Episode 332: Who Pays for Climate Damage? Climate Litigation, Attribution and Accountability with Dr Rupert Stuart-Smith
In this episode of The International Risk Podcast, Dominic Bowen speaks with Dr Rupert Stuart-Smith about the rapid expansion of climate litigation and what it means for corporate strategy, financial stability, and international risk. The discussion explores how climate lawsuits have evolved from targeted environmental challenges into a structural feature of the climate transition, reshaping legal duties, redistributing financial exposure, and creating new forms of liability for governments, corporations, and financial institutions.
The conversation highlights how climate litigation is not confined to fossil fuel producers alone. While major emitters remain central targets, claims are increasingly extending to banks, investors, and companies across the economy whose strategies are misaligned with the goals of the Paris Agreement. He explains how advances in attribution science are allowing courts to trace emissions through to specific climate harms, strengthening causal arguments and narrowing the space for uncertainty-based defences. Even where claims are unsuccessful, companies face material consequences through legal costs, reputational damage, investor scrutiny, and heightened disclosure obligations.
Find out more about how courts are beginning to accept, in principle, that corporations may bear proportional responsibility for climate impacts, and how this possibility is reshaping risk assessments. The episode examines the implications of cases against companies such as RWE and Shell, as well as emerging litigation targeting financial institutions for the emissions they indirectly finance. It considers whether investors are “flying blind” in the face of evolving liability standards and how fragmented jurisdictional approaches complicate global risk modelling.
Dr Rupert Stuart-Smith is Deputy Director of Climate Science and the Law and Senior Research Fellow at the Oxford Sustainable Law Programme at the University of Oxford. His research sits at the intersection of climate science, legal accountability, and financial risk. In addition to his academic research, Rupert has advised international legal bodies, including the Inter-American Court of Human Rights, on the role of climate science in judicial decision-making.
The International Risk Podcast brings you conversations with global experts, frontline practitioners, and senior decision-makers who are shaping how we understand and respond to international risk. From geopolitical volatility and organised crime to cybersecurity threats and hybrid warfare, each episode explores the forces transforming our world and what smart leaders must do to navigate them. Whether you’re a board member, policymaker, or risk professional, The International Risk Podcast delivers actionable insights, sharp analysis, and real-world stories that matter.
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Dominic Bowen is the host of The International Risk Podcast and Europe’s leading expert on international risk and crisis management. As Head of Strategic Advisory and Partner at one of Europe’s leading risk management consulting firms, Dominic advises CEOs, boards, and senior executives across the continent on how to prepare for uncertainty and act with intent. He has spent decades working in war zones, advising multinational companies, and supporting Europe’s business leaders. Dominic is the go-to business advisor for leaders navigating risk, crisis, and strategy; trusted for his clarity, calmness under pressure, and ability to turn volatility into competitive advantage. Dominic equips today’s business leaders with the insight and confidence to lead through disruption and deliver sustained strategic advantage.
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Transcript
00:00
Rupert Stuart-Smith
By failing to be proactive, by failing to effectively manage climate risk and align with these new obligations, I think we are potentially walking into a mountain of climate-related liability risks where we could see much more disruptive action and rapid realignment with legal roles.
00:20
Elisa Garbil
Welcome back to the International Risk Podcast, where we discuss the latest world news and significant events that impact businesses and organisations worldwide.
00:29
Dominic Bowen
Today’s episode is sponsored by Conducttr. They’re a crisis exercising software that’s built for corporates, consultants, humanitarian teams, and defence and security organisation. It lets you build exercises fast using its intuitive scenario editor and ready to make content. I’ve used Conducttr and I can testify that if you use PowerPoint or Excel still, well it’s time to start looking at Conducttr. If you want your teams to be genuinely ready for the next crisis, then Conducttr is certainly worth a look. And before we start today, I have a quick favour to ask you. If you listen to The International Risk Podcast and you find it useful, please follow and subscribe wherever you are watching and listening today. In return, my commitment to you is simple that every week we will keep raising the bar with better guests, sharper questions and more practical takeaways for you that you can use to make better decisions. And if there is someone you want on the show, tell me. We read all of your comments, and we act on them. Let’s get onto the show.
