruling-in-netherlands-climate-case/_jcr_content/root/main/section/simple/text_1377231351_copy.multi.stream/1657006823005/460167304a697f411be1b9f80c6e05be0ac057fb/dutch-district-legal-case-faq.pdf> accessed 5 September 2023.

100 Status as of 5 September 2023.

101 Milieudefensie v. Shell (n 97) cons. 3.2.

102 ibid. cons. 4.2.2 and 4.2.4.

103 Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations [2007] OJ L199/40 (‘Rome II’).

104 Milieudefensie v. Shell (n 97) cons. 4.3.6.

105 International Covenant on Civil and Political Rights of 16 December 1966, SR 0.103.2.

106 Milieudefensie v. Shell (n 97) cons. 4.4.9.

107 ibid. cons. 4.4.10. The Hague District Court relied thereby on the ruling of the Dutch Supreme Court of 20 December 2019, Urgenda, ECLI:NL:HR:2019:2006, cons. 5.6.2 as well as the rulings of the Human Rights Council of 23 September 2020 in the sense of Ioane Teitiota v. Neuseeland (CCPR/C/127/D/2728/2016), cons. 9.4 and of 20 September 2019 in the sense of Norma Potillo Cáceres v. Paraguay (CCPR/C/126/D/2751/2016), cons. 7.7.

108 ibid. cons. 4.4.11.

109 ibid. cons. 4.4.17-18.

110 ibid. cons. 4.5.8 and 5.9.

111 ibid. cons. 5.3.; 2019 was chosen as the ‘base year’ since this was what the plaintiffs had requested (cons. 4.4.38).

112 ibid. cons. 4.4.52.

113 The court also noted that Shell had not sufficiently contradicted the plaintiffs’ claims that Shell’s planned investments in new explorations were not compatible with the reduction goals (ibid.cons. 4.5.2).

114 Swiss Civil Code of 10 December 1907, SR 210.

115 Heinrich Honsell in Heinrich Honsell, Peter Nedim Vogt and Thomas Geiser (eds), Basler Kommentar, Zivilgesetzbuch I, art. 1-456 CC (6th edn, Helbing Lichtenhahn 2018) (hereinafter: BSK CC I-author), art 2 mn. 11.

116 SFC 124 III 297 cons. 5c; Honsell (n 115) art 2 mn. 11; Heinrich Honsell, Bernhard Isenring and Martin A. Kessle, Schweizerisches Haftpflichtrecht (5th edn, Schulthess 2013) § 2 mn. 7; Bernhard Berger, ‘Abschied vom Gefahrensatz?’ (1999) 17recht 104; Heinz Hausheer Heinz and Manuel Jaun, Die Einleitungsartikel des ZGB (Stämpfli 2003) art 2 mn. 69-70.

117 See above section C.II.1.

118 Ordinance on mandatory climate disclosures for large companies.

119 The reasoning could be similar to a claim filed against Danone by three non-profit organisations in September 2022, in which the claimants argue that Danone does not adequately address the risks related to the plastic pollution it produces (see Climate Case Chart, ClientEarth, Surfrider Foundation Europe and Zero Waste France v. Danone, summary available at <http://climatecasechart.com/non-us-case/clientearth-surfrider-foundation-europe-and-zero-waste-france-v-danone/> accessed 5 September 2023. The claim is based on the French ‘loi de vigilance’ of 2017, which provides that specific large companies must establish a plan to prevent the violation of human rights and environmental damage that may occur in the course of their business. The plan must include reasonable vigilance measures to identify risks and prevent serious violations of human rights and fundamental freedoms, the health and safety of individuals and the environment, resulting from the activities of the company and the companies it controls, as well as from the activities of sub-contractors or suppliers. If the plan is not correctly drafted or is inadequate to measure and prevent these risks, the company is liable for the damages that such plan might have prevented. Anyone with a legitimate interest can also ask for injunctive relief to force the company to comply with the law (see art L.225-102-4 and 225-102-5 of the French Commercial Code). See with respect to tortious liability arising from violations of art 964j-l CO and other ESG-related litigation risks in Switzerland: Matthias Gstoehl, Laura Knöpfel and Christian Exner, ‘ESG litigation in Switzerland, Risks and possible defense strategies’ [2023] <https://www.lalive.law/wp-content/uploads/2023/03/2402_Lalive-ESG_15.pdf> accessed 5 September 2023.

