Welcome to our latest ESG Disputes Bulletin. The end of 2024 saw several high-profile decisions in cross-border ESG claims. In this first edition of 2025, we explore some of those developments including the English courts' exercise of jurisdiction in cross-border supply chain disputes and approach to case management in complex environmental claims; the Hague Court of Appeal's decision in Milieudefensie et al v. Royal Dutch Shell; the US Supreme Court's reluctance to hear climate change cases being brought in US states; and a UK regulator's use of AI tools to identify and address alleged greenwashing in advertisements.

ESG supply chain litigation: the English Court of Appeal accepts jurisdiction

English Court of Appeal exercises jurisdiction in high-profile supply chain case¹

The Court of Appeal has ruled that England and not Malaysia is the appropriate forum to hear claims brought by factory workers against English and Malaysian companies in the Dyson group relating to alleged exploitative working conditions at a third-party supplier in Malaysia. The decision marks the first time the Court of Appeal has accepted jurisdiction over an English-domiciled "anchor defendant" and its foreign domiciled group company following the end of the Brexit transition period and therefore in accordance with English common law principles rather than the Recast Brussels Regulation (see our previous post on the decision for further insights).

The decision reaffirms the English courts' willingness to assert jurisdiction in cases with connections to England where the alleged harms occur abroad, including those which involve supply chain liability issues. We expect to continue seeing claims against English-domiciled companies for acts that have arisen in overseas jurisdictions where it may be more difficult for claimants to access justice and where there is a sufficient connection to England.

UK companies will need to continue to be mindful that claims can be brought against them for overseas ESG-related impacts, including potentially through the actions of third-party suppliers, and tailor their ESG and supply chain policies and risk mitigation strategies accordingly.

The Dyson defendants have since sought permission to appeal to the Supreme Court, so this may not be the final word on the issue.

Managing complex group claims: all for one and one for all?

Court of Appeal overturns High Court's approach to case management of complex international claim against Shell²

The Court of Appeal has rejected the High Court's so-called "global claim" approach to managing the complex environmental claim brought against Shell in the English courts by 14,000 Nigerian-domiciled claimants, favouring a "lead case" approach (again, see here for more details of the appeal).

The claimants allege that Shell's UK-based parent company and its Nigerian subsidiary caused extensive environmental damage as a result of multiple oil leaks. The High Court initially required the claimants to prove a causal link between their individual losses and specific polluting events – a significant challenge given the scale and complexity of the case.

To attempt to simplify matters, the High Court endorsed a global claim approach, requiring the claimants to prove that Shell was liable for all pollution causing the environmental damage. However, adopting such an approach would potentially have meant that individual claims would fail if any sources of contamination were not attributable to Shell.

The Court of Appeal rejected this approach, emphasising the importance of respecting litigants' right to determine how to prove their claims. It endorsed the more conventional lead case strategy in English courts, where representative cases are used to address broader issues, which is intended to streamline proceedings while maintaining procedural fairness.

This judgment reaffirms the English courts' readiness to hear complex international environmental claims and use its case management powers to ensure those claims are progressed fairly and proportionately.

Emissions targets: the unwritten duty of care

Dutch Court of Appeal overturns landmark ruling against Shell on emissions targets

The decision of the Hague Court of Appeal in the case of Milieudefensie et al v. Royal Dutch Shell was much anticipated and has attracted extensive discussion since it was handed down late last year.

The decision overturned the landmark 2021 ruling of the District Court of The Hague that ordered Shell to reduce its carbon emissions by 45% by 2030. Although the Court of Appeal found that Dutch law imposes an "unwritten" duty of care on companies like Shell to address their climate impact, it did not agree with the imposition of a percentage reduction in emissions, finding no legal basis for applying such a precise standard to an individual company. The court emphasised that while large corporations must act consistently with global climate goals, including the Paris Agreement and soft-law principles, they retain discretion as to how to achieve those targets.

On Scope 1 and 2 emissions – being direct emissions owned or controlled by a company – the court found that Shell was already on track to achieve its reduction targets, having achieved a planned 31% reduction on baseline levels by 2023, as part of the broader target of achieving a 50% reduction by 2030.

For Scope 3 emissions – being those within a company's value chain but not within its direct control (e.g. produced by its customers) – the court affirmed corporate responsibility to reduce emissions but found, having considered expert evidence, that forcing Shell to limit fossil fuel sales and dispose of assets would not effectively reduce global emissions, because such restrictions would likely only cause supply to be shifted to other producers.

