As climate change worsens, legal actions against companies for their emissions are on the rise. Take the case of Smith v. Fonterra in New Zealand. Mike Smith, an indigenous leader, argues that major companies like Fonterra are responsible for greenhouse gas emissions damaging his land and culture. He claims rising sea levels and warming waters are ruining fisheries and flooding sacred sites in Wainui Bay.
The complexity of climate change poses challenges for accountability. While some governments look to limit these lawsuits, advocates emphasize that shutting down litigation means that companies won’t face their share of responsibility. Smith’s case is crucial; it argues for the application of long-standing legal principles to climate issues.
Globally, people are filing similar lawsuits against powerful corporations. Survivors of disasters related to climate change are now demanding that companies reduce emissions and help cover the costs of damages. For instance, victims of typhoons in the Philippines and farmers in Peru are taking legal action, grounded in real-life impacts rather than theoretical risks.
In 2024, the New Zealand Supreme Court agreed that Smith could pursue his case. However, in a surprising move, the government announced a bill to stop all climate-related lawsuits against companies, claiming it would bring legal clarity. Critics argue that while climate change is complex, it doesn’t exonerate companies from accountability.
How should companies be held responsible? Options include stricter regulations on emissions and financial compensation for those affected. Many believe litigation is necessary for both accountability and reparations for damage done.
In places like New York and Vermont, laws mandate companies to help cover climate-related costs. This regulatory approach could set precedents, showing a route that goes beyond litigation. If businesses contribute to solutions, it can reduce the burden on taxpayers and those affected by climate impacts.
Critics of the new New Zealand legislation warn that it will make it harder for victims to seek justice. As insurers become wary of high-risk areas due to climate shifts, it shifts more financial responsibility onto governments and, ultimately, taxpayers.
The proposed law has not only a retrospective effect—meaning it affects ongoing cases—it also risks stifling judicial avenues to hold companies accountable. Courts should be allowed to apply existing legal principles to these modern challenges.
What’s needed is a comprehensive regulatory framework addressing climate issues. Existing mechanisms, like emissions trading, often fall short, and many major polluting industries are not adequately regulated. For real progress, governments need to create laws that ensure companies share the responsibility of mitigating climate change impacts, instead of simply shielding them from litigation.
In conclusion, as we grapple with the complexities of climate change, the interplay between corporate accountability and legislative actions will continue to evolve. Clear solutions require bold regulatory reforms—not just liability shields that let corporations off the hook.
Sam Bookman is a lecturer at Melbourne Law School.