01:33
Dominic Bowen
Climate litigation is no longer a fringe tactic of environmental activism. In fact, it’s becoming a central arena where climate policy, corporate strategy, and public accountability intersect. And in today’s episode, we’ll explore how climate litigation has evolved from something that’s isolated in minor disputes into something that’s now a material risk factor that investors, boards, and policy makers need to pay attention to. Joining us today is Rupert Stuart-Smith. He’s the Deputy Director and Senior Research Fellow in Climate Science and the Law at the Oxford Sustainable Law Program. Rupert works at the frontier of where climate science and legal accountability intersect and I think this will be a really fun conversation today. I’m Dominic Bowen, host of the International Risk Podcast. Rupert, welcome.
02:18
Rupert Stuart-Smith
Thank you very much. It’s a pleasure to be with you today.
02:20
Dominic Bowen
Rupert, I understand you’ve just raced to the podcast after giving a lecture. Whereabouts are you today?
02:26
Rupert Stuart-Smith
So I’m at the University of Oxford and yes, I was just lecturing to my master’s students on a similar topic on the impacts of climate related legal action and some of the financial repercussions that might have.
02:38
Dominic Bowen
Perhaps most importantly for many of our listeners, business leaders and policy makers, should we be feeling excited about the next cohort of people graduating from university? Have you got a good bunch of students there?
02:47
Rupert Stuart-Smith
Well, if today’s questions are anything to go by, then I think the answer to that is probably resounding yes.
02:53
Dominic Bowen
Oh, fantastic. That’s good. It’s always very easy to tease the university students. So great to hear that you’ve got some great students in your class. As we talked about in the introduction, Rupert, climate litigation is increasing and perhaps transforming what was more a niche tactic into something that’s now a source of financial exposure for many companies. So for our listeners who might not follow or understand the legal landscape closely, how would you describe climate litigation and what’s it trying to achieve?
03:22
Rupert Stuart-Smith
Climate litigation is a wide variety of legal tactics. Some of the types of cases we hear about most often in the news, they’re some of the flashiest ones. Climate litigation involves a lot of bread and butter environmental lawsuits challenging individual new fossil fuel projects like coal power stations or new oil fields. It’s a wide variety of challenges also to state’s climate targets or the implementation of those targets, challenging their consistency with either domestic law or states’ legal duties under international legal frameworks like the Paris Agreement.
But climate litigation, it goes both ways. Climate-related lawsuits have also been brought by companies challenging climate policies themselves or the implementation of climate policies by companies, for instance, seeking to legally insulate them from the financial consequences of policies that would have them close down coal power stations sooner than otherwise they would plan to. So it’s a diverse set of legal tactics, it looks different in different countries. In the global south, climate lawsuits have often been brought to different type of topics than we often see in Western Europe or North America. Criminal claims relating to deforestation being particularly numerous. So a wide variety of different types of legal strategies in different jurisdictions with different outcomes and different consequences also for the financial risks that firms are exposed to as a result.
04:52
Dominic Bowen
That’s really interesting so I think we’ll unpack quite a few of those things but seeing you finish that by talking about risk, let’s unpack the risk perspective. I think why this is such a pressing risk for corporations, for investors, for board members and I think the courts are being used also to challenge governments on inadequate climate action, like you mentioned but also holding companies liable for emissions, maybe even greenwashing, and of course, maybe even testing the boundaries of fiduciary and perhaps even human rights law. I understand that more than 3,000 cases have actually been filed globally, um some of which are reaching high courts, which of course sets precedent and of course, then, even if companies win these lawsuits, there’s still legal costs, there’s still reputation damage, there’s still investor confidence, there’s credit ratings, there’s insurance pricing. So winning a case isn’t necessarily all good either. Can you talk to us about who should be paying attention? Because it sounds like everyone, but that sounds a bit too broad. Who should be really paying attention to this conversation, Rupert?
05:45
Rupert Stuart-Smith
I think we need to recognise at the start that the dominant frame that regulators, policy makers, business leaders, their investors use for assessing or for engaging with climate change as an issue is through financial risk because climate related legal action changes the distribution of those risks across the economy, and I’ll give you some examples of that. That means that, frankly, all of those groups should be concerned by this. But in particular, businesses or entities investing in those businesses that have either produced historically large amounts of emissions, have currently high amounts of emissions, or continue to invest in high-emitting products, that are based in jurisdictions in which we are seeing increasing legal interest in the impacts of climate change.
