What is a local government to do when it has a “funding gap” that will expose its residents to climate impacts and prevent it from meeting its climate goals? That’s the question that staff at the District of Saanich dealt with as they wrote up their fifth Annual Climate Plan Report Card.
The answer? They proposed that Saanich look into the option of collaborating with other local governments to sue global fossil fuel companies. And on Monday, February 12th, Saanich Council unanimously adopted their recommendation – instructing staff to explore that legal option further.
Around the same time that Saanich staff tabled their report, a volunteer forwarded to me a recent PowerPoint that an insurance lawyer presented at an event hosted by the global insurance company Swiss Re. He briefed insurance experts on how fossil fuel polluting clients can avoid being sued by communities like Saanich. His advice? Stop polluting as quickly as possible.
I highlight these two separate events, because together they illustrate the economic logic that underscores the Sue Big Oil campaign:
- Local governments cannot afford the skyrocketing costs of climate change and need fossil fuel companies to pay their fair share; and
- Making fossil fuel companies pay their fair share helps us solve climate change by changing the business case for fossil fuels.
Either of these arguments on its own represents a strong reason to support the Sue Big Oil campaign. Together, they explain why the campaign has so much potential to move us towards a safer future.
Local governments cannot afford climate change
Saanich is not the first BC municipality interested in a class action lawsuit to recover climate costs. But it is the first where the recommendation to do so has been initiated and driven by staff, concerned primarily about budgetary demands.
Here’s how Saanich staff summarized their recommendation:
... [T]here are considerable capital costs required for future actions if we are to meet our targets, and inflation over the last year has greatly impacted the ability to fund these actions as a municipality ... Federal and provincial funding streams are usually highly oversubscribed and often take considerable time to evaluate, resulting in further inflationary costs.
Globally, more focus is being placed on large oil and gas companies, with a number of lawsuits filed in recent years against the fossil fuel industry for its role in the climate crisis with a desire to secure their fair share of climate change costs. ... Such action may be instrumental for gaining access to the funding necessary for us to respond to our changing climate given the gap that exists at all orders of government.
The targets they mention at the outset include keeping Saanich residents safe and healthy in a warming world.
There’s a pretty good chance that your local government also faces a “funding gap,” and that funding gap is likely going to get larger as climate change impacts get more severe and frequent.
A recent report by the Canadian Climate Institute, Damage Control, projects that taxes from all levels of governments will need to rise to deal with climate damages (see figure 12 from their report below). You’ll note that in their high-emissions scenario, in which greenhouse gas emissions stabilize but do not decline significantly, government taxes peak and start dropping as climate change impacts destroy our economy, undermining the ability of our governments to pay for the rising climate damages.
Local governments cannot rely on the federal and provincial governments to make up the funding gap (and that would just shift the costs from one group of taxpayers to another).
There are, of course, no guarantees in litigation, and Saanich Council is clearly aware of the significant challenges in going up against global fossil fuel companies. However, we have seen Big Tobacco and Big Pharma successfully sued for the harm their products caused and for their misinformation campaigns. Big Oil is no different. Several Saanich council members were clear that if they can see a path to winning a lawsuit, the risk is well worth taking.
The business case for local governments to sue fossil fuel companies is a basic economic one. Over 60 U.S. local governments have performed a similar calculus and are already suing global fossil fuel companies. Recent votes from Qualicum Beach and Slocan Councils in support of the Sue Big Oil campaign show that it is high time that Canadian local governments do the same.
Lawsuits against polluters result in a better future
The economic impact of climate litigation from the perspective of fossil fuel companies and their investors can be seen in the PowerPoint slides, presented by lawyer Chris Van Dijk at the Swiss Re conference. Mr. Van Dijk, an Attorney and Partner at the Insurance and Litigation practice group of Kennedy Van der Laan, discussed the rise in climate litigation, and how insurance industry clients can avoid being made to pay.
The deck starts with a summary of what is known about climate change, and the failure of government regulation to reduce emissions and protect their citizens, warning: “Government regulation failure (too late too little): yes. Consequence: People are increasingly turning to courts to combat the climate crisis.”
While Van Dijk says that this litigation is not desirable, such cases are “inevitable.” After reviewing the number of cases being brought and some examples of cases against fossil fuel companies, he argues that industrial clients should be “begging” for more action by governments, because:
The more the danger [of climate change] materializes, the more governments will be forced (by its citizens) to take draconian measures which, because there is less and less time, are increasingly expensive and difficult to achieve; the more lawsuits will be initiated and the more claims will have a chance of success.
As for the industrial clients themselves, Van Dijk suggests they should reduce their potential exposure to liability by moving to reduce emissions to zero as quickly as possible. (See slide 20 from the Powerpoint, below).
We obviously disagree with Van Dijk’s view that climate litigation is undesirable. In an ideal world, these cases would be unnecessary – but we have seen what happens when the fossil fuel industry makes massive profits with zero responsibility for climate harm, and litigation is the best tool we have to challenge that.
We completely agree that climate lawsuits against major polluters are inevitable, and that they have the potential to force these companies and their investors to re-evaluate the long-held assumption that they will be immune from any accountability.
As with the fiscal message for local governments, the Sue Big Oil campaign has argued repeatedly that fossil fuel companies and their investors need to recognize that they will be sued for their ongoing contributions to climate change. When insurance experts at a conference organized by a major insurance company are advised that their clients need to “reduce as soon as possible” if they don’t want to be sued, that carries a lot of weight and credibility. Swiss Re and other insurance firms are focused not on environmental protection, but on how to protect their clients from climate liability that could affect their own bottom line. After all, it has been demonstrated by the Grantham Institute that even the act of filing lawsuits against fossil fuel companies affects their stock prices.
Because lawsuits can be filed in Canada not just against Canadian companies but against global companies that cause harm in Canada, the Sue Big Oil campaign and the local governments that work towards litigation can influence corporate behaviour at a global level.
Conclusion
The budget challenges facing our local governments and the mind-boggling profits of the oil and gas industry are flip sides of the same coin: our local governments are facing skyrocketing climate costs while the oil and gas industry has avoided paying any share of those massive costs.
The Sue Big Oil campaign knows this.
We appreciate the work of Saanich staff and the private lawyers and insurance experts who are making the same point in their respective fields.