WR ESG Alert: Another landmark ruling on climate change and human rights, and rules to protect against forced labour and abusive court proceedings

Environment

Landmark ruling on climate change issued by the European Court of Human Rights

In Verein KlimaSeniorinnen Schweiz and Others v. Switzerland, the Grand Chamber of the European Court of Human Rights (ECtHR) for the first time found that a member state had violated the European Convention on Human Rights (the Convention) by failing to sufficiently address climate change. Switzerland was found to have violated its positive obligations to ensure the right to private life under Article 8 of the Convention, as well as the obligations to ensure the right of access to courts in Article 6 § 1.

The case was brought before the ECtHR by the Swiss association, Verein KlimaSeniorinnen Schweiz, in addition to four individual applicants. The case was found inadmissible for the latter four applicants, and the judgment thus concerned only the violations of the association’s rights. 

The Grand Chamber held that Article 8 of the Convention encompasses the right to effective protection by public authorities from the serious adverse effects of climate change on life, health, well-being and quality of life. While recognising that Swiss authorities enjoy a margin of discretion in the adoption and application of laws and measures in this regard, the Court found that Switzerland had violated its positive obligations under Article 8 by failing to address climate change sufficiently promptly or effectively.

Moreover, the ECtHR found that Article 6 § 1 had been violated. The Court held that Swiss courts had not provided convincing reasons for why they considered it unnecessary to examine the merits of the complaints, and that they had failed to sufficiently examine the scientific evidence on climate change.

The judgment sets precedent for all member states of the Council of Europe, including Norway, and could have significant implications for climate litigation before Norwegian courts.

New rules for free allocation of emission allowances in EU ETS have entered into force

On 4 April 2024, the European Commission issued a regulation concerning harmonised rules for free allocation of emission allowances. The regulation follows revisions to the EU Emissions Trading Scheme (EU ETS), aligning it with the target of 55% net emission reductions by 2030 (compared to 1990). 

Free allocation of emission allowances will, for operators of specific installations meeting certain requirements, be conditional on the submission of a climate-neutrality plan. These climate-neutrality plans shall be made publicly available by the competent authorities in the member states. 

The climate-neutrality plan must meet certain requirements. Apart from general information about the installation such as location and historical emissions, the climate-neutrality plan must include information about measures, milestones and targets to achieve climate neutrality by 2050. Also, a detailed description of the milestones for 2025 and for each five-year period thereafter is required.

Under the EU ETS,  industrial installations considered to be at significant risk of carbon leakage receive free allowances to support their competitiveness, according to specific requirements. Carbon leakage refers to the situation that may occur if, for reasons of costs related to climate policies, businesses were to transfer production to other countries with less strict climate policies.  

Revision of the Industrial Emissions Directive

On 12 March 2024, the European Council officially adopted the amended Industrial Emissions Directive (IED) , already agreed with the Parliament, following a provisional agreement reached in November 2023. The Directive regulates emissions from industrial activities and large livestock farms by requiring the use of Best Available Techniques (BAT). The co-legislators reduced the Commission's ambitions for livestock farms, following significant criticism from the agricultural sector.

Important changes in the revision are:

• Extending the scope to extractive industry installations (mines) and large installations manufacturing batteries
• Lowering the threshold for the amount of livestock that are included
• Making it mandatory to set the strictest achievable emissions levels for the sectors covered
• Operators may be required to pay penalties up to at least 3% of their annual Union turnover for serious infringements

Under the IED, there are comprehensive reference documents (BREFs) that describe the best available techniques, with associated emission levels (BAT AEL). The so-called Sevilla process, which develops these documents, is a driver for technology development. Within four years of the publication of the BAT conclusions in the EU Official Journal, the pollution control authorities must ensure operators' compliance. Thus, pollution permits may be changed with relatively short deadlines for operators to invest and upgrade to the best available technology. The binding emissions levels contribute to high environmental standards and a level playing field for the most polluting industrial activities in Europe.

Report from the Norwegian Environment Agency on the potential for emission reductions (Norwegian)

On 10 April 2024, the Norwegian Environment Agency published a report on the potential for emission reductions in Norway, including barriers and possible measures. This release is the second in its annual series, and a response to the Norwegian Parliament's order to the government to submit a white paper in the spring of 2024 showing how Norway will cut emissions in the period up to 2030, in line with Norway's climate targets. 

The order came in connection with the Parliament's decision to tighten the Climate Act's emissions target for 2030 to at least a 55 per cent reduction compared with the reference year 1990, which entered into force on 1 January 2024.  The Climate Act's 2030 target was tightened to be in line with Norway's updated climate target for 2030 under the Paris Agreement. On the other hand, a number of other proposals to make the Climate Act more binding were voted down. These included confirming the 1.5-degree target, establishing an independent professional climate commission, and introducing annual sectoral climate targets and budgets.

The report has the potential to significantly influence future policy developments and strategies for reaching Norwegian climate goals, including the goal for 2030. However, this year's edition places special attention on what could potentially be achievable by 2035, as Norway is required to submit its nationally determined contribution (NDC) to the UN by February 2025 to fulfil the requirements in the Paris Agreement. The Agency has mapped possible climate emission reduction measures in all sectors. 

Social 

European Parliament approves proposal for a Forced Labour Regulation

On 23 April 2024, the European Parliament approved the adoption of the proposed Forced Labour Regulation, which will enable the EU to prohibit the sale, import, and export of goods made using forced labour. The regulation will apply to all companies, regardless of size and areas of operations.

The new rules will grant the European Commission or national authorities the power to launch investigations to check if suspected goods have been produced using forced labour. The decision to launch an investigation will be based on several criteria and risk factors, including lists from the Commission of high-risk economic sectors and geographical areas, as well as information from third parties. If the investigations reveal the use of forced labour in the products' supply chains, the manufacturers must withdraw the products from the EU market and online marketplaces, and donate, recycle or destroy them. If companies eliminate forced labour from the relevant supply chains, banned products can be allowed back on the EU market.

Unlike the proposed Corporate Sustainability Due Diligence Directive (the "CS3D"), the Forced Labour Regulation does not impose due diligence requirements. Nonetheless, to avoid the fines that may be imposed on the basis of non-compliance with the regulation, companies will have to take steps to ensure that they do not sell, import or export goods made using forced labour.

The Regulation is expected to enter into force by the summer of 2024, following anticipated approval by the Council. It has been marked as EEA relevant, and will in any event apply to Norwegian companies that sell, import or exports goods to or from the EU market. After its expected implementation into Norwegian law, it will also apply to all companies that sell, import or export goods to or from the Norwegian market.

New EU legislation to protect persons who engage in public participation from abusive court proceedings

On 16 April 2024, the EU Directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings was published in the Official Journal. The Directive provides safeguards against claims brought against natural and legal persons due to their involvement in public participation. This will include, e.g., journalists, publishers, media organisations, whistleblowers and human rights defenders, as well as civil society organisations, NGOs and trade unions. 

Strategic lawsuits of this kind are typically initiated by influential individuals, lobby groups, or corporations who target parties who express criticism or communicate messages that claimants find uncomfortable, often on matters of public interest. The intention is to intimidate and silence critics by overwhelming them with the cost of a legal defence until they abandon their criticism.  As stated in the Directive, a healthy and thriving democracy requires that people can participate actively in public debate without undue interference.

The Directive introduces rules on safety, support and procedural safeguards. The rules are minimum requirements, meaning that Member States may choose to introduce provisions that are more favourable to protect persons engaged in public participation, including national provisions that establish more effective procedural safeguards relating to the right to freedom of expression and information.