120 Other risks resulting from climate change, e.g., financial risks, are not considered here.

121 Analogous (under German law) are also the arguments brought forward in the case of the Peruvian farmer against RWE (see above section C.III.).

122 FSC 119 II 411 cons. 4b; Heinz Rey and Lorenz Strebel in Geiser Thomas and Wolf Stephan (eds), Basler Kommentar, Civil Code II, art. 457–927 CC and art. 1–61 (6th ed, Helbing Lichtenhahn 2019 (hereinafter BSK CC II-author), art 684 mn. 4.

123 FSC 109 II 304 cons. 3 and 5.

124 FSC 95 I 490 cons. 5; 94 I 286 cons. 9, whereby the court mainly dealt with the noise issue in this case.

125 BSK CC-II-Rey/Strebel art 684 mn. 1.

126 FSC 109 II 411 cons. 4b; Arthur Meyer-Hayoz in Berner Kommentar, Das Eigentum – art. 641-654a CC (5th edn, Stämpfli 1981(hereinafter BK-author)), art 684 mn. 67.

127 For example, Integrated Carbon Observation System (‘ICOS’) conducts measurements of the climate gases CO₂, CH₄ and N₂O at nine German monitoring stations (see German Weather Watch, Research <https://www.dwd.de/DE/forschung/atmosphaerenbeob/zusammensetzung_atmosphaere/spurengase/inh_nav/klimagase_node.html> accessed 5 September 2023. The ICOS’ purpose is to generate data and products for future climate gas trends in Germany and Europe, as well as to monitor emission reductions over the long term, and not to measure greenhouse gas concentrations at individual properties; nevertheless, this shows that local CO₂ measurements are possible, and vary between locations and from time to time.

128 Art 684(2) CC.

129 Ppm stands for ‘parts per million’. 1000 ppm CO₂ correspond to 1 volume permille or 0.1 volume percent or 1.83g CO₂ per m³. See ‘Bundesgesundheitsblatt’ of the German Federal Environment Agency of 2008, 1358 et seq. and footnote 1 (<https://www.umweltbundesamt.de/sites/default/files/medien/pdfs/kohlendioxid_2008.pdf> accessed 5 September 2023).

130 ibid. 1363.

131 FSC 109 II 114 cons. 5.

132 BSK-CC II-Rey/Strebel, art 684 mn. 16; BK-Meyer-Hayoz, art 684 mn. 148-9.

133 Greenwashing could in extreme cases also lead to criminal liability, which is not covered by the following considerations.

134 Will Kenton, Investopiedia [2022] <https://www.investopedia.com/terms/g/greenwashing.asp> accessed 5 September 2023.

135 Federal Act against Unfair Competition of December 19, 1986, SR 241.

136 Mathis Berger in Reto M Hilty and Reto Arpagaus (eds), Basler Kommentar, Bundesgesetz gegen den unlauteren Wettbewerb /(Helbing Lichtenhahn 2013) (hereinafter BSK-UCA-author)), art 3(1)(b) mn. 14 et seq.

137 Carl Baudenbacher and Joachen Glöckner in Carl Baudenbacher (ed.), Lauterkeitsrecht, Kommentar zum Gesetz gegen den unlauteren Wettbewerb (Helbing Lichtenhahn 2001), art. 3(b) mn. 31 with further indications.

