In the UK, before an oil and gas company can proceed with a major project they must first carry out an Environmental Impact Assessment (EIA) to determine potential environmental impacts of the project. Just how far-reaching those EIAs must be was the subject of recent litigation in the UK. An oil and gas developer wanted to start new oil production in Surrey. The Surrey County Council initially wanted the company to include scope 3 emissions in the EIA before approving the project. The Council then sought to walk back this position, requiring only direct emissions from the site to be reported. A claimant living near the proposed site challenged the back-tracking, arguing that the developer must include scope 3 emissions in their EIA. The Supreme Court agreed stating in its judgment that:
“First, public participation is necessary to increase the democratic legitimacy of decisions which affect the environment. Second, the public participation requirements serve an important educational function, contributing to public awareness of environmental issues. Guaranteeing rights of public participation in decision-making and promoting education of the public in environmental matters does not guarantee that greater priority will be given to protecting the environment. But the assumption is that it is likely to have that result, or at least that it is a prerequisite. You can only care about what you know about.”
The court ruled that scope 3 emissions are “effects of a project” and therefore mandatory in the EIA for any oil and gas projects. The ruling offers nothing in the way of limits for scope 3 emissions and doesn’t say what an acceptable level of emissions for any given project would be. Instead, the ruling states that the public must be made aware of the total emissions so the government may make decisions democratically at a policy level. This is a key theme in ESG. From company emissions disclosures to investor supply chain data, ESG is often a movement that advocates for the proliferation of data above all else. Problems can’t be solved if we don’t know about them and the only way we can learn is if there is robust data available. The UK court decision represents another attempt to make more data available – although not everyone agrees that is actually valuable.
Our members can learn more about ESG litigation in the UK here.
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