The Court of Appeal has thrown out an attempt to force seven large polluting companies to cut greenhouse gas emissions, saying climate change is a matter for national regulations and international coordination.

However, Mike Smith (Ngāpuhi and Ngāti Kahu), the Māori environmentalist behind it, says he will appeal.

“It was a bit unsurprising,” Smith says of the Court of Appeal decision. “The judgment was quite interesting – on some counts they said no and other counts they said maybe – and so we’re off to the Supreme Court, that’s the next step.”

A legal expert says the country’s highest court might decide to hear it, keeping alive the possibility of the New Zealand judiciary following the lead of courts around the world in making a radical decision on climate change.

“I certainly think there’s a prospect that the Supreme Court would grant leave for another appeal,” says Jenny Cooper QC, president of Lawyers for Climate Action. “It’s a matter of public importance – you can’t think of a more important issue – and it’s a novel area of testing whether the law is ready to develop on these points.”

The case against the ‘Polluting 7’

Iwi leader Smith launched proceedings against New Zealand’s biggest company Fonterra, farming giant Dairy Holdings Ltd, electricity generator Genesis Energy, which runs the Huntly power station, NZ Steel, owner of the Glenbrook mill, fossil fuel company Z Energy, NZ Refining Company, and BT Mining, a joint venture between Bathurst Resources and Talley’s Energy operating the Stockton mine on the South Island’s West Coast.

The claim said climate change science is clear and by continuing to pollute, or selling products that are burnt and emit greenhouse gases, the companies are contributing to environmental damage, such as increased temperatures, sea level rise, ocean acidification, and increasingly extreme weather events.

Smith wanted the court to require each company’s emissions to reach net zero by 2030.

If the big corporates didn’t know the harm they were causing, they should have, the claim said. The legal strategy was three-pronged: public nuisance, negligence and a proposed new “tort” – an area of law dealing with obligations of one party to another – breach of duty.

Smith, who has an interest in coastal land at Wainui Bay, Northland, took proceedings in his own name. The land has customary, cultural, nutritional, historical and spiritual significance to him which, he argued, made him more vulnerable to climate change than the average person.

The companies asked the High Court to strike out the case, stating, indisputably, they were operating within statutory and regulatory requirements. In March last year, Justice Edwin Wylie partially upheld their request, knocking out the first two causes of action, but allowed the novel breach of duty tort to continue.

All parties appealed the decision.

News of the Court of Appeal judgment comes as heavy rain (three months’ worth in 48 hours), rising rivers, and flooding prompted a state of emergency to be declared in Gisborne. A Newsroom analysis of eight decades of climate data revealed average summer temperatures are up 2°C in Auckland, Christchurch and Hamilton.

At the UN climate summit, COP26, in Glasgow, pressure is being heaped on governments to follow through on emissions reduction pledges.

At first blush, the Court of Appeal decision, released last month, is a stinging rejection for Smith and his pro bono legal team, led by Davey Salmon QC.

Justices Christine French, David Goddard and Mark Cooper said the polluting companies’ activities were not unlawful and tort law is concerned with unlawful activities.

“This is not the domain of tort law.”

Courts don’t have the expertise to set a regulatory regime. Smith’s remedy – net-zero emissions by 2030 – is inconsistent with New Zealand’s law of net-zero by 2050.

“Private litigation against a small subset of emitters, requiring them to comply with requirements that are more stringent than those imposed by statute, will not be effective to address climate change at a national level, let alone globally,” the justices said. “It will be costly and inefficient. And it will be arbitrary in its application and impact.”

The judgment goes on: “This pressing issue calls for a sophisticated regulatory response at a national level, supported by international co‑ordination.”

Striking out the claim doesn’t breach the Treaty of Waitangi, the court said. But that’s not to say courts have no meaningful role in responding to climate change.

“They do, in fact, have a very important role in supporting and enforcing the statutory scheme for climate change responses and in holding the Government to account. Our point is simply that it is not the role of the courts to develop a parallel common law regulatory regime that is ineffective and inefficient, and likely to be socially unjust.”

The legal track record around the world

Similar claims in the U.S. were rejected for essentially the same reasons. None of Smith’s causes of action can succeed, the Court of Appeal decision said. “It should be struck out in its entirety.”

Civil society, disillusioned by the lack of action by political leaders, is more and more turning to the courts.

In this country, law student Sarah Thomson (also represented by Salmon) took the Minister of Climate Change Issues to the High Court, alleging failures over the setting of emissions reduction targets. She lost.

Last year, the High Court quashed a decision by the Thames-Coromandel District Council not to sign a declaration of climate emergency.

Smith has an active case against the Crown, alleging it’s failing to protect all New Zealanders, but especially Māori, from the catastrophic effects of climate change. Previously, he took a lawsuit against Austrian oil giant OMV.

With the Polluting 7 appeal, several overseas decisions might give Smith hope – although there are differences.

In 2019, the Netherlands Supreme Court ordered the government to further reduce its emissions, after accepting a legal argument, mounted by the small non-profit Urgenda, that the country wasn’t doing enough to meet its international obligations.

“That’s not the same as the issues in this case,” says Cooper, of Lawyers for Climate Action. “But that was an example of a court taking quite a bold move.”

Earlier this year, also in The Hague, a landmark court ruling called on Royal Dutch Shell to cut its carbon emission faster – a judgment the oil giant will appeal.

