New Zealand Curbs Climate Litigation Against Major Emitters

New Zealand has passed legislation barring tort liability for climate damage linked to greenhouse gas emissions, limiting court-based claims against major corporate emitters.

The law directly affects litigation brought by Māori climate activist Mike Smith against six major businesses, including Fonterra and Z Energy.

The government says the measure protects investment certainty, while opponents argue it restricts judicial oversight and removes a potential avenue for corporate climate accountability.

Parliament draws a line around climate liability

Parliament has passed legislation preventing companies from being held liable in tort for climate-related harm caused by greenhouse gas emissions.

The Climate Change Response Amendment Bill passed its third reading on August 18 by 67 votes to 53. It amends the Climate Change Response Act 2002 and applies to current and future proceedings.

The government says climate policy should remain the responsibility of elected lawmakers rather than develop through individual court cases.

Justice Minister Paul Goldsmith said the legislation gives companies greater clarity over their climate obligations.

“Ongoing litigation in the High Court, where an applicant has brought civil claims against six major businesses for their greenhouse gas emissions, risks developing a new regime that contradicts the framework Parliament has already enacted. It’s creating uncertainty in business confidence and investment.”

Justice Minister Paul Goldsmith

The measure arrives as six major New Zealand emitters face litigation brought by Māori climate activist Mike Smith. The defendants include dairy group Fonterra and fuel retailer Z Energy.

The Supreme Court had previously allowed Smith’s claims to proceed. The case was expected to reach trial in 2027.

Government prioritises regulatory certainty

Goldsmith argued that greenhouse gas regulation should be handled through New Zealand’s existing statutory climate framework.

“The courts are not the right place to resolve claims of harm from climate change, and tort law is not well-suited to respond to a problem like climate change which involves a range of complex environmental, economic and social factors.”

The government maintains that the legislation does not weaken its obligations under the Climate Change Response Act. Companies covered by the country’s Emissions Trading Scheme must also continue meeting their existing requirements.

For businesses and investors, that distinction matters. The law narrows one source of potential climate litigation risk without removing regulatory exposure under New Zealand’s established climate policies.

Goldsmith told Parliament the legislation confirms that developing and implementing greenhouse gas policy “sits with the elected Government and the Parliament”.

He also rejected claims that Smith was being stripped of an established legal entitlement.

“The bill has not altered the law, rather, it will remove the prospect of finding out what the common law might eventually say.”

RELATED ARTICLE: New Zealand Climate Goals at Risk, Report Says

Opposition challenges the governance implications

Opposition MPs dispute that interpretation.

Labour MP Camilla Belich said “no matter what the minister says” about existing rights remaining intact, “rights certainly will be”.

“In fact, if they were not to be removed, it is hard to know why this piece of legislation has come with such urgency to this house to be passed to prevent Mr Smith from following through on those exact rights.”

Labour MP Camilla Belich

The debate therefore extends beyond climate policy. It raises questions about the relationship between Parliament, the courts and emerging forms of corporate climate liability.

Smith described the legislation as a serious setback for climate accountability.

“The events of this week have reinforced something important for me: we cannot simply assume that governments or major corporations will do what is necessary, or do it quickly enough, to protect our communities from the climate crisis.”

Greenpeace also criticised the government, arguing that companies had gained excessive influence over climate policy.

“This Government has allowed corporate polluters to write the policy on everything from fresh water to climate change. Now, they’re attempting to take away our avenues to challenge those polluters.”

Climate litigation risk shifts back toward regulation

For corporate boards, the immediate effect is greater protection from a developing category of common-law climate claims in New Zealand.

Yet climate-related legal exposure is expanding internationally. Companies continue to face challenges involving disclosure, directors’ duties, consumer claims, environmental regulation and compliance with national climate frameworks.

New Zealand has chosen to restrict one pathway by placing responsibility for emissions policy firmly with Parliament.

That approach offers companies greater domestic legal certainty. It also places more pressure on elected governments and regulators to determine how corporate responsibility for climate harm should be allocated.

For global investors, the decision highlights a widening divergence between jurisdictions over whether climate accountability should develop through legislation, regulation, litigation, or a combination of all three.

The ESG News Editorial Team is comprised of veteran financial journalists and sustainability analysts dedicated to providing real-time, objective reporting on global ESG regulations, climate finance, and corporate governance. Our desk monitors daily developments from the SEC, IFRS, CSRD and international regulatory bodies to ensure our 1M+ readers receive accurate, data-driven insights into the evolving sustainable investment landscape. Follow the ESG News Editorial Team for expert reporting on global sustainability standards, ESG disclosures, and climate policy. Access over 10,000 investigative reports and real-time updates.