The decision may inform the approach other courts take when addressing issues of diffuse emissions involving a wide range of actors and force claimants to reframe their demands for emissions reductions. Given the significance of the decision, it is perhaps not surprising that Milieudefensie has announced that it intends to appeal the decision to the Supreme Court. The remedies that courts can provide and enforce in these circumstances will be in sharp focus.

The decision is a key example of strategic litigation by NGOs against private companies seeking to influence corporate decision-making and compel decarbonisation in line with the Paris Agreement. We anticipate that this trend will continue in 2025 in the Netherlands and further afield.

US Supreme Court refuses to intervene in climate change litigation brought by states

At the start of this year, the Supreme Court of the United States (SCOTUS) rejected a bid by several energy companies to overturn a Hawaii Supreme Court decision. This decision is another example of SCOTUS's reluctance to intervene and shift climate change cases to the jurisdiction of the federal courts.

In light of the increasing number of climate change cases being pursued by both blue and red state and local governments against fossil fuel companies in the US, SCOTUS requested the opinion of the US Solicitor General, Elizabeth Prelogar, prior to issuing its decision. She affirmed that SCOTUS was not the correct forum for a case brought by Honolulu for several reasons, including the fact that the case was not at final adjudication and therefore SCOTUS lacked jurisdiction to review the Hawaii Supreme Court's interlocutory decision; the review by SCOTUS would be unwarranted and potentially lead to piecemeal precedents being set on constitutional questions; and that no other appellate court had addressed similar claims so it could not be said that any appellate court would have reached a different court. SCOTUS decided the case along these lines.

US climate change superfund legislation

Vermont faces legal challenges over innovative Climate Superfund Act with other states enacting similar legislation

Vermont's landmark Climate Superfund Act (the Act), which is designed to hold fossil fuel companies accountable for climate adaptation costs and which came into effect on 1 July 2024, is facing significant legal challenges. The US Chamber of Commerce and an oil and gas industry trade group filed the first challenge against the state's "polluters pay" legislation in the Vermont District Court at the end of last year, claiming the law imposes unconstitutional retroactive liabilities and clashes with federal regulations.

The Act directs entities that have emitted more than 1 billion metric tons of greenhouse gas over the last three decades to pay into a state-managed fund, which the claimants argue violates the US Constitution by discriminating against the economic interests of other states by targeting large energy companies located outside Vermont.

Also in December last year, New York enacted similar legislation (the Climate Change Superfund Act) requiring companies deemed to have contributed significantly to greenhouse gas emissions to contribute proportionally to the costs of infrastructure investments and projects needed for climate change adaptation/abatement. Responsible parties are expected to pay around US$3 billion per year into the fund, with a target of US$75 billion by 2050 and the first payments due in 2026. This legislation has also seen its first challenge, with 22 states and four energy industry organisations and businesses filing a challenge in February 2025.

The new laws and the litigation challenges facing them illustrate the complex dynamics at play, as states and private companies seek to address or fund solutions to climate change within a rapidly evolving federal landscape.

ASA's use of AI to proactively identify greenwashing advertisements

ASA bans "Greenest Choice" ad

In November 2024, the UK's Advertising Standards Authority (ASA) banned a leading airline's advertisement claiming it was "one of the greenest choices in air travel".

The airline provided a report which substantiated several pieces of key data in support of its claim, including (but not limited to):

• its significant investment in the industry's effort to reduce carbon emissions;
• the fact that it was stated to have the youngest and most efficient fleet of aircrafts in Europe; and
• its investment in Sustainable Aviation Fuel (SAF), including its shareholding in two companies producing SAF and its aim to reach 10% SAF usage by 2030, exceeding the ReFuel EU Aviation Regulation requirements.

Nonetheless, the ASA upheld the complaint, finding that the basis of comparative claims (i.e. "the greenest choice") must be clear and verifiable, with sufficient information for consumers to understand and verify the underlying claims. The fact the information in the report was not included in the advert was key to its finding.

As with other recent cases of alleged non-compliance with advertising standards, the advertisement in question was identified for investigation by the ASA's AI-powered Active Ad Monitoring System which was introduced in 2023. Since its inception, the system has processed more than 20 million ads, spanning multiple industries, with the majority of advertisements amended or withdrawn following identification by the tool and subsequent ASA action. It represents a significant shift for the ASA from its previous reactionary stance of responding to allegations raised by consumers to a significantly more proactive approach, which we expect to continue.

1. Limbu & Others v. Dyson Technology Limited & Others [2024] EWCA Civ 1564 ↩
2. Alame & Others v. Shell PLC and The Shell Petroleum Development Company of Nigeria Ltd [2024] EWCA Civ 1500 ↩