06:30
Dominic Bowen
And of course, proof is a critical aspect of most core cases. And for cases like this, I assume we’re relying heavily on the evidence that we get from science. Now, attribution is going to be particularly important. And I think that’s one of the things, obviously we’ve seen there’s still a lot of people in senior positions that don’t believe in climate change, don’t believe a lot of the science that’s being published but attribution and the attribution that courts are recognised, I understand, is getting increasingly stronger and that’s about the you know proving causation whether it’s cancer clusters or contaminated drinking water etc so how good is defense versus how good is attribution today when it comes to these cases?
07:06
Rupert Stuart-Smith
Attribution science is the branch of climate science that essentially allows us in scientific terms to assess causal relationships between greenhouse gas emissions and their consequences and in particular, in cases seeking to hold firms responsible for their contributions to the impacts of climate change, attribution is a central part of the claim. If you can demonstrate that an individual company’s emissions contributed to or were responsible for specific climate change impacts, then you might be able to hold them legally responsible for those costs.
Now attribution science has developed over the last two decades or so from an initial interesting scientific endeavor into one that is able to be deployed rapidly in the immediate aftermath of climate related disasters happening around the world and using scientific methods that not only have been widely accepted by the Intergovernmental Panel on Climate Change. The way it tends to work is we use climate models to assess how the climate system would have evolved in the absence of human greenhouse gas emissions, compared to how it has over the last decades. Using those models and observations of the climate system, we’re able to quantify how much less hot individual heat waves might have been in the absence of climate change, how much less wet storms would have been, how much drier certain droughts are due to human influence in the climate. Some recent studies have even gone all the way back to individual emitters. They’ve quantified how much worse individual fossil fuel companies, for instance, have made specific heat waves. They’ve quantified economic losses attributable to individual emitters too. So increasingly, scientific evidence is allowing us to span that full causal chain. Emissions of greenhouse gases on the one end right the way through to the impacts of climate change on the other end. We’re seeing it also used to demonstrate that individual groups are victims of climate change and therefore they have the right to bring claims seeking to compel states to cut their emissions more rapidly.
About a decade ago, Mr. Saulo Luciano Lluia, Peruvian farmer and mountain guide from the city of Huaraz in the Peruvian Andes, brought a case against RWE, a German coal mining and energy company. He argued that RWE should pay part of the costs of protecting his city, against a potentially devastating flood. Now, the cause of this flood was that a valley that used to be largely full of a glacier had been transformed by the effects of climate change. The glacier had retreated a mile up the mountain and the wake of its retreat, a huge lake had formed and expanded. and was now threatening to burst into the city below it. He said, why should we have to pay the costs of protecting the city ourselves? When companies like RWE on the other side of the world were responsible through their greenhouse gas emissions for these climate change impacts. The court accepted many of the legal arguments in principle. Companies in Germany could be held responsible for climate change impacts that were caused as a result of their emissions. The case was ultimately not successful because the court asked a very precise question. They said, what is the likelihood in the next 30 years of this lake directly affecting Mr Lliuya’s home? The court-appointed experts found that the risk to Mr. Lliuya’s home was about 1% over the next 30 years. On that basis, the court threw out the claim. But as I say, it accepted in principle that German firms could indeed be held legally responsible for their contributions to the costs of managing climate risks elsewhere in the world.
10:39
Dominic Bowen
I think that’s so interesting and it was actually just last week I was speaking with a client and they were talking about potential force majeure and acts of God and I so had to push back and say, no, this is quantifiable. There are human fingerprints. There is a very clear chain between your decisions as a company, the position that your employees are in and the potential risks that are now being faced. And I think it’s important for a lot of business leaders to really understand that these chains and these links really do exist.
But I think not all sectors potentially face the same level of exposure. And we’ve spoken about oil and gas and fossil fuel producers. But are there other industries or other sectors that are perhaps less obvious that really do need to be paying attention to potential climate litigation and maybe actions they can be taking now to be less offensive in their actions or mitigate the risk more proactively?
