Explainer-Why are BMW and Daimler being sued over climate change? By Reuters

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© Reuters. FILE PHOTO: An exhaust pipe of a car is pictured on a street in a Berlin, Germany, February 22, 2018. REUTERS/Fabrizio Bensch/File Photo

By Victoria Waldersee

BERLIN (Reuters) – German activists have filed a lawsuit against automakers BMW and Daimler (OTC:) for refusing to tighten carbon emissions goals, the first time German citizens have sued private companies for exacerbating climate change.

The lawsuit from the heads of Deutsche Umwelthilfe (DUH), a non-governmental organisation (NGO), is similar to one being lined up for Volkswagen (DE:) by the heads of Greenpeace’s Germany division in collaboration with Fridays for Future activist Clara Mayer and an unidentified landowner. However, this group has given Volkswagen until Oct. 29 to respond.

DUH also challenged energy firm Wintershall to restrict its emissions targets, but no suit has been filed against the company as of yet.

Here’s what the cases mean, and why they matter.

WHERE HAS THIS COME FROM?

In May last year, Germany’s top court ruled the country’s climate law was not doing enough to protect future generations. It set carbon emissions budgets for major economic sectors, increased the percentage by which emissions must be reduced from 1990 levels by 2030 to 65% from 55%, and stated that Germany as a country must be carbon-neutral by 2045.

While meeting these demands implies some restrictions to current generations’ lifestyles, not meeting them would force future generations to make significantly more drastic sacrifices in order to both survive in a warmer world, and prevent the problem from getting worse, the court argued at the time.

In the same month, environmental groups in the Netherlands won a case against oil company Shell (LON:) for not doing enough to mitigate its impact on the climate – the first private firm to be ordered by a court to reduce its emissions.

On the back of those two rulings, the German activists are making their case.

WHY DOES IT MATTER?

This case is important on two levels.

Firstly, because of the legal precedent it could set – namely, that companies are directly responsible for the effect on people’s lives of the emissions their products create.

If the defendants win, citizens could be emboldened to sue other companies – from airlines to retailers to energy firms – for not doing enough to mitigate their impact on the planet.

Secondly, because companies will be forced to prove in court that their emissions targets are as watertight as they say they are – stress-testing their claims that they are taking climate change seriously.

WHY THESE COMPANIES?

Daimler and BMW have set a number of climate-related targets.

Daimler aims to produce purely electric vehicles (EVs) by 2030, and provide an electric alternative for all models by 2025. BMW wants at least half of global sales to be EVs by 2030, and reduce CO2 emissions per vehicle by 40% in the same timeframe. Volkswagen has said it will stop producing fossil fuel-emitting cars by 2035.

All three firms have stated that their targets are in line with the international Paris Agreement on tackling global warming.

But the defendants argue that the companies’ goals aren’t enough to adhere to the German climate ruling and carbon emissions budgets set by the Intergovernmental Panel for Climate Change (IPCC).

By prolonging carbon-emitting activities, the companies are directly responsible for the constraints on individual rights that will have to endured in future if carbon budgets aren’t stuck to, the case argues.

These are by no means the only firms to which such an argument could apply – and if DUH wins, more lawsuits could follow.

WHAT DO THEY WANT?

DUH wants both autos firms to legally commit to ending production of fossil fuel-emitting cars by 2030, and to ensure the CO2 emitted by their activities before those deadlines does not go beyond their fair share.

What do they mean by their fair share? It’s a complex calculation – but put simply, the NGO has calculated a personal ‘carbon budget’ for each company, based on a figure put together by the IPCC of how much carbon we can still emit globally without warming the Earth beyond 1.7 degrees Celsius, and how much carbon the companies emitted in 2019.

According to its calculations, the companies’ current climate goals aren’t enough to keep them within their allocated budget – meaning that even if everyone else sticks to their budgets, these companies’ activities would push emissions over the limit.

WHAT HAVE THE COMPANIES SAID?

Daimler said on Monday it did not see any grounds for the case. “We have long provided a clear statement for the path to climate neutrality: it is our aim to be fully electric by the end of the decade – wherever market conditions allow,” it said in a statement.

BMW said its climate targets were already at the forefront of the industry, and its goals were in line with the ambition of keeping global warming under 1.5 degrees.

Volkswagen said it would consider the case, but that it “does not view suing individual firms as a suitable method to tackle societal challenges.”

WHAT HAPPENS NEXT?

It’s now up to Germany’s district court to decide whether the case should be taken forward. If it thinks so, the companies will be asked to present evidence to defend themselves against the charges, and a written debate between the two sides will ensue.

A ruling could be years away. But the longer it takes, the higher the risk to the companies if they lose – as they could be left with very little time left to meet any court demands by 2030.

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