UK financial watchdog hit with claim over prospectus climate risk disclosure

UK financial watchdog claims the Financial Conduct Authority illegally approved listing documents for oil and gas producer Ithaca Energy that allegedly did not adequately outline climate change risks, environmental groups say It was hit by a rare lawsuit by

The lawsuit marks the first time environmental law charity ClientEarth, which has a record of successful allegations, has targeted a UK regulator.

The group also recently filed a claim In the High Court against an individual director of Royal Dutch Shell over its response to climate change risks. Both petitions have not yet been received by the court, and the court must decide whether to grant permission to proceed with the case.

Ithaca has a major interest in the controversial Cambo and Rosebank oil and gas fields in the North Sea off the coast of Scotland. Listed on the London Stock Exchange November last year.

ClientEarth said it has filed a lawsuit against the FCA in the UK High Court over regulatory approval of the Ithaca prospectus, a legal document that the company needs to produce prior to an IPO.

Robert Clarke, responsible financial attorney at ClientEarth, said Ithaca’s prospectus acknowledged that climate change poses risks to oil and gas companies, but was too general and provided investors with insufficient information. or fail to meet prospectus regulations that require companies to disclose material risks.

He argued that he did not explain how these risks specifically affected Ithaca or how important those risks were to the company. level.

“One of the main tasks of financial regulators is to protect investors. , to enable them to adequately disclose the risks associated with their activities, including climate-related risks,” Clark said.

“In the case of Ithaca’s listing, we believe the regulators have failed this basic function by finally going through Ithaca’s prospectus, even though legal requirements have not been met. ”

Clark said proper disclosure of climate-related risks is in “the best interest of investors, the public and the planet.” “This lawsuit is about ensuring that regulators properly apply disclosure rules,” he said.

The claim was filed as a judicial review action, a type of legal action challenging a decision by a public authority.

The FCA said it intends to oppose ClientEarth’s petition for leave to take the case to the High Court.

Noting the FCA’s response, Ithaca added: “It is not appropriate to comment further at this stage.”

It is very rare for UK regulators to face such legal issues.

2006, High Court Yukos Oil Permission Denied Continue judicial review of the FCA’s predecessor Financial Services Authority’s decision to approve the prospectus for the public offering of Russian oil company Rosneft.

Climate activists are increasingly taking legal action to target companies, governments and now regulators over environmental issues. More than 2,000 climate lawsuits have passed courts around the world since 1990. database Compiled by the Grantham Institute on Climate Change and the Environment, London School of Economics.