Key Takeaways
- A proposed amendment to the Climate Change Response Act would retrospectively block activist Mike Smith’s lawsuit against Fonterra, Z Energy and other major emitters.
- Fonterra and Z Energy argue that a successful court order to halt emissions would devastate the economy, estimating a $22 billion GDP loss by 2032.
- Legal scholars Vernon Rive and Jenny Cooper KC contend the government’s fears are exaggerated, warning the bill is rushed, poorly scrutinised, and creates a dangerous precedent that eliminates any avenue for climate‑damage compensation.
- The bill’s timing—introduced just before the Regulatory Standards Act changes—allowed it to bypass an extra layer of parliamentary review, raising concerns about undue influence from the companies involved.
- While the government says the law is needed to prevent business uncertainty, critics say letting the case proceed to trial would provide valuable evidence on corporate emission‑reduction capabilities and preserve accountability for climate harm.
Background of the Climate Litigation
The Justice Select Committee is currently hearing submissions on a bill designed to amend the Climate Change Response Act. The legislation directly responds to a high‑profile lawsuit filed by climate activist Mike Smith against Fonterra, Z Energy, Genesis and three other large greenhouse‑gas emitters. Smith seeks a court declaration that these companies are legally responsible for contributing to climate change through their emissions, and he asks the court to order them to cut emissions immediately, reach net‑zero by 2050, or cease emitting altogether from a date set by the judge. A High Court hearing is scheduled for next year, but the proposed law would apply retrospectively, effectively stopping Smith’s case before it reaches trial.
Fonterra’s Economic Warning
In its written submission, Fonterra contended that the courts were being asked to “override” Parliament’s existing climate‑change framework. The co‑operative warned that if the court granted Smith’s requested remedies, the impacts on Fonterra, its farmers, the dairy sector and the wider economy would be “devastating.” Simon Tucker, Fonterra’s group director of global external affairs, told the committee that, in practice, such an order would force the company to “immediately cease operations.” To substantiate this claim, Fonterra supplied an economic impact assessment it commissioned jointly with Z Energy and Genesis. The analysis projected that a court‑mandated immediate halt to emissions by the six defendants would slash New Zealand’s GDP by approximately $22 billion by 2032.
Expert Skepticism: Vernon Rive’s View
Associate law professor Vernon Rive of Auckland University, who was consulted by officials while the bill was drafted, dismissed Fonterra’s scenario as “frankly hyperbolic and implausible.” He asserted that “Fonterra is not going to bust,” noting that Parliament would intervene before any such catastrophe could unfold. Rive argued that the best course is to let Smith’s case proceed to trial, allowing Parliament to respond legislatively once the outcome is known. He emphasized that the lawsuit’s primary aim is not financial redress but a declaratory judgment establishing a legal duty for corporations to address their emissions. By halting the case now, Rive warned, the country would lose a “brilliant opportunity” to obtain robust disclosure about how large emitters can realistically reduce their carbon footprints.
Legal Critique: Jenny Cooper KC’s Concerns
Jenny Cooper KC, president of Lawyers for Climate Action, labelled the bill a “disproportionate, knee‑jerk reaction” to a single, undecided legal case. She described it as “bad law, based on bad policy, and the result of a deeply flawed decision‑making process.” Cooper cautioned that the retrospective nature of the amendment would effectively impose a total ban on any future claim for damages where climate change is a contributing factor, thereby eliminating any mechanism for those harmed by climate impacts to seek compensation. She pointed out that New Zealand currently lacks a regulatory regime for climate‑damage liability, so rather than filling that gap, the bill simply declares that major emitters face no accountability. Cooper also suggested the legislation appeared to be a direct response to “secret lobbying” by Fonterra and Z Energy, citing a previously undisclosed briefing document sent to the Prime Minister’s Office in May.
Process Issues and Timing
Both Rive and Cooper highlighted procedural shortcomings. The bill was introduced on 29 June, just two days before elements of the Regulatory Standards Act came into force. This timing, Rive noted, “conveniently” allowed the legislation to dodge an additional layer of scrutiny that would normally apply to bills affecting existing statutes. Cooper added that interfering with a live court case risks setting a dangerous precedent for judicial independence and could produce unintended future consequences, such as chilling legitimate climate‑related litigation. The Ombudsman has already rebuked the Prime Minister’s Office for its handling of the briefing document, and two formal investigations are underway into how that information was shared.
Government Rationale and Official Advice
The government maintains that the law change is necessary to avert business uncertainty created by Smith’s case and to prevent the emergence of a “parallel regime” that could conflict with existing climate change legislation. Officials advised against intervening in the ongoing litigation, yet the government proceeded with the bill nonetheless. Fonterra’s Simon Tucker defended the decision to share the briefing document via a personal email as “inappropriate and contrary to our internal policies,” acknowledging the misstep while still supporting the legislative fix.
Implications and Conclusion
The debate over the Climate Change Response Act amendment encapsulates a tension between protecting major emitters from potentially disruptive litigation and preserving the public’s right to hold corporations accountable for climate harm. While Fonterra and Z Energy warn of dire economic fallout should the courts order an immediate emissions halt, independent legal experts argue those fears are overstated and that the lawsuit offers a valuable chance to examine corporate emission‑reduction pathways. Critics contend the bill’s rushed, retrospective nature undermines parliamentary scrutiny, risks eliminating any future avenue for climate‑damage compensation, and may be motivated more by corporate lobbying than by sound policy. As the select committee deliberates, the outcome will shape not only the fate of Mike Smith’s case but also New Zealand’s broader approach to balancing climate responsibility with economic stability.