Reparation for Climate Change: The Successes and Limits of Litigation

Monika Hinteregger

Chapter 17: Private Law Instruments for Climate Change Damage — Challenges and Limits

1.Introduction

This chapter addresses private law litigation for climate change damages, as set out in scenarios 8, 9 and 10 (see introductory chapter on model scenarios), which cover several aspects of this topic.¹ The problems of tort law as a means of addressing climate change damages are illustrated in scenario 8, which is based on the facts of Asmania et al v Holcim,² a spectacular tort law case pending before a Swiss court in which Indonesian residents seek to hold a Swiss company, a major emitter of greenhouse gases (GHG), liable for sustained and future harm caused by rising sea levels. Scenario 8 raises several fundamental issues of tort law in relation to climate change damages. These concern the availability of applicable causes of action, the question of causation and the related problem of damage assessment.

Another typical feature of climate change damage is the fact that claimants and defendants are often located in different parts of the world (ie Asia and Europe in scenario 8) leading to questions of international jurisdiction and applicable law. The issue of legal standing is also addressed in scenario 10, which explores the availability of a class action under the US Alien Tort Statute to victims of climate change damage. The idea of suing in the US may be attractive to foreign claimants, because the procedural tool of the class action is not available in every jurisdiction. Another reason for this is that US substantive tort law is often perceived as favorable to victims. It will be shown that this perception is rather deceptive, as US courts are in fact rather reluctant to award compensation or other remedies for climate change damages.

Another very different route to litigation under private law is the shareholder lawsuit in scenario 9. The idea of shareholder lawsuits recognizes that climate change damage has already become a relevant factor for enterprises. As major emitters of GHG, enterprises are both drivers and victims of climate change, because climate change adversely affects corporate assets through impacts on infrastructure, supply chains and markets. In addition, private companies are also possible targets of climate change litigation. The potential of such litigation is demonstrated by the Heede study,³ which shows that just 90 entities, the so-called “carbon-majors,” are responsible for 63 per cent of global industrial emissions of carbon dioxide and methane from 1854 to 2020. It is obvious that these entities, many of them private corporations, will be at the center of attention when it comes to such litigation. Litigation is costly in itself, but for corporations it is also detrimental to their public image and thus can have a negative impact on their overall financial position. In the US⁴ and Australia,⁵ shareholders have already taken legal action against companies for failing to disclose relevant information about the company’s exposure to climate change risks. Lawsuits have also been brought against pension funds, claiming that they have a duty to consider climate-related financial risks in their investment decisions.⁶ Today, these lawsuits are brought by climate change activists who use them as another platform to articulate their concerns. As the risks associated with climate change continue to grow, such claims may become more frequent and actually driven by the financial concerns of shareholders.

In the following I will discuss these issues in more detail. I will begin with the problem of legal standing, then outline the main features of tort law and their implications for climate change damages, and explore whether shareholder lawsuits can be a way forward to tackle the problem of climate change.

2.Tort Law Litigation for Climate Change Damage

a.International Jurisdiction and Applicable Law

i.Scenario 8 (the Holcim-case) and the Rules in Europe

In Europe, there are clear rules on jurisdiction and conflict of laws which, as will be shown in the following, are quite favorable to claimants. In Switzerland, where the Holcim case is being heard, the 2007 Lugano Convention (LC)⁷ applies. According to the LC, the international jurisdiction for claims for damages lies either with the courts of the state in which the defendant is domiciled⁸ or with the courts of the State in which the harmful event occurred or may occur.⁹ According to the European Court of Justice (CJEU), this includes the jurisdiction of the state where the damage occurred.¹⁰ The plaintiff therefore has the right to choose.¹¹ The domicile of legal persons is defined in Article 60 LC as the place where they have their statutory seat, their central administration or their principal place of business. The domicile of the plaintiff is irrelevant.

