Lessons from the challenge to UK's net zero strategy
NGO challenge to the legality of the UK government's Carbon Budget Delivery Plan was upheld on four out of five grounds
Court decision serves as a reminder to insurers that climate change policies will be scrutinised closely
In a recent court case, Friends of the Earth, ClientEarth, Good Law Project v Secretary of State for Energy Security & Net Zero, the claimants successfully challenged the UK government's Carbon Budget Delivery Plan (CBDP) made under the Climate Change Act 2008 (CCA).
Three non-governmental organisations – Friends of the Earth, ClientEarth and the Good Law Project – challenged the legality of the CBDP, published in March 2023. The CBDP aimed to outline the UK’s approach to meeting the sixth carbon budget (covering 2033 to 2037) and to set the path towards achieving net zero greenhouse gas emissions by 2050.
This plan replaced the Net Zero Strategy, which the High Court ruled did not comply with the CCA in July 2022 after a successful challenge by Friends of The Earth, ClientEarth, and the Good Law Project. In the most recent legal challenge to the revised plan, the claimants argued the CBDP was flawed and the UK government had failed to comply with the CCA.
Legal basis
The legal challenge was about specific provisions of the CCA, including:
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Section 13(1): this section mandates that the secretary of state must prepare such proposals and policies as are necessary to ensure the carbon budgets set by the UK government are met.
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Section 13(3): this provision requires these proposals and policies must contribute to sustainable development; and
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Section 14: the secretary of state must publish reports on proposals and policies, detailing how they will enable the carbon budgets to be met, and to lay these reports before parliament.
The claimants had five grounds of challenge:
Breach of section 13(1): they argued the secretary of state failed to consider all mandatory material considerations. Specifically, the CBDP assumed all planned policies and proposals would be delivered fully and on time, which was not justified by available evidence.
Unlawful lack of contingency planning: the second ground focused on the CBDP’s absence of robust contingency planning. The claimants highlighted the plan lacked mechanisms to address potential under-delivery of key policies and was incapable of guaranteeing carbon budgets would be met.
Irrational lack of contingency planning: for similar reasons set out in the second ground, the secretary of state’s decision was irrational in determining the proposals and policies would enable the carbon budgets to be met.
Breach of section 13(3): according to the claimants, the secretary of state’s assertion the CBDP was “likely” to contribute to sustainable development was insufficient. The statutory requirement was the policies “must” contribute, which implies a higher degree of certainty and accountability.
Breach of section 14: this ground alleged the secretary of state failed to include essential information. The claimants maintained such omissions prevented meaningful parliamentary scrutiny and public engagement, violating the transparency requirements of section 14.
Justice Sheldon upheld the claimants’ first four grounds, finding the secretary of state’s decision irrational and unlawful because of the failure to consider the risk of non-delivery of policies and the lack of sustainability assessment.
However, the fifth ground was not successful, as the court found detailed risk information on individual policies was not required in the plan itself.
As a result, the secretary of state must produce a new report by May 2, 2025, outlining credible policies and proposals to meet the sixth carbon budget.
Insights for insurers
This decision serves as a reminder to the insurance industry that climate change policies will be scrutinised closely, including by the courts. Insurers should understand the importance of comprehensive plans and policies, including for:
Risk management and assessment: robust plans provide insurers with clear, actionable data that is essential for accurate risk assessment and management. Detailed and reliable information on climate change enables insurers to forecast potential risks more effectively. Without detailed plans that consider climate change, insurers face increased uncertainty, making it difficult to predict and price risks accurately.
Financial resilience: climate change exacerbates the frequency and severity of natural disasters, leading to higher claims. Robust climate plans help insurers to prepare for these eventualities to ensure they remain solvent and capable of meeting claims, even during periods of increased climate-related incidents.
Regulatory compliance and reputation: governments are tightening regulations governing climate risk disclosure and management. Robust climate plans ensure insurers are not only compliant but also perceived as responsible and proactive in addressing climate risks. This maintains the insurer’s trust and reputation in the industry.
The judgment in this case highlights the importance of robust climate change policies and sustainable development considerations.
Insurers should ensure they are prepared to implement effective plans to address the evolving risks of climate change.
Niall McLean is a partner and Sarah Keir is a trainee lawyer at Brodies LLP