11:26
Rupert Stuart-Smith
Well, absolutely and we spoke earlier in the podcast about the wide variety of legal strategies being used and, while many of these do target fossil fuel companies, by no means all. Climate-related lawsuits have been broadly successful in challenging inadequacies in state climate targets. The consequences of cases like these is that governments may need to implement more rapid emission reduction targets and then institute economy-wide reductions in greenhouse gas emissions. And when that’s happening as a result of climate-related legal action, the consequence will be that firms across the economy may be subject to more disruptive transitions if they’re not already on a course to reduce emissions in line with the goals of the Paris Agreement. We’ve also seen in recent years a shift in some of these climate lawsuits to challenge not only fossil fuel companies, but directly challenge the climate plans or the contributions to climate change impacts of other types of companies.
One notable recent example in the Netherlands was a case brought by the Dutch NGO Milleudefensie, the Dutch Friends of the Earth, against ING, the Dutch bank. They argue that in this case that ING, not so much the direct emissions, but through the emissions that indirectly essentially finance the various sectors, they also need to be reduced in line with sectoral transition pathways consistent with meeting the goals of the Paris Agreement. The claimants request that the court order ING to reduce the emissions intensity of the various different sectors in which ING is investing essentially by 2030, 2035, 2040 and provide sector-specific targets for each of those dates. So climate litigation, as I say, it’s a set of legal strategies that are increasingly encompassing a wide range of sectors and the consequences of these cases could therefore run much further than fossil fuel companies and investments in them.
13:23
Dominic Bowen
I think that’s something that on a daily basis I’m acutely aware of as someone who’s an advisor and I advise boards and executive teams on a lot of different topics, I’m always cautious about the what if and what if it goes wrong and what if only part of the advice is followed and will that stand up to the test of time? And as you mentioned then, investors and banks you know are increasingly exposed to climate litigation directly or indirectly and then there’s the lending, underwriting, holding stakes in different companies. So when we look at systemic risk, now how should companies be really looking at that, whether they’re investors, whether they’re advisors or financiers? The easy option would be, okay, well, we just don’t invest in companies. And of course, we’ve seen a lot of firms do this, just not investing in fossil fuels and industries like that. But of course, they are still going to attract investment. So how much say does ING actually have to the climate mitigation policies of fossil fuel companies?
14:14
Rupert Stuart-Smith
What is certainly claimed in cases like this is that ING is able to decide who it invests in, whether or not those companies have plans that are consistent with sectoral mitigation strategies, consistent with the goals of the Paris Agreement and so there are certain claims made about sort of agency in that respect.
14:33
Dominic Bowen
And Rupert, I’ll take the opportunity just to remind our listeners, those that prefer to watch their podcasts, that you can watch all of the International Risk Podcast content on YouTube. So please do go to YouTube and remember to subscribe and hopefully if you like it, also like our content that really is important for our success.
And Rupert, even in cases where the litigation is not successful, where the judgment is not against the companies, as I mentioned earlier, there’s significant consequences for companies. Can you explain some of these legal liabilities and other impacts that organizations need to take into account? Even if they can beat it legally, what are they still left with at the end of that?
15:10
Rupert Stuart-Smith
This moment in time where the majority of cases filed are still pending or have not yet been successful, what we’ve seen is an opening stage of claims and judicial decisions that have in some jurisdictions found that firms may be in principle, as a matter of law, held responsible for climate change impacts their emissions cause, or that they have in principle legal duties to reduce their emissions. We’ve seen that in a case against Shell in the Netherlands, for instance. So while even though companies like RWE have not been held legally responsible for the impacts of their greenhouse gas emissions, and even though companies like Shell, based on the most recent decision in the Netherlands, have not been compelled to reduce their emissions by a specific amount, these judicial decisions suggest that it is plausible that firms will be compelled by courts to reduce their emissions more rapidly than they currently plan to do so and also that it’s plausible that in the right evidentiary setting, when the fact pattern is right, firms may also be forced to pay up for their contributions to climate change impacts.
