The idea that human activity causes the Earth's climate to change is not a new concept. In fact, most people agree that our climate does change over time. Disagreements exist over exactly how and to what extend such change occurs and how, if at all, society can influence such changes. Although there is a great body of science supporting climate change, many people follow the often cited maxim generally attributed to American writer and humorist Mark Twain, stating that “everybody talks about the weather but nobody seems to do anything about it.” Even though the debate over climate change is likely to continue for some time, there are strong forces at play seeking to answer the question as to who will pay for climate change damages and prevention and what, if any, role litigation will play in moving economies away from fossil fuel dependence.

The notion that a corporation or individual director or officer could be held responsible for financial damages or loss arising from purported climate change also is not new. Numerous lawsuits over the past fifteen years have attempted to hold big greenhouse gas producers financially liable for alleged loss and damage. Most, however, have been dismissed or otherwise failed to move forward. Key issues have centered around difficulties in establishing fault, given that emitting greenhouse gasses is not illegal per se, and serious problems showing a causation between greenhouse gas production and specific injury or damages. It was a similar failure to link causation and effect that was the primary downfall of acid rain litigation in the 1980s.

But recent developments, including a New York State Attorney General investigation into oil giant ExxonMobil regarding climate change disclosures over a period of almost four decades, may mark an important step towards greater attention to climate change by public entities and corporations both domestically and internationally. Here is what you need to know.

ExxonMobil

In October 2015 numerous members of the United States Congress issued a letter to ExxonMobil questioning their donations to Donors Trust, a group that funds climate change denial. On October 14, 2015, Congressmen Ted Lieu and Mark DeSaulnier wrote to the United States Attorney General requesting an investigation into whether ExxonMobil violated any federal laws by “failing to disclose truthful information” and raising the concern that ExxonMobil “may have omitted or misrepresented material information in official filings.” The Congressmen stated in their letter that they were “deeply concerned that U.S. securities laws may have been violated.” More than forty leading environmental and social justice organizations also wrote to the United States Attorney General requesting a federal investigation as to whether ExxonMobil deceived the public regarding climate change. Former Vice President Al Gore and all three Democratic primary candidates for President of the United States also called for a Department of Justice investigation.

The New York Attorney General is currently investigating whether ExxonMobil's statements to investors were consistent with the company's decades of extensive scientific research supporting the phenomena of climate change. The Martin Act in New York state law gives the State Attorney General broad powers to investigate financial fraud. On November 4, 2015, the New York Attorney General issued a subpoena to ExxonMobil. The New York Attorney General investigation includes possible violations of consumer protection, fraud, and securities law. ExxonMobil denied withholding climate change research. Following published reports based on internal ExxonMobil documents and suggesting that during the 1980s and 1990s ExxonMobil used climate research in its business planning but simultaneously argued publicly that the science was unsettled, the California Attorney General is investigating whether ExxonMobil lied to the public or shareholders about the risk to its business from climate change, possible securities fraud, and violations of environmental laws. ExxonMobil denied wrongdoing. On March 29, 2016, the Attorneys General of Massachusetts and the United States Virgin Islands (USVI) announced investigations. Seventeen Attorneys General were cooperating on investigations. ExxonMobil said the investigations were “politically” motivated.

In a separate but related inquiry, Peabody Coal, the world's largest publicly traded coal company, had also been under investigation by the Attorney General over whether the company properly disclosed financial risks related to climate change. That investigation found Peabody misled investors and the public. In a settlement of those charges Peabody agreed to make fuller public disclosures about the risks climate change poses to its business.

It remains to be seen whether the investigation will ever lead to regulatory or enforcement action against ExxonMobil. Any attempt to bring an enforcement action would face numerous and significant obstacles, and as of June 2016, ExxonMobil is countersuing the Attorneys General of USVI and Massachusetts.

If prosecutors in New York succeed in proving that ExxonMobil was culpable in covering up the consequences of global warming associated with fossil fuels, that would set the stage for prosecutions in the U.S. and worldwide. It also raises the question whether other companies and industries could also be targeted. Such actions would increase corporate climate change-related enforcement and liability exposures which could potentially affect a wide range of companies, not just large oil companies.