The Indonesian plaintiffs in the Holcim case are therefore entitled to bring their claim before a Swiss court. If the defendant were not domiciled in Switzerland, the domestic rules on international jurisdiction¹² would apply, but the parties would also have the option of conferring jurisdiction on a Swiss court by means of a choice of court agreement.¹³

It is interesting to see that the European Union (EU) provides for similar rules in the Brussels I Regulation.¹⁴ Jurisdiction is conferred either on the courts of the State in which the defendant is domiciled¹⁵ or on the courts of the State in which the harmful event or the damage occurred.¹⁶ As in the LC, — S. 342 —the plaintiff has a right of choice.¹⁷ The definition of the domicile for legal persons is the same as in the LC.¹⁸ In order to benefit from these favorable rules, plaintiffs have already tried to sue European parent companies and then join subsidiaries as co-defendants to the claims.¹⁹ If the defendant is not domiciled in an EU member state and no choice of court agreement has been concluded, international jurisdiction is determined by the domestic rules of the relevant Member State. Unlike in US law, European courts have no discretionary power to decline their jurisdiction if another judicial body may more conveniently hear the case (doctrine of forum non conveniens).²⁰

This favorable position for plaintiffs also extends to the rules on choice of law. Swiss law provides in Article 133(1) of the Swiss IPRG²¹ that claims arising from tortious acts are governed by the law of the State in which the tortious act was committed. If the result does not occur in the State in which the tortious act was committed, the law of the State in which the result occurs shall apply if the tortfeasor could have expected the result to occur in that State. Within the EU, the applicable law for non-contractual obligations is governed by the Rome II Regulation.²² In the case of environmental damage, including damage to persons or property, the injured party has the right to choose between the law of the country where the harmful event occurred and the law of the country in which the damage occurred (Article 7 Rome II). According to Article 2 Rome II, Article 7 can also be applied to injunctive relief for imminent environmental damage.

Under Swiss law, in contrast to Article 7 of the Rome II Regulation, there is no choice between the place where the harmful event occurred and the place where the damage occurred.²³ However, the parties are free to agree on the applicable law in accordance with Article 132 of the Swiss IPRG. According to — S. 343 —Article 138 of the Swiss IPRG, claims arising from harmful effects (emissions) emanating from a property are to be assessed either according to the law of the State in which the property is located or according to the law of the State in which the effect of the impact occurs. The choice is left to the plaintiff.²⁴ Thus, all in all, the plaintiff-friendly result also applies to Swiss law.

ii.The US Alien Tort Statute (Scenario 10)

The US Alien Tort Statute (ATS)²⁵ is a specific rule of US federal law that allows foreign nationals to sue in US federal courts for tort law remedies for the violation of the law of nations or treaties concluded by the United States. The rule does not create a cause of action but merely establishes that federal courts have jurisdiction²⁶ and “allows federal courts to recognize certain causes of action based on sufficiently definite norms of international law.”²⁷ The scope of the statute is rather unclear. To be actionable, the violated rule must be “specific, universal, and obligatory.”²⁸ According to the US Supreme Court,²⁹ the requirement of specificity means that the violated rule must be comparable to the common law causes (piracy, torts against foreign ambassadors and violations of safe passage) that were actionable under the ATS in the 18th century. The cause of action must be universally recognized by the law of nations, and it must be of a binding nature. Even if all three criteria are met, the court may decline jurisdiction due to policy considerations, such as public policy, separation of powers, political questions etc. In Jesner³⁰ the Supreme Court set a rather high standard for the type of perpetration that can be the basis of a suit under the ATS by referring to international human rights norms that prohibit acts repugnant to all civilized peoples, such as genocide, torture and slavery, which make their perpetrators enemies of all mankind. Jurisdiction under the ATS rule thus requires the violation of well-established, fundamental precepts of international human rights law.