138 BSK-UCA-Berger, art. 3(1)(b) mn. 23-4.

139 Peter Jung in Peter Jung and Philippe Spitz, Bundesgesetz gegen den unlauteren Wettbewerb (UWG) (Stämpfli , 2010), art. 3(1)(b) mn. 29 and 84; BSK-UCA-Berger, art 3(1)(b) mn. 33.

140 BSK-UCA-Berger, art 3(1)(b) mn. 49 et seq.

141 See above section C.III.

142 The Swiss Confederation may also bring actions under art 9(1) and (2) if it regards it as necessary in order to protect the public interest, in particular if (a) Switzerland’s reputation abroad is threatened or damaged and the persons whose economic interests are affected are based abroad; or (b) the interests of several persons or of a group of members of an industry or other collective interests are threatened or damaged (art 10(3) UCA).

143 BSK-UCA-Killias/Gilliéron, art 23 mn. 22 et seq.

144 BSK-UCA-Berger, art 3(1)(b) mn. 149.

145 In practice, liability actions are usually only initiated in bankruptcy (see Rolf H Weber and Andreas Hösli , ‘Climate Change Liability: Comparing Risks for Directors in Jurisdictions of the Common and Civil Law’ (2020) 10 Climate Law 151, 185). Nevertheless, a more detailed analysis of the chances of success of such a claims seems appropriate in view of the increasingly common ‘shareholder activism’ (see White & Case, ‘Insightia’s Shareholder Activism in Europe 2022 Report and Podcast’ <https://www.whitecase.com/insight-alert/insightias-shareholder-activism-europe-2022-report-and-podcast> accessed 5 September 2023).

146 FSC 132 III 564 cons. 4.2; 132 III 342 cons. 4.1.

147 BSK CO II-Gericke/Waller, art 754 mn. 15; FSC 131 III 306 cons. 3.1.1.

148 Lukas Glanzmann, ‘Die Verantwortlichkeitsklage unter Corporate Governance-Aspekten’ (2000) 2 ZSR 139, 167; BSK CO II-Gericke/Waller, art 754 mn. 15.

149 Glanzmann (n 148) 168.

150 FSC 125 III 86; 106 II 232 cons. 2 (this claim was also directed against the auditor).

151 FSC 131 III 306 cons. 3.1.1; 142 III 23 cons. 3.1.

152 FSC 132 III 564 cons. 3.2.2; BSK CO II-Gericke/Waller, art 754 mn. 17; Hans Caspar von der Crone, Aktienrecht (2nd edn, Stämpfli 2020) mn. 1887-8.

153 FSC 132 III 564 cons. 3.2.1.

154 ibid. cons. 3.2.3; BSK CO II-Gericke/Waller, art 754 mn. 17; Peter R Isler, ‘Fragen der Aktiv- und Passivlegitimation in Verantwortlichkeitsprozessen’ in Rolf H Weber (ed.), Verantwortlichkeit im Unternehmensrecht IV (Schulthess 2008) 87 et seq., 97 et seq.

155 See above section D.II.2.

156 FSC 139 III 24 cons. 3.2; BSK CO II-Watter/Roth Pellanda, art 717 mn. 3; Rolf Watter and Till Spillmann, ‘Corporate Social Responsibility – Leitplanken für den Verwaltungsrat Schweizerischer Aktiengesellschaften’ (2006) 2-3 GesKR 94, 107.

157 Andreas von Planta, ‘Sind die Aktionäre wirklich Eigentümer der Gesellschaft? – Ein Beitrag zur Diskussion um die Stärkung der Aktionärsrechte’ in Matthias Oertle (eds), M&A Recht und Wirtschaft, Liber amicorum für Rudolf Tschäni (Dike 2010) 397, 399.

158 Watter/Spillmann (n 156) 96; BSK CO II-Watter/Roth Pellanda, art 717 mn. 37-8. with further indications; see also the revised Swiss Code of Best Practice for Corporate Governance by economiesuisse which was published on 6 February 2023 and contains several references to the importance of long-term creation of shareholder value (e.g. art 12 and 39-41).