Closer to home, an Australian federal court found the environment minister, when considering approving a major expansion of a coalmine, owed a duty of care to children to prevent climate harm. It was held up as a world-first judgment.

Again, the decision is slightly different, Cooper says. “We are seeing new causes of action being successful so I just wouldn’t rule it out.”

The Court of Appeal didn’t dismiss the nuisance claim as comprehensively as the High Court judgment, she says. Rather, it narrowed it, saying there wasn’t enough connection between the activities of the polluters and the harm being suffered, and that not all contributors had been identified, or brought before the court.

While the justices found that was a barrier to Smith’s case progressing, a different court could take a different view, Cooper says.

“He doesn’t have any easy road but I wouldn’t be writing it off yet.”

Smith himself believes justice follows the morality of the general public. “It’s just a matter of time before climate justice will be served by the judiciary.”

What the “Polluting 7′ say

Newsroom asked the Polluting 7 companies to respond. Most did. However, Bathurst Resources chief executive Richard Tacon didn’t reply, and fossil fuel company Z refused to comment.

Fonterra’s legal director Andrew Cordner said the company agreed with Smith that greenhouse gases have adverse effects on the climate, and “we all need to take steps to limit global warming”.

“However, we think Parliament, not the courts, is the appropriate place to determine public policy on matters of significant public interest such as climate change.

“Agriculture depends on a stable climate which is why we aspire to be net zero-carbon by 2050.”

Genesis Energy’s chief officer of corporate affairs, Matt Osborne, said: “We share the sense of urgency to act and are executing our strategies at pace to accelerate New Zealand’s transition to a lower carbon economy.”

Refining NZ CEO Naomi James, who was pleased with the court decision, said: “We take our environmental responsibilities very seriously, and we are working closely with our community and local Iwi to ensure we are acting as a responsible manager of the land upon which we operate.”

NZ Steel’s chief executive Gretta Stephens said the company welcomed the decision and agreed with the court’s reasons.

Many of the responses flashed the companies’ green credentials and big spending.

Fonterra said it would spend $1 billion on sustainability initiatives between now and 2030.

Not to be outdone, Genesis says it’s spending $3 billion on new renewable generation. Once it has achieved its “ambitious science-based targets”, it will remove 1.2 million tonnes of annual carbon emissions. “To our knowledge, this will make Genesis the single biggest reducer of carbon in New Zealand between 2020-2025.”

Refining NZ said when its fuel terminal transitions to import-only its carbon footprint will decrease significantly.

Stephens says NZ Steel and its parent company BlueScope has a goal of net zero carbon emissions by 2050. She acknowledges, however, that is “highly dependent” on factors like “the commerciality of emerging and breakthrough technologies, availability of affordable and reliable renewable energy and hydrogen, availability of quality raw materials and appropriate public policy settings”.

Dairy Holdings is an Ashburton-based company which owns 60 South Island dairy farms, with more than 50,000 milking cows.

“We were surprised in the first instance to be included with the group of seven,” chief executive Colin Glass tells Newsroom. “We thought we were doing the right thing and moving in the right direction. This whole action has been a real wake-up call for us about the importance of us talking more about what we’re doing, and the fact that we do take responsibly the requirement to be seen to be continuing to step up, not just doing it behind closed doors.”

Glass trots out the usual lines – about carbon footprint on a per hectare basis, or emissions relative to units of production. An industry that’s relatively efficient internationally.

But he won’t talk raw numbers.

Dairy Holdings has been working on three areas. Purchased feed is now less than 5 percent of the industry average, which means pasture comprises a larger proportion of their cows’ diets. To achieve that, it’s improved the reliability of its irrigation systems.

Lastly, it’s trying to lift the fertility level of its herd to reduce the number of replacement animals required.

The company’s emissions are trending down, Glass says, adding: “They’re not things that happen overnight but they’re things that happen over time.”

“We believe those two fundamental things of reducing our purchase feed, plus focusing on our breeding objectives, will be largely the things that get us there.”

What is the company aiming for and by when? He can’t give an the absolute number, he says, but “the technology we have at our disposal today is taking us a significant way along that pathway”.

If not the courts, then direct action

None of that will wash with Smith.

He’s concerned about the Government’s latest emissions reduction plan, known as a nationally determined contribution, announced in Glasgow, which will rely largely on offsets. That reeks of corporate welfare for big polluters, including dairy farmers, Smith says.

“We’re not going to see a dramatic reduction on emissions, and that’s what we need to be seeing. We’re not going to be seeing that transformative change in our land-use system in terms of agriculture – i.e. moving away from industrial scale dairy farming, reducing the national herd from the ridiculous numbers that it’s at at the moment down to a carrying capacity that the land can actually support.”

Smith seems to be enjoying his foray in the courts, but as a former Greenpeace campaigner he honed his activism on direct action. He says it’s one of the most effective things he’s been involved with.

A 10-year campaign “drove out every oil company that arrived here”. That was confirmed when the Government announced a ban on new oil and gas exploration. It didn’t take a court case to achieve that, Smith notes.

“While it would be great if just a few lawyers could go and convince some judges of the soundness of our arguments, and they would find in our favour … that’s not the only way to do things.”

Direct action campaigns will continue, he says. “We’ve got to stop what’s happening.”

This story originally appeared in New Zealand’s Newsroom and is part of Covering Climate Now, a global journalism collaboration strengthening coverage of the climate story.