It is not clear whether economic rights and corporate liability are covered by the statute. In Jesner the Supreme Court held that foreign corporations

could not be sued under the ATS.³¹ For US companies the issue remains unresolved.³² In addition, in Kiobel³³ and Nestle USA, Inc v Doe,³⁴ the US Supreme Court held that there must be a sufficient connection between the cause of action and the domestic conduct of the defendant company. Mere corporate presence of the defendant company in the United States does not suffice. This consideration is discussed under the term “presumption against exterritorial application” which is intended to prevent US courts from unwanted interference with foreign policy.³⁵ In the legal literature, scholars debate whether the ATS can be applied to climate change damages.³⁶ According to the construction of the rule by the Supreme Court in Jesner, such a suit cannot be brought against a foreign corporation. Whether it is possible to sue a US corporation under this rule is still unclear. According to the ruling in Kiobel, it would require that the corporation has committed a violation of a rule of international law that (i) is recognized by the United States, (ii) is directed not only at the state but also at private entities and (iii) is equivalent in gravity to the acts already recognized under the statute. The obligation may arise from an international treaty on human rights³⁷ — S. 345 —or climate protection ratified by the United States,³⁸ or from customary international law. Whether such an obligation in relation to climate change damage can be derived from any of these sources of international law is doubtful and highly controversial among legal scholars. While some authors³⁹ see space for the application of the ATS to climate change damage, others⁴⁰ do not.

For scenario 10, this means that the case brought by members of the Sámi community in Norway against ExxonMobil and Chevron in the US District Court on the basis of the US Alien Tort Statute is not very promising from a legal point of view. There is no question that this claim would not be barred by the presumption of exterritoriality, since both companies are based in the US and both have been responsible for significant amounts of GHG emissions that have undoubtably affected the territory of the US and beyond. The problem for such a claim, however, would be that the plaintiffs would have to show that the defendants had violated an established and universal rule of international law against the emission of GHG. This violation of international law would have to be of a gravity comparable to the eighteenth-century common law causes that were actionable under the ATS (piracy, torts against foreign ambassadors and violations of safe passage). It is highly doubtful that the existing international frameworks on human rights or on climate change prevention have ever provided for such a rule in the past, and it is also doubtful that such a rule exists today.

Even if all of these criteria are met, the Court may decline jurisdiction due to policy considerations. One of the biggest hurdles in this regard would be the “political question doctrine,” which has already been used by US courts to dismiss actions for the compensation of climate change damage.⁴¹

In addition, it is important to note that the ATS is only concerned with the establishment of jurisdiction. If the claimants succeed to do so, they will then have to show that their harm is compensable under a specific cause of action under federal common law.

3.Tort Law

a.Causes of Action

There is currently no international liability regime for the prevention and compensation of climate change damage. As a result, all claims must be brought before national courts under specific national laws. National tort laws provide for different types of liability that can be applied to climate change damage.⁴² To date, no country has a specific no-fault liability regime applicable to climate change damage, but many countries have liability regimes that can be applied to climate change damage. One basis for litigation in some civil law countries are the rules on neighborhood liability⁴³ which require a continuous, unlawful and polluting interference with the use or enjoyment of land (such as by smoke, wastewater, noise, etc.) from one neighboring land to the other. In common law countries, the corresponding remedy is the action of private nuisance.⁴⁴ Although GHG are undoubtedly pollutants within the meaning of neighborhood law, they cannot easily be subsumed under this requirement because GHG do not directly affect the neighboring land. They are released by the emitter into the atmosphere, where they accumulate over a long period of time and cause the temperatures on Earth to rise. This leads to a change in climate patterns, triggering certain natural events (storms, rising sea levels) that cause damage. It is very questionable whether such an indirect causal relationship can be considered an interference according to neighborhood law. However, it is interesting to note that in the case of Lliuya v RWE⁴⁵ the German Court of Appeal (Oberlandesgericht Hamm) did not hesitate to apply Section 1004 of the German Civil Code (BGB), a special provision of property law which provides for injunctive relief in the case of disturbance of ownership and includes the right to have the disturbance removed, even though the alleged tortfeasor (RWE) and the disturbed plot of land in Peru are more than — S. 347 —10,000 kilometers apart.⁴⁶ On 28 May 2025, the Higher Regional Court of Hamm dismissed the lawsuit on factual grounds in a second instance, concluding that the plaintiff’s house was not specifically endangered by glacier melt. However, in its detailed ruling, the court expressly affirmed the civil liability of major emitters for climate damage.⁴⁷