159 BSK CO II-Watter/Roth Pellanda, art 717 mn. 3; Harald Bärtschi, Verantwortlichkeit im Aktienrecht (Schulthess 2001) 243. Some companies, e.g. Novartis and Nestlé, included the creation of long-term value in the corporate purpose statement in their articles of association, even though this would from a legal perspective not be required (articles of association of Nestlé <https://www.nestle.com/sites/default/files/asset-library/documents/library/documents/corporate_governance/articles-of-association-of-nestle-de.pdf> and the articles of association of Novartis <https://www.novartis.com/sites/novartis_com/files/statuten-de.pdf> both accessed 5 September 2023.

160 Daniel Jenny, ‘Abwehrmöglichkeiten von Verwaltungsratsmitgliedern gegen den Vorwurf der Pflichtverletzung’ (2018) 2 ZSR 151, 155 ff.; Peter V Kunz, ‘Business Judgment Rule (BJR) – Fluch oder Segen’ (2014) 3 SZW 274, 277; Hans-Ueli Vogt and Michael Bänzinger, ‘Das Bundesgericht anerkennt die Business Judgment Rule als Grundsatz des schweizerischen Aktienrechts’ (2012) 4 GesKR 607, 612 et seq.; Rolf Watter and Michael Bänziger, ‘Die Business Judgment Rule in der Praxis – Unternehmensinterne Entscheidungsverfahren im Lichte der bundesgerichtlichen Rechtsprechung’ in Peter Jung and others (eds) Festschrift für Lukas Handschin (Schulthess 2020) 767, 769.

161 Decision of the Federal Supreme Court 4A_623/2018 of 31 July 2019, cons. 3.1 (this consideration is not included in the published FSC 145 III 351).

162 Decision of the Federal Supreme Court 4A_642/2016 of 27 June 2017, cons. 2.1; 4A_259/2016, 4A_267/2016 of 13 December 2016, cons. 5.1; 4A_603/2014 of 11 November 2015, cons. 7.1.1; 4A_219/2015 of 8 September 2015, cons. 2.1.

163 Decision of the Federal Supreme Court 4A_74/2012 of 18 July 2012, cons. 5.1.

164 Watter and Bänziger (n 160) 775; Vogt and Bänziger (n 160) 615 et seq.; Rolf Sethe, ‘Geschäftsentscheide, Expertenrat und Verantwortlichkeit des Verwaltungsrats’ in Rolf Sethe and Peter R Isler (eds), Verantwortlichkeit im Unternehmensrecht VII (Schulthess 2014) 165, 176.

165 BSK CO II-Watter/Roth Pellanda, art 717 mn. 9; Peter Böckli, Schweizer Aktienrecht (5th edn, Schulthess 2009) § 9 mn. 708.

166 See above n 34.

167 The Intergovernmental Panel on Climate Change (IPCC) so far published six reports on climate change, its impacts and required measures, see <https://www.ipcc.ch/> accessed 5 September 2023.

168 Watter and Bänziger (n 160) 776.

169 See with respect to conflicts of interest and dealing with conflicts of interest Rolf Watter and Annina Hammer, ‘Interessenkonflikte – wie hat sich ein Verwaltungsratsmitglied zu verhalten?’ (2018) Schulthess Manager Handbuch 2018/2019 (Schulthess 2018) 55 et seq.

170 See with respect to compensation systems in the context of climate protection Hermann J Stern and Rolf Watter, ‘Manager-Boni contra Klimaschutz?’ (2020) 1 GesKR 78.

171 Currently, short-term profit figures continue to dominate variable compensation in many Swiss companies; see ibid. 58 et seq.

