A group of environmental activists has filed a rare lawsuit against the Financial Conduct Authority (FCA).
This is the latest in a series of innovative legal challenges from the ClientEarth Legal Group.
The group cracked down on the directors of Shell, the European Commission, French bank BNP Paribas and food giant Danone to pressure companies and regulators to better respond to the threat of climate change.
The latest Supreme Court lawsuit alleges that in approving the prospectus for the British oil and gas company Ithaca Energy, despite the company’s disclosures, the regulator “failed to adequately describe the climate-related risks it faced”, thereby violating the requirements of the law, acted illegally.
Last April, Ithaca paid £1.12bn for the Cambo field, about 120km west of Shetland, and a stake in the nearby Rosebank field. If developed, the field could produce hundreds of millions of barrels of oil.
Following the COP26 climate conference in Glasgow, climate campaigners and former Scottish First Minister Nicola Sturgeon spoke out against the exploitation, arguing it would undermine the UK’s ability to meet its climate commitments. Shell, which owns 30 percent of the Cambo field, later announced its withdrawal.
Ithaca was listed on the London Stock Exchange in November 2022 when world leaders and officials met in Egypt for the COP27 climate talks. The listing cannot take place without the approval of FCA’s prospectus.
While the oil company acknowledged that climate change, climate legislation, carbon prices and changing perceptions of fossil fuels could pose a “significant adverse risk” to the oil and gas industry, ClientEarth claims Ithaca did not specify which risks could specifically impact the business. or how big the risks were.
According to him, non-compliance with the FCA means that he is acting illegally.
Robert Clark, chief financial adviser to ClientEarth, said: “One of the most important responsibilities of a financial regulator is to protect investors.
“A key way to do this is to ensure that companies applying to list on the London Stock Exchange properly disclose the risks associated with their operations, including climate-related risks. We believe that the regulator failed in this fundamental function, ultimately abandoning Ithaca’s prospectus despite failing to comply with regulatory requirements.
Prior to the Ithaca listing, ClientEarth said it wrote to the FCA twice to express concerns.
An FCA spokesman said: “ClientEarth must obtain judicial authorization before filing this claim and the FCA intends to prevent such authorization from being granted.”
Ithaca said it was “inappropriate” to comment.
Source: I News
I am Moises Cosgrove and I work for a news website as an author. I specialize in the market section, writing stories about the latest developments in the world of finance and economics. My articles are read by people from all walks of life, from investors to analysts, to everyday citizens looking for insight into how news will affect their finances.