The common law provides for another tort of nuisance, which is unknown in civil law countries: the tort of public nuisance. This tort covers interference with a public interest and can be brought by the State against a person who unreasonably interferes with a right common to the public (public waters, air).⁴⁸ Private parties can only bring an action for public nuisance if they have suffered particular injury different from that suffered by the public at large. An action in public nuisance allows recovery for personal injury and property damage as well as for pure economic loss.

All national tort laws provide for fault-based liability.⁴⁹ In the civil law countries fault-based liability is regulated in the civil codes and requires proof of actionable damage, fault and causation. The criterion of fault (in the broad sense, which includes the Germanic notion of unlawfulness) is the result of a comprehensive assessment of several factors, such as the magnitude of the risk, the gravity of the harm, the cost of precautions and the social utility of the defendant’s conduct.⁵⁰ The assessment must always be made ex ante and must relate to the time of the emission, not to the time when the harm occurred. The concept of fault thus requires that the harm was foreseeable at the time of the emission. For this purpose, it is important to determine when industrial emitters of GHG must have become aware of the negative effects of GHG on the global climate. Climate science shows that the first scientific analyses of the warming effects of GHG date back to 1861,⁵¹ and it can be assumed that since — S. 348 —1990, when the first IPCC report on climate change was published,⁵² the interested public definitely had knowledge of the risk. However, it is important to note that the fact that the emitter was aware or must have been aware of the risk does not yet necessarily amount to fault.

b.The Problem of Causation

There is no doubt that the establishment of causation for climate change damage is very difficult and a real challenge for any court. In the context of climate change damage, all conceivable causation scenarios culminate at the same time. Damage is caused by multiple emitters. Emitters and injured parties are located far from each other. There is a considerable time lag between emissions and the harm, and there are possible synergistic effects between the various emitted substances as well as between these substances and the natural environment.

Compensability of harm under tort law requires a sufficient causal link between the defendant’s activity and the harm sustained by the victim. Legal doctrine provides that the causal link is established according to the “but for” test (common law) or the conditio sine qua non-formula (civil law), which qualifies any circumstance as a cause of the damage if the damage would not have occurred without it. The “but for” test and the conditio sine qua non-formula are appropriate tools for the attribution of damage in most causation scenarios. Traditional tort law also recognizes liability in case of concurrent, cumulative and alternative causal constellations,⁵³ and it is even able to provide well-balanced solutions to the problems of synergistic and progressive effects of pollutants.

Tort law theory thus offers solutions even for the more complex scenarios of climate change damage. It is important to note that climate change leads to different types of damage and that not all types of climate change damage raise the same problems of causation.⁵⁴ For those events that can be directly attributed to the large-scale rise in the temperature of the atmosphere, such — S. 349 —as the rise of sea levels or the gradual melting of glaciers and polar ice caps, climate science can show that the causal link is actually quite clear: these events are predominantly caused by GHG emitted into the atmosphere by human activity. The causal relationship between the emission of GHG and the consequences for the natural environment also includes the finding of actionable harm caused by those natural events to persons and property. Examples of such scenarios are the cost of rebuilding a village on a sea-cliff that has become uninhabitable, as in the Kivalina case,⁵⁵ or the cost of a dam to protect against melting glacier waters, as was claimed by the plaintiffs in the Lliuya case. With respect to these scenarios, the problem for the establishment of causation lies not so much in the scientific proof of causation as such, but rather in the attribution of the incurred harm to specific polluters, given the large number of polluters that have released GHG into the atmosphere over the last hundred years.

