At the Paris climate conference in December 2015 (COP 21), 195 countries agreed to assume various obligations to mitigate and reduce the long term effects of global climate change. With obligations come responsibility – and risk. And where there is risk, there will be disputes. It is no surprise, therefore, that climate change has emerged as a – if not ‘the’ – relevant factor in a number of high-profile disputes in recent years. For financial institutions and corporates alike, this presents new challenges (and on a global scale), including how to identify the parts of a business exposed to the risk of climate change disputes, and how to manage that risk. This article explores these two challenges.

Disputes involving climate change issues range from the commercial to the personal to the public interest: from disputes arising out of option agreements for the trade of the old system of ‘emission reduction units’, to cases dealing with personal property damage caused by climate change related events; from claims by local communities against state-actors challenging their award of a licence for a particular emissions-producing project, to claims urging governments to do more to prevent climate change (for example, the high profile Urgenda case in the Netherlands). Most (if not all) of these claims are being dealt with in litigation, in the public domain.

Jul-Sep 2018 issue

Allen & Overy LLP