The shipping industry must open its eyes to climate change litigation

Climate change litigation is far from being a distant risk for the shipping industry. A small but growing number of climate change cases have begun to target the sector. Shipping must wake up to the risks involved, says our Legal Officer Isa Keuschnigg.

To date, over 2,300 climate change cases have been filed around the globe, and that number continues to grow. While the fossil fuel industry remains the primary target of lawsuits filed against private sector actors, increasingly, other sectors are being targeted. Every sector has its part to play in the critical need to decarbonise our global economy.

Accounting for approximately 3% of global emissions, shipping has a major impact on the climate crisis, and emissions are expected to continue to grow if no action is taken.

It’s no surprise that the International Chamber of Shipping warned that climate change litigation could herald a new legal risk for shipping. Our new briefing - Climate change litigation and shipping: taking stock - takes stock of existing climate change cases impacting the sector and shows that far from being a future risk, it is live now.

A diversity of legal actions

Shipping litigation cases rely on a variety of legal strategies – from challenges to shipping-related projects with detrimental environmental impacts, to legal action against greenwashing.

1. ‘Permitting’ cases

Most of the climate change cases that we identified revolve around permitting and approval decisions of shipping-related projects. Often, claimants do not only challenge climate impacts but also broader pollution and public health impacts as well as biodiversity threats posed by the projects.

We also identified a subset of ‘permitting’ cases which do not necessarily involve maritime stakeholders (such as ports or shipping companies), but involve shipping in an indirect manner, as they address a project’s downstream shipping emissions.

For example, in 2022 several NGOs filed a lawsuit against the Canadian government, challenging the environmental impact report of an offshore oil production project for allegedly failing to consider the downstream greenhouse gas emissions associated with the project, including the shipping of oil. The case is currently under appeal after having been dismissed in the first instance.

2. Anti-greenwashing action

Greenwashing is also emerging as an issue in shipping-related climate change litigation. An example is a class action against Etsy which alleged that the company’s claims on the offsetting of its carbon emissions generated by its shipping activities were false (dismissed in 2023).

Greenwashing cases in shipping are increasing. Here at Opportunity Green, we filed a quasi-judicial greenwashing claim against the cruise industry for greenwashing its use of liquified natural gas (LNG) in 2023, while other organisations have similarly filed to financial conduct regulators.  

3. Targeting finance flows

Another case category that we identified concerns finance flows. Considering that at least USD 1 trillion in investments is needed to drive the maritime energy transition, it is crucial that finance flows are aligned with a 1.5˚C pathway.

To this end, alongside four other European NGOs, Opportunity Green filed a legal challenge against the European Commission requesting it to review its green investment rules on shipping and aviation in the EU Taxonomy at the start of 2024 (currently pending).

The power of legal activism

Climate change litigation has undeniably reached the shores of shipping. But, crucially: Does it work?

Some cases, such as a legal challenge to a shipping terminal project at the Port of Los Angeles were won in court. In that case, the Court’s most recent ruling (2024) was secured by environmental groups after many years battling between the port and environmental groups.

Other cases such as a case involving a marine terminal at the Port of Oakland resulted in a settlement. According to the port, the agreement reached in 2023 was aimed at prioritising ‘sustainable, community-conscious development’.

Impacts go beyond the courtroom

Some of the lawsuits were dismissed, resulting in judicial outcomes unfavourable to climate action.

However, it is important to note that the impact of strategic climate change litigation, which seeks to advance broader, systemic change, goes well beyond a win in the courtroom. Even cases with unfavourable judicial outcomes can have positive impacts, as litigants use the power of the law as one tool in their campaigning toolkit.

For example, even unsuccessful cases can incentivise behavioural change in organisations; and the possibility of legal risk, including through simply delaying a project can raise risk perception among directors and boards, thereby ensuring that climate change is placed firmly on a company’s risk register.

A recent example is the South Korea’s government export credit agency’s withdrawal of insurance – worth $330 million – for the Barossa gas project near Australia. Before the withdrawal, the Barossa project had been subject to multiple legal challenges and had been delayed by more than a year. While these had been defeated in court, the withdrawal suggests that the insurer had nevertheless lost confidence in the viability of the project.

Bringing a legal case in shipping, a sector whose climate impacts have been largely ignored, should act as a wake-up call for directors and accelerate industry change.

Further, when legal strategies are coupled with communications and/or public mobilisation strategies, cases can help raise the profile, shift public perceptions and change the way that the public and companies think about an issue.

For example, in a landmark case in Australia, young people sought to confirm that the government had a duty of care for young people in the context of the climate crisis. Even though the case ultimately failed in court, the narrative around the issue had shifted so much as to result in a bill which proposed to enshrine a duty of care in Australia’s climate law. The introduction of the bill demonstrates that the power of legal activism goes well beyond court.

Raising the profile of shipping could be an important first step to increase pressure to decarbonise as the sector is considered to be largely invisible to the public – despite being a major contributor to the climate crisis and a cornerstone of global trade.

The ever-increasing risk of climate change litigation

Regardless of the outcome, it is clear that legal scrutiny on the sector is increasing. While the majority of lawsuits concern ‘permitting’ cases, claimants are increasingly using cutting-edge legal strategies, as shown with legal challenges around greenwashing and scrutiny of financial flows.

The full shipping ecosystem – shipping and cruise companies, charterers, port authorities, insurers and investors – must therefore be alive to the increasing risks of climate change litigation across the entire value chain.

Companies should ensure that they properly consider – and crucially, take – concrete, meaningful action to reduce their organisation’s climate impact and make robust investment decisions in true decarbonisation solutions. Not to do so exposes companies and authorities to ever-increasing legal, reputational and financial risks.

For more information, read our briefing Climate change litigation and shipping: taking stock here.