For such constellations, tort law can offer the theory of minimal causation.⁵⁶ In such scenarios the mere application of the “but for” test cannot produce acceptable results because, due to the smallness of the contributions, it does not indicate the concrete share of the individual contributor. Although this cannot be established with certainty for the individual emitter, it is legitimate to assume that each emitter has in fact caused a part, albeit a very small part, of the damage. As the number of emitters is quite large and the shares attributable to each emitter are quite low, a solidary liability of each emitter would be excessive and would lead to a result that is neither fair nor, due to an extreme over-deterrent effect, economically efficient. It would therefore make much more sense to hold each emitter liable only for its share. Since this share cannot be established with sufficient probability, it is fair and reasonable to estimate the share according to the total amount of GHG emitted by the individual contributor.

However, the application of the theory of minimal causation to these types of climate change damage faces the further problem that GHG only cause climate change if they exceed a certain threshold. GHG, especially carbon dioxide (but also methane and nitrous oxide, but not the fluorinated gases) are part of natural processes and can be absorbed to some extent by the natural environment. It can, therefore, be assumed that the emissions caused by a single person (breathing, driving a motor vehicle, heating the home) will never be sufficient to exceed this threshold. Since these emitters do not have even — S. 350 —the slightest potential to cause climate change damage, it would, already from a theoretical point of view, not be justifiable to subject those contributors to the theory of minimal causation. Such an approach would overwhelm the system both from a theoretical and, given the enormous number of past and actual emitters of GHG, practical viewpoint. Therefore, at best, the theory of minimal causation can be applied to the major emitters of GHG, such as the “big players” in the energy generating industry, who are responsible for the emission of enormous amounts of GHG over the past decades.

Under the condition that the concept of minimal causation is accepted for such large emitters, the main problem for the allocation of the loss to the individual polluter is then not so much the question of causation, but rather, as was outlined above, the need to find an applicable cause of action for the claim.

An even greater challenge for legal doctrine is posed by those cases where it is only possible to establish a statistical link between the rising temperatures on the planet and the sustained harm. Examples of this are property damage or personal injury caused by extreme weather events, such as storms, floods or heat waves. Such events occur regularly, but science shows that climate change is increasing their frequency and severity. In these cases, the causal link between the emission of GHG and the damage incurred is not direct, but only of a statistical nature. In order to deal with such constellations in tort law, the question arises as to (i) whether under these conditions full proof of causation can be dispensed with and (ii) whether it can be justified to apportion the damage suffered by an individual according to the percentage increase in the probability of the occurrence of such damage, or according to the percentage increase in the damage caused by human emissions of GHG.

Legal doctrine is not entirely reluctant to find liability in cases where plaintiffs face scientific and structural problems in proving causation. A look at different legal systems shows that courts find even more sophisticated solutions when the causality situation becomes more complex and plaintiffs encounter structural problems for the proof of causation. The solutions applied vary. Courts may accommodate the claimant by lowering the standard of proof in the individual case, or they may reverse the burden of proof from the claimant to the defendant, or they may impose only partial liability or, under specific circumstances, even full liability. Prominent examples are provided by the famous DES cases and the theory of market share liability developed by US courts,⁵⁷ the “increased material risk of harm” test of the UK Supreme — S. 351 —Court in Fairchild,⁵⁸ or the attribution of proportional liability under the French perte d’une chance theory⁵⁹. These examples show that courts and legislators are willing to address the issue and to adapt their usual requirements for the establishment of causation to the specific circumstances.

Whether jurisdictions are willing to accept such theories of proportionate liability is a matter of policy. In any case, holding emitters of GHG liable for an increase in damage that is only statistically verifiable is in any case a farreaching measure that pushes tort law to its conceptual and factual limits. In such cases, the causal connection between the individual emitter of GHG and the person who suffers a specific damage is very loose. The causal connection only becomes more obvious when it is established between the respective groups, the group of GHG emitters on the one side and the group of injured parties on the other. Such an undertaking requires procedural tools that allow for the aggregation of these persons into coherent groups. A good example for such an instrument is the class action under US law. Another appropriate instrument would be the introduction of specific compensation funds, financed by the GHG producing industry.