172 Kunz (n 162) 278; Leo Rusterholz and Lukas Held, ‘Ausgewählte Aspekte zur Business Judgment Rule im Licht aktueller Rechtsprechung’ (2016) 2 GesKR 186, 189.

173 Decision of the Federal Supreme Court 4C.201/2001 of 19 June 2002, cons. 2.1.2; Watter and Bänziger (n 160) 777 with further indications.

174 Watter and Bänziger (n 160) 778, who also propose that the duration of the meetings be recorded in the minutes and that it be mentioned explicitly that the relevant management body considered the basis of information consulted under the given circumstances as reasonable.

175 Decision of the Federal Supreme Court 4A_623/2018 of 31 July 2019, cons. 3.1 (this consideration is not included in the published FSC 145 III 351); 4A_642/2016 of 27 June 2017, cons. 2.1; 4A_259/2016, 4A_267/2016 of 13 December 2016, cons. 5.1; 4A_603/2014 of 11 November 2015, cons. 7.1.1; 4A_219/2015 of 8 September 2015, cons. 2.1

176 Decision of the Federal Supreme Court 4A_268/2018 of 18 November 2019, cons. 6.5.1; 4A_375/2012 of 20 November 2012, cons. 3.2 ff.

177 Watter and Bänziger (n 160) 782.

178 Thus, in principle, a resolution of the general meeting of shareholders constitutes a consent justifying the conduct of the governing body (BSK CO II-Gericke/Waller, art. 754 mn. 34).

179 See on the definition of E&O insurance Chubb, ‘What Is Professional Liability or E&O Insurance’ <https://www.chubb.com/us-en/businesses/resources/what-is-professional-liability-or-e-o-insurance.html> accessed 5 September 2023.

180 Schweizerischer Versicherungsverband (SVV), ‘Klimaadaption und Auswirkungen des Klimawandels als Emerging Risk’ (2020) <https://www.svv.ch/de/klimaadaption-und-auswirkungen-des-klimawandels-als-emerging-risk> accessed 5 September 2023.

181 Zurich, ‘Organhaftpflichtversicherung’ <https://www.zurich.ch/de/firmenkunden/haftung-recht/organhaftpflichtversicherung> accessed 5 September 2023.

182 See e.g., Zurich North America, ‘ESG and the new mandate for corporate governance – White paper’ (2022) <https://www.zurichna.com/knowledge/articles/2022/09/esg-and-the-new-mandate-for-corporate-governance>; also Allianz Global Corporate & Specialty, ‘ESG risks emerging as a future driver of liability losses’ (2022) <https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/claims-report-22-ESG-risks.html> both accessed 5 September 2023.

183 Bank of England, ‘Results of the 2021 Climate Biennial Exploratory Scenario (CBES)’ [2022] <https://www.bankofengland.co.uk/stress-testing/2022/results-of-the-2021-climate-biennial-exploratory-scenario> accessed 5 September 2023.

184 ‘Climate litigation threatens to push up companies’ insurance costs’ (Financial Times, 27 August 2022) <https://www.ft.com/content/1115a034-3fa0-4814-9a87-42bb56128352> accessed 5 September 2023.

185 ibid; see also ‘Directors and officers liability insurance cover considerations – Environmental, social and governance’ (Marsh, 19 August 2022) <https://www.marsh.com/uk/risks/climate-change-sustainability/insights/esg-directors-and-officers-liability-cover-considerations.html>; ‘Climate disclosure rules may have D&O consequences’ Business Insurance, 28 March 2022) <https://www.businessinsurance.com/article/20220328/NEWS06/912348834/Climate-disclosure-rules-may-have-D&O-consequences> both accessed 5 September 2023.

186 ‘D&O Coverage for Climate Change-ESG-Related Liabilities’ (Anderson Kill, 7 April 2022) <https://www.andersonkill.com/Publications/D&O-Coverage-for-Climate-Change-ESG-Related-Liabilities> accessed 5 September 2023.