Climate law change is a dangerous trade-off

Comment: The Government’s plan to limit climate civil litigation has created ambiguity and uncertainty about how major climate emitters will be held legally accountable for their contributions to climate harm.

Justice Minister Paul Goldsmith announced on May 12 that the Government intended to amend the Climate Change Response Act 2002, with the aim of limiting and potentially foreclosing climate change litigation, like Smith v Fonterra.

The stated rationale is to reduce exposure to such claims to provide greater commercial certainty for greenhouse gas emitters.

At one level, that is consistent with other policy settings. Businesses value predictability, and governments often seek to reduce legal risk to encourage investment. But this trade-off is questionable.  

While much remains unclear about the scope of the proposed amendment, the Government appears willing to exchange commercial certainty for environmental insecurity. That is not just a technical legal adjustment; it is a choice about how we confront one of the defining long-term challenges of our time.

The Smith v Fonterra case was brought by climate change spokesperson for the Iwi Chairs Forum Michael Smith (Ngāpuhi, Ngāti Kahu) against several major emitters. Smith is attempting to use tort law to address the diffuse, cumulative harms of climate change to his property, culture, and iwi.

Tort law typically deals with situations where harm is direct, identifiable, and attributable to a specific defendant. If a neighbour’s tree falls on your house, responsibility is relatively clear.

Climate change, however, does not fit neatly into that model. Even though emissions come from a point source, they are globally dispersed. Specific attribution, or ‘causation’ become more challenging. Also, the harm is collective as well as individual.

Smith v Fonterra pushes tort law into unfamiliar territory by asking whether major emitters can be held legally accountable for their contribution to climate harm, even where no single act can be tied to a specific injury in a conventional sense.

For that reason, the case has always sat uneasily within orthodox legal doctrine. Whether such claims would ultimately succeed remains uncertain. But their significance lies in the attempt to use the common law to grapple with a problem that existing regulatory frameworks have not fully addressed.

The Government’s proposed amendment appears designed to shut down this line of litigation. If enacted as suggested, it would remove the possibility of using civil litigation to pursue climate-related claims against emitters. Parliament is, of course, entitled to define the scope and limits of liability.  

Our Accident Compensation Scheme is a well-known example. That legislation removed individual rights to sue in personal injury in exchange for a comprehensive no-fault system of support.  

But that analogy only goes so far. In this case, the right to sue may be removed without any comparable substitute. This carries wider concerns.

First, the very possibility of litigation like Smith v Fonterra provides a forum in which claims about responsibility, harm, and accountability can be tested. Closing off that avenue suggests that certain kinds of environmental grievances will not be recognised within the legal system. It removes one mechanism for protecting rights and property, even as the Government asserts that property and rights are one of its priorities.  

Second, it is a signal internationally. Climate litigation is gaining traction worldwide. New Zealand’s developments have been closely watched. In announcing that it will foreclose present and future climate tort claims, the Government is signalling that New Zealand is no longer participating in this area of legal innovation. That may reassure some investors, but it also raises a tough question: Who wants to invest in an increasingly insecure environment?

The timing of the announcement is also notable. Just days earlier, the Climate Change Commission released the second National Climate Change Risk Assessment as required by the Climate Change Response Act 2002. That report outlines the scale of the risks New Zealand faces as a result of climate change, including significant impacts on Māori communities. Against that backdrop, a move to limit legal accountability for emissions appears, at best, incongruous.

There are legitimate concerns about using tort law to address climate change. Courts are not always well equipped to resolve highly complex, diffuse issues involving science, economics, and policy. There is a risk of judicial overreach, and of imposing liability in ways that are difficult to calibrate fairly.

But the alternative is not simply to close the door. If the statutory framework is not fully fit for purpose, then the common law has a role to play in probing its limits. At present, New Zealand lacks a comprehensive climate change plan and does not allocate responsibility for the costs of climate harm.

If litigation is foreclosed, a question arises: who pays? The costs of climate harms will fall on someone. Is the burden to fall on taxpayers, rather than on those whose activities contribute the most damage? Is this just another example of privatising profit and socialising losses?

Cases like Smith v Fonterra generate debate, clarify principles, and pressure institutions to respond. The Government is indicating that Smith v Fonterra is problematic and the existing legislation is sufficient. That is contestable.

The breadth of the proposed amendment is a significant issue. We currently do not know how far it will go in insulating emitters from liability or what forms of litigation it will capture. Reform aimed at creating certainty for business risks creating new uncertainties elsewhere, about rights, remedies, responsibility, and the future direction of climate governance.

Ultimately, the Government’s position can be distilled to a simple proposition: reducing legal risk for emitters is a priority.

But this sits uneasily alongside the realities of climate change. Economic activity does not exist independently of environmental conditions and those conditions are becoming more volatile. We have recently seen indications of this often, across flood-prone and coastal regions, and most recently in Northland.

In that sense, the proposed reform does more than tidy up an awkward corner of tort law. It prioritises short-term business interests over the development of legal tools capable of addressing systemic environmental harm. Whether that is a worthwhile trade is a question deserving of intense public scrutiny.