4.Shareholder Lawsuits (Scenario 9)

Shareholders are the co-owners of a company. They are entitled to participate in the company’s decision-making process, according to the rules of the relevant national company law. They can express their concerns to the board, they can formulate resolutions to be put to the vote at general meetings (“shareholder proposals”) and they can try to influence the nomination and election of board members (“proxy battles”).

In general, shareholders are not entitled to sue the company for disclosure of any business- related information. However, in some countries (eg UK, US), in the event of a conflict, they can challenge board decisions by way of — S. 352 —“derivative action.”⁶⁰ This means that shareholders can bring a legal action on the company’s behalf against the directors of the company for a breach of their managerial duties under company law. In doing so, shareholders can only sue in the interests of the company, not in their own interests (eg to recover damages for a fall in the value of their shares). A prominent example is ClientEarth’s derivative action against the directors of Shell in the High Court of England and Wales, alleging that Shell’s climate change strategies are inadequate, which was dismissed by the court without a full trial.⁶¹

It is highly questionable whether shareholders (and other interested parties) need to resort to such litigation to obtain information about their company’s climate risks, as there are already a number of regulations that provide for such reporting requirements. For climate change risks, the standard for reporting and disclosure has been set by the Task Force on Climate-Related Financial Disclosures (TCFD), which developed a framework for the voluntary reporting on climate-related risks and opportunities. In 2023, this task was taken over by the International Sustainability Standards Board (ISSB) of the International Financial Reporting Standards Foundation (IFRS).⁶² In 2023 the ISSB published the IFRS S2 Climate-related Disclosures which aims to provide a global baseline of sustainability disclosures to inform financial markets. The rules require “an entity to disclose information about climate-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term.”⁶³ Climate-related risks comprise physical risks, transition risks and climate-related opportunities available to the entity. The information shall enable users of financial reports to understand how the company deals with its climate change related risks. The rules follow a very comprehensive approach by including all strategies and mechanisms for monitoring, managing and overseeing the climate-related risks and opportunities of the company.

Beside these important and widely accepted voluntary rules, mandatory rules on reporting and disclosure obligations of climate change risks are evolving. A very comprehensive and important step in this regard has been taken by the EU with the adoption of the Corporate Sustainability Reporting Directive — S. 353 —(CSRD),⁶⁴ which entered into force on 5 January 2023. The new rules, which are part of the European Green Deal,⁶⁵ modernize and strengthen the reporting obligations already provided by Directive 2013/34/EU on disclosure of non-financial and diversity information by certain large undertakings and groups.⁶⁶ The new directive broadens the scope of enterprises which fall under the reporting duties (all large companies, all listed companies except listed micro-enterprises, and non-EU companies which generate over EUR 150 million on the EU market) and explicitly extends the reporting obligations to climate change risks. The directive aims to ensure that all stakeholders, including consumers, shareholders and civil society groups, have the necessary information on the sustainability performance of the relevant company in order to be able to assess the company’s risks and opportunities arising from climate change and other sustainability issues. The reports must follow a defined format, which is provided by the European Sustainability Reporting Standards (ESRS).⁶⁷ A further instrument within the EU Sustainable Finance Frameworks is the Sustainable Finance Disclosure Regulation (SFDR)⁶⁸ which obliges the participants of the financial markets (banks, investment firms, fund managers, etc.) and financial advisers to provide investors with sustainability information, including information on GHG-emissions.

A very comprehensive obligation to include climate change risks into the business operations of larger corporations is provided by the Corporate Sustainability Due Diligence Directive.⁶⁹ The directive obliges corporations to mitigate their negative impacts on human rights issues (child labor, slavery, — S. 354 —labor exploitation) and on the environment, including the management and prevention of risks caused by climate change.

