Oil Companies Around the World Are Suing to Block Climate Action
Fossil fuel companies are suing countries that enact climate change policies, arguing that they are illegally cutting into their profits — and they’re winning 72 percent of the time. Now governments risk being sued for billions when enacting climate policies.
A recent Intergovernmental Panel on Climate Change report pointed out how fossil fuel companies use ISDS to “block national legislation aimed at phasing out the use of their assets.” (Roo Reynolds / Flickr)
Fossil fuel investors are adopting a bold new legal tactic in response to efforts to limit global warming: they are going to private international tribunals to argue that climate change policies are illegally cutting into their profits and they must therefore be compensated. Now governments are scrambling to figure out how to not get sued for billions when enacting climate policies.
Termed “investor-state dispute settlement” legal actions, such moves could have a chilling effect on countries’ ability to take climate action. Consider this case from 2017: Nicolas Hulot, France’s environment minister at the time, drafted a law that sought to end fossil fuel extraction in the country by 2040. In response, Vermilion, a Canadian oil and gas company, threatened to use such a settlement provision to sue the French government. In the end, the French law was watered down to allow new oil and gas exploration even after 2040.
When these legal actions move forward, the results tend to benefit oil and gas interests. A recent report on investor-state dispute settlement (ISDS) actions found that when such cases were decided on by their merits, fossil fuel investors emerged victorious 72 percent of the time — earning, on average, $600 million in compensation.
This article is for subscribers only. Please login or subscribe to access our full archives and beautiful print and digital magazine starting at just $3 a month.