The long road to increased corporate responsibility
Climate litigation is rich in insights on failing climate governance. What can we learn from lawsuits against car corporations trying to stop the distribution of fossil-fuelled cars?
Climate governance is currently failing in (too) many areas. Sadly, this inconvenient or even painful conclusion is an opinion shared by many. The fact that governments and corporations worldwide are increasingly being taken to court against the backdrop of the climate crisis clearly illustrates the need to shift current climate regimes. On a positive note, however, these climate litigation cases can be studied to provide insights into the search for solutions.
Climate litigation against car corporations
One recent and innovative example of climate litigation worth a closer look is the German automotive industry. In autumn 2021, two environmental organisations, Deutsche Umwelthilfe (DUH) and Greenpeace, filed lawsuits against three major car corporations: BMW, Mercedes-Benz, and Volkswagen. Their injunctive claims: the car corporations need to stop the distribution of internal combustion engine cars by the end of this decade. Selling fossil-fuelled cars beyond this timeframe would exceed the CO2 budget deriving from the 1.5° C goal that is allocable to the companies, thereby violating the protection of personal rights.
The legal arguments in these cases merit an elaborate discussion on their own. Regardless of their final outcomes, taking a socio-legal lens allows us to shed light on the underlying need for the claims: failed governance by the state.
Understanding the context
The German automotive sector is entrenched with tension. Being a key sector for Germany, it has high economic, political, and cultural value. Simultaneously, it accounts for the greatest contribution to CO2 emissions of Germany’s transport sector – the sector that has repeatedly failed to meet its CO2 reduction goals. The lion’s share of CO2 emissions is produced during the user phase of the fossil-fuelled car. While a European regulation exists to limit these emissions per car fleet (Regulation EU 2019/613), this has been strongly criticised for being subject to lobbying and has major loopholes that prevent its effectiveness.
These circumstances create a tricky situation: producing and selling fossil-fuelled cars is legal from a regulatory point of view, while its consequences are jeopardising overall, effective climate change mitigation. The result: a dilemma of responsibility. Few corporations have significant economic power as well as high CO2 emissions, the latter being ineffectively mitigated by legislation.
Against this background, the question arises: what notions of corporate responsibility exist in relation to climate change mitigation? And what role does climate litigation play within these different notions? In the search for answers, the analysis must go beyond an examination of legal arguments. To unravel different notions of corporate responsibility, a critical discourse analysis of the statement of claims, sustainability communication of the sued companies, and interviews with relevant actors provides insights into how corporate responsibility is constructed.
Different notions of corporate responsibility and the role of climate litigation
While both environmental organisations and car manufacturers acknowledge a general responsibility for CO2 mitigation, they use different yardsticks to construct it. More precisely, they are deploying different framing factors for their notion of corporate responsibility. This does not only reflect a contrasting nature of the perceived responsibility, but also results in varying limits.
From a corporation’s point of view, the scope of responsibility goes beyond compliance with regulations or philanthropic behaviour, but is limited by the embeddedness within market conditions. This includes appointing responsibility for climate change mitigation to other actors or the market in general. Environmental organisations, however, understand the responsibility of corporations as being equal to that of a state authority. This results in a moral responsibility assigned to the corporations based on climate science and (future) rights.
Consequently, there are conflicting perspectives when it comes to at what cost corporations must decarbonise, including factors like time, (self-)dependency, and areas of action. This conflict includes the question of which (type of) law is relevant to define the obligations of corporations.
These observations already point to the vital role that climate litigation plays in these diverging notions. At stake is no less than either upholding the currently prevailing understanding of corporate responsibility and its economic nature – or appointing more responsibility to corporations, thereby pushing the limits of corporate responsibility overall. The question at hand is whether the power of corporations within the current economic and political system entails environmental responsibility, or whether these two aspects stand separately. Similarly, such litigation ties into the dimension of time underlying responsibility for climate change mitigation: to what extent can market conditions and infrastructure pose a limit to responsibility in the face of a rapidly, irreversibly shrinking CO2 budget inherent to limiting global warming?
Where does the road lead?
A year after this analysis was conducted as part of my master’s thesis for the degree Law & Society (M.Sc.), the notion that businesses are subordinate to states with their responsibility being defined by governmental regulations seems to have been upheld by the courts. Over the past few months, all three claims were rejected on similar grounds with the assessment that suing single corporations is unsuitable for addressing climate governance, especially when the companies are obeying the law. Though this is not the final word on the matter, as the claimants have announced they will appeal the decision, this situation brings us back to square one: failing climate governance in which the consequences of corporate activities are jeopardising effective climate change mitigation, while operating within a sphere of legally allowed activities.
Undoubtedly, thorough discussion is needed as to whether such litigation cases should be the place where far-reaching shifts in corporate responsibility are made. At the same time, the question inevitably arises on how to intervene otherwise, especially if strong economic interests are involved and effective legislation fails. It is also important to emphasise in that regard that the corporations are embedded within this system and thus should not be depicted as villains.
The debate on responsibility for climate change mitigation is not limited to corporations and NGOs. It is also the responsibility of scholars to contribute to viable solutions to find a way out of the dilemma. The road ahead still seems long, so let’s hope we do not hit the brakes and instead put the pedal to the metal.
This blog contribution is based on findings in the master’s thesis written by Bettina Schmiedler for the degree Law & Society (M.Sc.) in 2022: 'Can Climate Litigation Put Enhanced Climate Governance on the Road?'. The thesis was awarded the best thesis prize at Leiden Law School and came third in the University Thesis Prize of Leiden University.