As a consequence, NGOs and other interested parties, including shareholders, will no longer have to resort to such claims in order to force companies to provide information on their climate change risks and to encourage them to integrate such risks into their management strategies.

However, it should be noted that, despite having only recently entered into force, both the CSRD and the CSDDD have already been amended.⁷⁰ The start of reporting obligations under the CSRD was postponed,⁷¹ and the implementation deadline for the CSDDD was extended from 26 July 2026 to 26 July 2027. Its scope was narrowed, and the start of the reporting obligations for affected companies was also postponed.⁷² Furthermore, the Commission has proposed a significant restriction of the reporting and due diligence obligations set out in both directives as part of an omnibus package.⁷³ Among other things, the liability rule set out in Article 29 of the CSDDD is to be removed, leaving the question of liability to national liability laws. These restrictions will reduce the climate-protecting effect of these instruments on companies, but will not eliminate it completely.

5.Conclusions

The use of private law instruments to combat climate change faces a number of fundamental challenges. To date, there is no international liability regime for the prevention and compensation of climate change damage. Therefore, all claims must be brought before a national court under a specific rule of national law. It is necessary to find a court that has jurisdiction and then to decide on the applicable law. It has been shown that in Switzerland (as well as in the EU) there are concrete rules on jurisdiction and conflict of laws that are quite favorable for plaintiffs of climate change damages. These rules allowed the Indonesian claimants in the Holcim case to sue the Swiss company before a Swiss court under Swiss law which means that if the claimants win the case, they will also be able to enforce the judgement in Switzerland. In contrast to US law, — S. 355 —European courts do not have any discretionary power to decline jurisdiction if another judicial body may more conveniently hear the case (doctrine of forum non conveniens). Establishing the jurisdiction of a US federal court under the US ATS, as set out in scenario 10, is a rather long shot and faces a number of fundamental hurdles, in particular the need to show that the defendants have violated an established and universal rule of international law against the emission of GHG.

Actions based on national tort law undoubtedly have the effect of attracting a great deal of publicity. They will therefore raise public awareness of the risks of climate change, and subsequently induce governments and industry to intensify their efforts to reduce their GHG emissions. As companies tend to avoid negative publicity, this may even be the case if the individual case is not successful. The usefulness of such actions is also stressed by tort law theory. Tort law ensures that a committed wrong is redressed and that victims are compensated for their losses. It also has important preventive effects, because the threat of liability makes potential polluters aware of the risks of their actions and gives them a strong incentive to minimize the expected damage costs in their own economic interest in the future. It therefore prevents the externalization of costs. It is assumed that if GHG emitters are liable for all the harm they cause, they will adapt their behavior and reduce their future emissions in their own interest. Making enterprises liable for the harm they cause would therefore lead to a reduction in GHG emissions through the market mechanism, as enterprises with lower GHG emissions will have lower damage costs. This would improve their position in the market and will give other enterprises with higher liability costs an incentive to reduce their own GHG emissions in order to reduce these costs.

It is, however, undeniable that the use of tort law confronts plaintiffs and defendants with considerable challenges. Engaging in litigation as outlined in the Holcim case of scenario 8 means entering into a lengthy legal process that can take many years and will cause high costs. When it comes to climate change damages, serious factual and legal uncertainties will make such litigation an arduous task for plaintiffs and defendants alike. If tort law is to serve as an effective tool for climate protection, it must be adapted to the specific characteristics of climate change damages. This concerns the attribution of legal standing, especially in relation to pure economic loss, the substantial expansion of the right to bring collective action and the recognition of minimum and proportionate liability by national tort laws.

A shareholder action, as presented in scenario 9, would bypass these tort law hurdles. However, the above analysis shows that in the EU, NGOs and other interested parties, including shareholders, will no longer have to resort to such — S. 356 —claims in order to force companies to provide information on their climate change risks and to encourage them to integrate such risks into their management strategies, because they will be able to rely on the mandatory reporting and disclosure requirements on climate change risks provided by EU law.