Climate legal action is on the rise and David Barnden is leading some of the most important cases … and winning.
Can a citizen sue a government for selling sovereign bonds without disclosing climate risk? That is what 24-year-old Australian Katta O’Donnell is claiming in a precedent-setting class-action lawsuit that could have global implications for the $7.82 trillion global sovereign bond market. It’s the first case of its kind internationally and being handled by Australia’s best-known climate litigator, David Barnden, founder and principal partner of Equity Generation Lawyers. Should the case prevail, it will be a test to see if money, not international agreements or extreme weather, can push governments from their lethargic approach to climate change.
The O’Donnell v. the Commonwealth case is the first by a citizen suing their own government as an investor in the country’s sovereign bonds for failing to disclose climate change risks. O’Donnell is among the many retail investors, pension funds, central banks, hedge funds and insurers that have loaned the Australian government over $800 billion to operate, a government that currently has no national climate change policy to reduce emissions in line with the global Paris Agreement.
According to Michael Burger from the Sabin Center for Climate Change Law at Columbia University, there has never been a case by a citizen against their own government’s bonds so its outcome could have international repercussions.
“This case could fundamentally alter the way national governments and corporations approach climate-related financial disclosures,” he said at the time the case was filed.
This matters because understanding climate risk is not only a legal risk but a pocketbook issue. The cost of climate change damage is soaring around the world and will be a huge burden to future generations. In Australia, one climate risk expert estimated as part of a previous case that climate-related damage will cost every Australian aged 13 to 17 between $92,500 to $181,000 in their lifetime, or three times the cost of getting a university education.
The Australian case is the latest of a wave of global litigation that Barnden and others hope will add legal precedent against governments, companies and super national organizations like the United Nations –– all of whom continue to ignore the real risks of climate change, plaintiffs argue.
Globally across six continents, the cumulative number of climate-related cases has more than doubled in less than six years.
Australia has become a hotspot for climate litigation. Whether due to the government’s climate policy inaction or the country’s legal structure, Professor Jaqueline Peel from the University of Melbourne says that Australia has had more than 90 climate change cases dating back to the 1990s.
Globally across six continents, the cumulative number of climate-related cases has more than doubled in less than six years. Over 800 cases were filed between 1986 and 2014, while over 1,000 cases have been brought in the last six years. They include complaints made to the OECD, U.N. Human Rights Committee and the Committee on the Rights of the Child as well as the U.N. Special Rapporteurs.
“Some countries are frozen in their mindsets and have a preference for business as usual,” Barden says. “In COVID times when people can’t express their voice and protest on the streets, litigation is extraordinarily important.”
For O’Donnell, her legal case makes perfect sense. She invests in government debt via bonds because she says it is generally considered the safest form of investment. So it came as a surprise that climate change was not considered a risk despite the country’s devastating fires in 2019-20 that were estimated to have cost $A1.9 billion (U.S. $1.3 billion) in insured claims and as much as $A1.9 billion in smoke-related health costs.
“I’m suing the Government because I need to be aware of the risks to my money and the Australian economy,” she said when the case was lodged. “Governments need to stop keeping us in the dark so we can be aware of the risks that we’re all facing.”
The claim alleges that the Australian Government is misleading and deceiving investors.
“Cases like this give clients the opportunity to bring climate change science and the real nature of the risk to an independent judiciary and ensure they listen to the expert evidence,” Barnden says.
A defensive Australian government has asked the courts to shut the case down calling it a “pseudo” class-action suit. However, experts believe the courts will disagree.
“We’ve never seen a case like [the O’Donnell case] brought forward in Australia, [or] the world,” Professor Peel said when the case was launched.
[Inaction on climate change] might fairly be described as the greatest intergenerational injustice ever inflicted by one generation of humans upon the next.
This is not the first time Barnden and his team of lawyers and trial advocates have rocked the legal establishment. Just three months ago, Barnden made global news when a ruling on the world’s first case focused on intergenerational crimes, or ‘duty of care’. In Sharma v. the Australian Environment Minister, eight teenagers and a nun sought an injunction to prevent their Australian environment minister, Sussan Ley, from approving a large-scale coal mine expansion. The Australian federal court ruled that Ley has a duty to protect young people against potential climate change impacts. Importantly, the judgment recognized climate change as an “intergenerational injustice,” something experts believe is an important precedent.
“[Climate change impacts on future generations] will [not] be the fault of nature itself. It will largely be inflicted by the inaction of this generation of adults, in what might fairly be described as the greatest intergenerational injustice ever inflicted by one generation of humans upon the next,” the judge’s ruling states.
“The duty of care decision is important,” Barnden says. “When the minister does make the decision [on the proposed coal mine expansion], whenever that may be, she’s going to have to confront it. It’s an extraordinary victory to have that duty of care established and it will have significant impacts.”
The estimated hundreds of thousands of dollars due to climate impacts on young people by a climate risk expert witness is “extraordinarily cutting edge,” Barnden says, “but it’s well thought through and based on science and good economic modeling.”
Barnden founded Equity Generation in 2019 with a flair for innovative legal action and a strong understanding of climate risk in a country whose government has refused to keep pace with international climate change commitments. He has degrees in Law and Applied Science and lived and worked in Argentina, the Netherlands and England before taking a legal job at a well-known plaintiff law firm back in Australia. There and in his next job at Environmental Justice Australia, he helped litigate a number of important public interest cases and saw the power they can have on companies, banks and the government.
Barnden’s first big case after establishing his firm was to represent 25-year old Mark McVeigh against his pension fund, the $44 billion Rest superannuation fund, arguing that fund managers violated trustee law by failing to consider the material risk of climate change to its investments. Rest settled the case out of court but agreed to say publicly, “… that climate change is a material, direct and current financial risk to the superannuation fund.”
With pension fund assets valued at $34.2 trillion globally according to the OECD, McVeigh’s case opens the door to future climate risk disclosure legal cases in countries around the world.
“Getting companies and investors to admit climate change risk is critical to getting them to change what they do,” Barnden says. “There’s only going to be more accountability and if you’re a director and you’re not thinking about climate change, then you should quit or be kicked out. Climate impacts are only going to get more significant. Investors looking for returns will make actors accountable for the money they lose.”
So where to from here for Barnden and Equity Generation Lawyers?
“There’s plenty to do,” Barnden says. “For clients who are motivated by climate change impacts, there are many new ways to approach litigation. It’s quite fertile ground.”