If either or both those eventualities materialize, the financial consequences could be very profound indeed. Typically, climate-related risk assessments have not accounted for the effects of climate-related legal action and so even before these cases are fully successful, there’s a need to be able to better manage these risks, to understand the scale of the financial risks to which investors are exposing themselves and the potential legal outcomes that we might see in the years to come.
16:48
Dominic Bowen
And so I wonder, based on that, is it too early to tell beyond the immediate challenges, like looking at a company’s balance sheet, looking at their credit rating, looking directly at investor confidence? Maybe even before courts reached their decision, have we seen any impacts of that and how people are actually voting with their money?
17:04
Rupert Stuart-Smith
So there is some research that indicates some shifts in firm value around the time that climate-related lawsuits were filed or decisions came out. But to some extent, I don’t think we can read too much into this. Generally speaking, there’s a relatively limited understanding, let alone quantification of the financial repercussions that climate-related legal action might have and to a great extent, investors are largely flying blind in the face of potentially substantial financial risks that could come from cases like this. A few years ago, the Dutch courts in the first instance found that Shell had legal obligations to reduce its greenhouse gas emissions by 45 percent by 2030. That wasn’t just Shell in the Netherlands. That was Shell’s global network of subsidiaries and it wasn’t just from their scope one emissions. It included the emissions produced worldwide as a result of the sale of its products. While that case was ultimately overturned on appeal, if that decision had stood, the financial repercussions of that for a company like Shell would presumably have been very large indeed.
If you think back to the RWE case I referred to previously, that case brought by Mr. Lliuya from Huaraz in Peru, the financial repercussions for RWE might have been relatively modest. That case only sought about 20,000 euros in damages. That was because RWE’s contribution, around about half a percent of historical emissions, multiplied by the costs of these adaptation measures, wasn’t all that large. So the costs of claims like this, be it associated with the impacts of climate change or be it by court orders that would compel states or companies to reduce their emissions much more rapidly, they could be substantial and to a great extent, they are not yet being accounted for in risk disclosures or risk management of many firms.
18:57
Dominic Bowen
I think your point about risk disclosures is critical and also I liked your comment about investors are often largely flying blind and I think transparency and disclosure are critical when it comes to managing risk and one thing that I see a lot when working with large European clients is generic risk language, boilerplate statements. Maybe not necessarily greenwashing or climate washing amongst any of my clients, but certainly, I ask questions about, are we really being transparent? Are we disclosing all the liabilities and potential scenario impacts? Have we considered all the realistic scenario impacts that could occur over the next decade or two?
Then of course, within companies, there’s often that ownership and fragmentation around legal financial risk, who actually owns what risks. And I’d perhaps go further and argue that that given what we know now and given the conversation we’re having, Rupert, board members may be breaching their duties of care. They may be breaching their oversight if they fail to identify, and monitor and manage climate risk including the litigation risk that comes from that. But what do you see? What’s your opinion on the potential exposures, not just that the companies, but actually that the directors and board members themselves have?
20:03
Rupert Stuart-Smith
It’s difficult to say anything definitive, but it is worth noting that there have been claims brought arguing that directors of Shell, for instance, have been failing to meet their duties as directors through their failure to effectively manage climate-related risks, including legal risks. It is plausible given that we know that these risks are real, that they may well be materia, and that we may well see similar sorts of legal claims made in future. The reality is that climate-related legal action could, and we can demonstrate at this moment in time for sure, that climate-related legal action could result in substantial and thus material financial risk for targeted firms. The logical consequence of this, at least for me, is that firms must therefore manage those risks effectively. What precisely this means in terms of legal duties and liabilities of directors will be seen in future but these risks are certainly here, they are likely to be material and recent court decisions indicate that we could see some of those risks materializing in the not too distant future.
21:14
Dominic Bowen
And Rupert, I wonder if you had a room full of board members, investors, executives, what would be the one principle or the one bit of advice you’d be giving them in order to be able to better anticipate and manage climate litigation risks so that they can take positive proactive steps today as opposed to taking reactive steps in five or 10 years?
