Olga Hancock, Head of Responsible Investment, Church Commissioners for England, explores the implications for investors of the EHCR decision on Swiss government inaction.
In November 2023, I wrote about the links between human rights and climate change for investors. Since then, there have been significant developments. One in particular stands out.
Last month, the European Court of Human Rights (ECHR) determined that the Swiss government had violated its citizens’ human rights, due to its lack of action on climate change. The case – Verein KlimaSeniorinnen Schweiz v Switzerland – was brought by four women and a supporting association who were concerned about the consequences of climate change on their living conditions and health.
The ECHR ruling is significant because it makes the link between human rights and climate change material for investors – and establishes a legal precedent for climate litigation on the basis of human rights law. And so this ruling inevitably raises the pressure on governments to be more ambitious on climate change. The case is also important for investors because of the implications for private legal actions.
So what happened?
To simplify: the ECHR ruled that the Swiss government had not adequately addressed its climate change obligations and needed to take measures to do so. Significantly, these obligations were defined as alignment around 1.5°C, adequate intermediate reduction targets, and a goal of net zero by 2050. For the 46 member states of the ECHR, that effectively imposes obligations to enhance climate mitigation policies.
Engagement with governments
The decision hands investors an important weapon as they engage with governments to enhance climate ambition. Investor engagement with governments is an increasing area of focus, as investors move from a stewardship approach focused on company engagement to collaborative engagement with governments to address systemic risk – and thus create an enabling environment for sustainable investments.
Governments have to date been able to respond to investors by saying that their requests to create a Paris-aligned enabling environment form part of a broader political process. Now there is a judgment which requires ECHR member governments to comply with the ambition of the Paris Agreement.
This decision will no doubt guide other judicial bodies’ thinking around the world, when considering human rights as the basis for climate litigation. The jurisprudence in EHCR rulings, whilst not binding, is considered ‘persuasive authority’ in other jurisdictions, so the case is also important for engaging with governments outside