24 August 2015
Climate change is increasingly informing policy and practice. Governments around the world are testing out different mitigation measures, while climate change issues are now having a significant impact on other aspects of commercial life, such as accountancy, taxation, corporate social responsibility, transactions, litigation and real estate.
How have national policies in your jurisdiction evolved to take account of the threat posed by climate change?
First, Sweden has obligations and climate goals in line with its duties as an EU member state. National policies on climate issues relate to these and other objectives set out by Parliament.
Second, in 2009 the Swedish government introduced two bills on an integrated energy and climate policy, which were somewhat more ambitious than the general EU goals. The bills were approved by Parliament in 2010 and the following national goals set:
These goals are now under further revision.
Third, apart from applying and implementing EU rules on emissions trading and geological storage of carbon dioxide, among other things, Sweden levies extensive taxes on energy to combat climate change. Under the Act on Excise Duties on Energy, energy tax, carbon dioxide tax and sulphur tax are levied on fuels, and energy tax is levied on electricity. Further, nitrogen oxide emissions from energy production are subject to a levy. To promote electricity from renewable sources, the electricity certificate system was implemented in 2003. Under this system, certain electricity users (eg, electricity suppliers and industry) must obtain a number electricity certificates corresponding to the extent of their operations. Since 2012 certificates have been bought and sold on a market similar to that in Norway. The market sellers produce electricity through renewable energy sources.
Although politically unsolved, a major question for the Swedish energy system remains over the future of its extensive nuclear power programme (accounting for approximately 40% of electricity production) and how a gradual phase-out of nuclear power would affect the ambitious national goals on carbon dioxide emissions.
What practical impact are climate change issues now having on corporate life for companies in your jurisdiction? What are the main concerns of which they must be aware?
A key question on the agenda concerns Parliament's drafting of legislation to implement the EU directive on disclosure of non-financial and diversity information by certain large companies.
The government has proposed that the following changes enter into force on July 1 2016:
The legal amendments proposed are expected to affect 2,000 Swedish companies. This is far more ambitious than the scope provided by the directive – the directive's minimum requirements apply to about 100 Swedish companies. This is one of the key criticisms that the bill has attracted from some of its referral bodies, along with the warning that the proposed regime will generate substantial costs to companies affected, as the type of accountancy required is not generally undertaken in-house. As the bill remains under debate, it is too early to make projections regarding its impact. The only certainty now is that a legal regime is expected and companies which might be affected are advised to keep up to date with its preparatory process.
How are environmental issues reflected in corporate social responsibility programmes in your jurisdiction? What are best practices in this regard?
Environmental issues are a key aspect of corporate social responsibility (CSR) programmes in Sweden, in regards to both administration and production.
Within company administration, best practice includes:
In recent years best practice has come to include environmental due diligence when choosing providers of services and products. This has become especially prominent when choosing to cooperate with companies in parts of the world where legislation for sustainability and environmental protection is perceived to be less developed.
Environmental considerations in production have also become best practice in this regard. Upholding pre-determined environmental standards in production is an important part of a company's corporate social responsibility. This is also becoming a striking competitive advantage, as an increasing number of buyers throughout the economy consider the environmental effects of their consumption when deciding with whom to do business.
To ensure continuity in CSR programmes, best practice includes formal environmental management and follow-ups, most favourably through certification systems, where applicable.
At present a debate is raging on how CSR work is carried out in Swedish companies. Critics say that there is often limited substance and follow-up on CSR questions and investments, and that CSR must aim to increase economic profits instead of being seen as charity.
As investigators are being asked to disinvest in fossil fuel stocks, what obligation do companies have to report on the possibility of 'buried assets' as part of their risk management strategies? What are the legal consequences of hiding this information from shareholders?
Since 2008, all companies owned by the state must submit a report on sustainability, which partly aims to include the information in question. Other companies are expected to impose corresponding obligations in the near future.
Swedish law does not provide rules which are designed specifically for this purpose. However, when asked by a shareholder at a shareholders' meeting, the company board and chief executive officer must provide information about circumstances that might affect the assessment of matters on the meeting's agenda or the financial situation of the company. The obligation is restricted to information that can be disclosed without causing substantial detriment to the company. Non-performance of this provision is not penalised per se, but all board members are obliged to compensate any damage caused to the company through negligence or intent.
Are there grounds for individuals or groups to sue the government for damage that results from climate change? Have any such case been brought to date? What is the main focus of other climate-related litigation in your jurisdiction?
In general, Swedish law takes a restrictive view of accepting damages for failure to perform or implement various policies (eg, policies against climate change in a wider sense), due to the concept of legitimate expectations or similar.
As a point of departure, the liability of a public body requires the breach of specified legal obligations. In such case a Swedish authority (local or regional) can be held responsible for losses it inflicts through negligence in its exercise of public authority. Under special circumstances, authorities are liable for information and advice given. An important limitation is that Parliament and the government are not liable for their decisions unless they are revoked or amended.
With regard to the wide concept of climate change, such specified obligations could (indirectly) materialise in a variety of other rules, including local or regional planning provisions or regulations applicable to certain public utilities. As a practical example, municipalities may be obliged to cater for day-water treatment in certain areas and the lack of adequate facilities to manage recurring weather phenomena (eg, heavy rain connected to climate change) could, under certain circumstances, give rise to claims by property owners suffering damages (eg, water damage to buildings) due to the lack of adequate public facilities. Such claims have in practice been sustained by Swedish courts.
For further information on this topic please contact Mikael Wärnsby at Advokatfirman Lindahl KB by telephone (+46 40 664 66 50) or email (firstname.lastname@example.org). The Advokatfirman Lindahl KB website can be accessed atwww.lindahl.se.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.