Current GHG emissions and energy investment trends lead us to a +6°C future involving massive changes in sea levels, local climate and water availability, as well as a sharp intensification of extreme weather events. As this future is becoming increasingly probable, cities and states are currently starting or planning massive adaptation investments and are therefore looking for deep-pocket organizations to foot the bill.
Climate-related litigation risk is the long-term risk that lawsuits targeting companies with high cumulated past emissions create liabilities, based on the company’s share of responsibility in the cost of global warming. Climate litigation targeting carbon-intensive companies for their cumulated emissions seems to be a new promising way to achieve this goal. Some lawyers see it as the ‘new tobacco’, while most investors only consider this risk as a science-fiction scenario. However, no in-depth comprehensive analysis of risk exposure has been conducted to date.
It is not limited to direct emissions and likely to occur in countries where extra-territorial jurisdiction and class action lawsuits exist. The tort cost could include adaptation costs at the local level for states and cities (invested by anticipation), thus shortening the time horizon of risk from the years 2050-2100 to today. This concept note focuses on this type of risk.