21:33
Rupert Stuart-Smith
Well, there are a few things that we know triggers these risks in particular. One of them is misalignment with emission reduction pathways that achieve the goals of the Paris Agreement. Growing numbers of firms, whether it’s Shell or Total, have been challenged for their climate strategies in the last few years. Those cases would never have been brought, and certainly would have had zero chance of success if those firms had climate targets that were but clearly aligned with the goals of the Paris Agreement. The claim of the defendants was that the status quo for these companies was insufficient. So one of the best ways to manage exposure to these sorts of risks is to align with the goals of the Paris Agreement and have ambitious and transparent climate targets that would reduce emissions rapidly in the near term, would minimize dependence on speculative technologies and would be consistent with pathways that reduce emissions very rapidly.
So that’s one option for firms that are at risk of being challenged for the impacts of their historical greenhouse gas emissions. Of course, to an extent, there’s only so much they can do, but continuing to produce emissions would increase the magnitude of liabilities they might be exposed to and especially in the present day, producing emissions may increase their exposure to climate-related risks much more substantially than their far historical emissions. There’s nowhere to go and argue that you can’t know that those greenhouse gas emissions will cause climate change impacts. The science is there and therefore to see and we know what many of those impacts are, and we can project how they will materialize around the world. The best way to minimize risks would ultimately be for firms to stop emitting greenhouse gases to the atmosphere as quickly as they possibly can and remove their historical contributions from the atmosphere as quickly as they could as well. That would be the ideal set of circumstances that would ultimately minimize their exposure to climate damages claims, as well as climate-related mitigation claims.
We know that progressive, and ambitious transition to net zero is ultimately the cheapest way to do it. Far more expensive is essentially to faff around for a decade, gambling that we’re not going to take the issue seriously, only to discover that legal obligations to reduce emissions and the global scale ultimately kick in, more disruptive transitions have to take place, emissions reduced much more rapidly in a way that may be economically much more painful, and then the financial consequences of that.
24:01
Dominic Bowen
Thanks for explaining that, Rupert. and one final question we ask all the guests on the International Risk Podcast is, when you look around the world, what are the international issues and the international risks that cause you the most concern?
24:14
Rupert Stuart-Smith
In the context of climate change specifically, I think we’re moving into a period where we’re seeing gaps in climate governance that are growing only wider day by day and year by year. On the one hand, we have global climate targets that would have emissions reduced rapidly such that global temperature rise can be limited to 1.5 degrees. On the other hand, we have widespread inaction by states and by companies where climate targets are insufficient to achieve those goals and climate policies to achieve those targets lag even further behind. We’re therefore seeing a less coordinated approach to addressing the impacts of climate change that is jurisdictionally differentiated. Some countries are sticking at it, whereas other countries are essentially absconding from responsibility and we’re seeing an increasing role of the courts as a result, because these legal duties continue to exist, even in a world where politicians say, I don’t care, or where business leaders don’t take sufficiently rapid action to address their greenhouse gas emissions. Those legal obligations continue to exist so by failing to be proactive, by failing to effectively manage climate risk and align with these legal obligations, I think we are potentially walking into a mountain of climate-related liabilities and risks where we could see much more disruptive action and a rapid realignment with legal goals. Either that or those globally agreed legal targets are dispensed with entirely and the consequence of that is far greater levels of climate change and the associated impacts that in any case would cause negative economic consequences for many firms.
It’s difficult to quantify these risks often because we don’t know precisely which lawsuits will be filed, by whom, against which parties, in which jurisdictions and even if we knew the answer to those questions, we don’t know the likelihood of success of those claims, what the remedies will be, if those cases are successful and whether or not those remedies will be enforced.
26:20
Dominic Bowen
Thanks for explaining that Rupert and thank you very much for coming on the International Risk Podcast.
26:25
Rupert Stuart-Smith
It’s great pleasure. Thank you for having me.
26:28
Dominic Bowen
Well, that was a great conversation with Rupert Stuart-Smith and I really appreciate hearing his thoughts today on climate litigation risks and the importance for all of us. Today’s podcast was produced and coordinated by Ella Burden. I’m Dominic Bowen, your host. Thanks very much for listening. We’ll speak again in the next couple of days.
26:46
Elisa Garbil
Thank you for listening to this episode of The International Risk Podcast. For more interviews and articles visit theinternationalriskpodcast.com. Follow us on LinkedIn, BlueSky and Instagram for the latest updates and to ask your questions to our host Dominic Bowen. See you next time.
