Businesses are aware that the climate impacts of their actions are increasingly attracting the attention of litigants, as we have written about. 

A closely related subject that has perhaps received less attention in the legal press to date is litigation relating to impacts on nature and consequent loss of biodiversity. While there have been several well-known court challenges concerning plans for the net zero transition and extraction of fossil fuels, less attention has been focussed on claims regarding damage to the natural environment more broadly and the risks posed to ecosystems by loss of habitat and of species. 

This lack of focus may not last much longer, particularly as leaders recently gathered for the Biodiversity COP16 in Colombia and are seeking greater legal recognition of, and rights for, nature. The World Wildlife Report 2024 found that over the last 50 years the average size of monitored wildlife populations has shrunk by 73%. A G7 report has found that biodiversity loss is among one of the top global risks to society. This has also been reflected in the Global Risks Report by the World Economic Forum which identified biodiversity loss as a top five risk for the first time in 2020. 

We set out below some of the growing trends in nature-related litigation, following the Network for Greening the Financial System’s recent report on the emerging trends of nature-related litigation.  

Nature-related litigation against companies and financial institutions 

There are several different heads of claim that litigants may use to challenge corporate practices that are perceived to threaten the natural environment and risk causing loss of biodiversity. Some key areas are as follows:

Due diligence 

Companies are increasingly being held to higher standards over their supply chains and the due diligence they must conduct to ensure they are not having unacceptable impacts on the environment. 

For example, in France the Droit de Vigilance, Loi 2017-399, was enacted in 2017 and requires certain companies to publish an annual vigilance plan detailing and addressing the risks that are posed by its supply chain to human rights or the environment. In the first threatened claim utilising the Droit de Vigilance, two non-governmental organisations (Comissao Pastoral da Terra and Notre Affiaire a Tous) sent a letter to BNP Paribas, alleging that the bank is in breach of the law by continuing to provide services to one of the world’s largest beef producers without adequate due diligence. With cattle farming in South America shown to contribute to deforestation, the claimants argue that BNP Paribas’s duty of vigilance plan does not provide strong enough safeguards to prevent deforestation and human rights violations by its client, and so needs amending.

These due diligence obligations are likely to increase, for example through the Corporate Sustainability Due Diligence Directive (which we previously covered here Corporate Sustainability Due Diligence Directive), which will affect companies operating in the EU. Accenture, the global professional services company, conducted a study, published in June 2024, which found that 85% of companies surveyed anticipate that there will be an increase in mandatory ESG disclosures in the next three years, yet only 22% of CFOs are ready for increased reporting obligations. This creates potential grounds for strategic litigants to bring further cases in favour of nature. 

Shareholder rights 

As with strategic climate litigation, cases are beginning to emerge where shareholders seek to challenge company policies as not offering sufficient plans to address the impact a business has on the natural environment. As the risk of causing biodiversity loss intensifies, businesses will need to consider whether the impact that they have on the environment and the risk biodiversity loss has on the businesses itself is adequately mitigated; failure to do so could become a competitive disadvantage and result in a loss of profit and/or value, leading shareholders to challenge company plans.

For example, in a case before the Federal Court of Australia², an application was made by ANZ shareholder Catherine Rossiter for preliminary disclosure of ANZ’s internal risk management framework due to her concerns that the Australian bank may not be properly managing the climate and biodiversity crises. The application was made on the basis that Australia’s financial services laws require ANZ to properly identify and manage material risks in their risk management frameworks, including the APRA Prudential Standard CPS-220 Risk Management, applicable to ANZ, which requires ANZ to maintain a risk management strategy that would address material risks. Ms Rossiter was concerned that ANZ’s risk management strategy failed to address the risk of climate change and/or biodiversity loss as stand-alone material issues. 

Following the application made by Ms Rossiter, ANZ published its annual report on 13 November 2023 and stated on page 8, that ANZ would be “continuing to evolve [its] strategy, policies, processes, products and services to seek to manage the risks and opportunities associated with climate change and nature, including biodiversity loss” and that it had “approved that 'climate risk' will be elevated as a key material risk”. In response to the publication, Ms Rossiter consented to withdraw her application, demonstrating the potential power of bringing shareholder related disputes against corporations.  

Whilst in the UK many businesses now have legal obligations to specifically assess climate related risk and have responded by creating policies and procedures to evaluate, manage and mitigate such risks to UK businesses (for example in the UK through mandatory Taskforce on Climate related Financial Disclosures reporting), the same cannot be said of nature related risks. 

Anti-money laundering legislation 

Where damage to the natural environment is a crime, as it is in many jurisdictions, AML risks may emerge. Profits generated while tolerating unlawful practices could be the proceeds of crime. 

We previously wrote about the Court of Appeal’s decision to reverse the findings of the High Court in relation to the National Crime Agency’s interpretation of the UK’s Proceeds of Crime Act 2002 by refusing to open a criminal investigation into consignments of cotton products produced in the Xinjang Uyghur Autonomous Region². That ruling suggests that it is possible companies will commit money laundering offences if they suspect criminality in their supply chain and do not take action to address those suspicions. While the Uyghur decision relates to social issues of possible forced labour, rather than nature-related issues, it is likely that a similar claim could be brought in relation to nature (for example if there is illegal deforestation in the supply chain) in due course.

Such a claim has already emerged overseas. In the first claim of its kind, the French based non-governmental organisation, Sherpa, filed a criminal complaint for alleged money laundering and concealment of illegal profits, against BNP Paribas, Credit Agricole and Axa in relation to their financing of Brazilian meat processing companies that have allegedly contributed to illegal deforestation in the Amazon. The claimant argues that the financial institutions are holding bonds issued by the companies which are profiting from environmental crimes, meaning that the bonds may later be repaid with proceeds derived from alleged illegal deforestation. 

Conclusion

The growth of nature-related litigation has arguably been less well publicised than climate litigation, but climate and nature crises are two sides of the same coin, and addressing one will inevitably impact the other. There is nascent but growing trend of bringing claims against companies and financial institutions around the globe to hold entities accountable for causing or allowing negative impacts on nature. Corporate actors should be aware of the rising level of nature-related litigation as part of their horizon scanning exercises, keep in mind the increases to their reporting and disclosure obligations going forward and consider developing robust risk management policies and procedures covering nature and biodiversity loss related risks. 

¹Rossiter v ANZ Group Holdings, NSD1313/2023 
²R (on the application of World Uyghur Congress) v National Crime Agency [2024] EWCA Civ 715.