Global Developments

While it is possible, if not likely, that large oil and gas producers like ExxonMobil as well as other greenhouse gas producers will become the target of climate change related litigation and enforcement, courts around the world are holding public agencies and governments responsible for solving perceived climate change problems.

On December 20, 2015, a treaty was negotiated by representatives of 195 countries. Known as the Paris Agreement (L'accord de Paris), the treaty is an agreement within the United Nations Framework Convention on Climate Change (UNFCCC) dealing with greenhouse gases emissions mitigation, adaptation, and finance starting in the year 2020.

The aim of the treaty is to

1. hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.

2. increase the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production.

3. make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

The treaty was opened for signature on April 22, 2016 (Earth Day), in a ceremony in New York City. As of June 2016, 178 UNFCCC members have signed the treaty. Although only nineteen countries have ratified the accord, which is not enough for the treaty to enter into force, it sends a strong signal that governments are responsible for curbing the impact of climate change.

Just last year a district court in The Hague ordered the Dutch government to reduce greenhouse gas emission by 25 percent compared to 1990 levels. The new emission standards must be met by 2020. This is the first time that a court of law has ordered a governmental body to meet specific standards related to climate change and is an example of how international obligations can land into local courts. Although the case is under appeal, the directive has already resulted in the planned closure of seven coal plants. Similar cases are pending, or expected, in Belgium, France, Switzerland, and New Zealand.

In the Pacific islands, five tiny islands have disappeared due to rising seas and erosion—a discovery thought to be the first scientific confirmation of the impact of climate change on coastlines in the Pacific. In addition, six other islands had large swaths of land washed into the sea and on two of those, entire villages were destroyed and people forced to relocate. Last year citizens from the nations of Vanuatu, Kiribati, Tuvalu, Fiji, the Solomon Islands, and the Philippines announced their intent to bring legal action against fossil fuel companies for their role in contributing to climate change. In a written Declaration of Climate Justice letter, they stated that climate change has claimed thousands of lives, displaced millions of people, damaged livelihoods, and caused a severe economic toll in relief, rehabilitation, and reconstruction efforts. The nations also stated they are committed to “hold the big carbon polluters accountable to appropriate international bodies or processes.” To date it is unclear what further action has been taken in this matter.

In the United States, which has the highest rate of climate change lawsuits, a lawsuit was brought alleging that the federal government is violating constitutional and public trust rights by promoting the use of fossil fuels. The basis for these lawsuits is that for over fifty years, the United States government and the fossil fuel industry have known that carbon dioxide from burning fossil fuels causes global warming and dangerous climate change and that continuing to burn fossil fuels destabilizes the climate system. This case is one of several similar cases in federal district court in Oregon, and in the state courts of North Carolina, Pennsylvania, Colorado, and Massachusetts, all supported by Our Children's Trust, seeking the legal right to a healthy atmosphere and stable climate.

Hurdles Remain

Bringing climate change related lawsuits against governmental bodies may be easer than against corporations because such bodies have an actual or perceived duty to protect its citizenry. However, there remains the issue of causation and damages, although this may be becoming easier to prove in litigation with both corporations and governmental bodies. There is a whole science emerging around “climate attribution” or being able to cross the causation legal barrier with quantitative analysis and probability. Because most legal systems recognize probabilistic evidence when evaluating causation, any scientific improvements in this area help plaintiffs support their cases.

Another defense that defendants in climate litigation cases can use is the principle that carbon pollution is a global problem. The argument is that if everyone is causing the problem then no single person or entity should be held responsible. However, a study by the journal Climatic Change is making that defense more difficult for fossil fuel companies. In that study, researchers from the journal Climate Accountability found that although there are thousands of oil and gas companies throughout the world, the majority of emissions are produced by only a handful of participants. Roughly two-thirds of greenhouse emissions come from just ninety entities, fifty of which are investor-owned companies.

For now, at least, insurance underwriters appear not to be terribly concerned about climate change litigation spilling over into the D&O arena. This, however, could change quickly.