UK watchdog faces lawsuit from climate group over energy company prospectus

By Kirstin Ridley

LONDON (Reuters) – Britain’s markets watchdog acted unlawfully when approving documents that allowed an oil and gas company to list in London even though it had failed to properly describe climate-related risks, an environmental law charity alleged on Thursday.

ClientEarth has filed a judicial review in London’s High Court against the Financial Conduct Authority (FCA) over its decision to approve the prospectus of Ithaca Energy Plc despite its interests in the undeveloped Cambo and Rosebank oil and gas fields in the North Sea. 

It is the first such case against the FCA, but campaigners are increasingly turning to the courts to force public authorities and companies to adopt a speedier transition to low-carbon strategies.

The FCA, targeted by ClientEarth for the first time, noted that the High Court would have to give permission for the claim to proceed and pledged to “oppose permission in this case”.

A spokesperson for Ithaca Energy, which made its market debut last November in Britain’s largest flotation of 2022, said the company had noted the FCA response and that it would not be appropriate to comment at this time.

Ithaca’s prospectus had acknowledged that climate change presented risks to the oil and gas industry in general but ClientEarth lawyers alleged the company did not appear to explain how these risks affect its business specifically – or how significant they were for the company. 

“The company’s plans for new oil and gas appear to be fundamentally incompatible with global climate goals and the massive risks associated with its activities have not been properly explained in its prospectus,” said Robert Clarke, a ClientEarth accountable finance lawyer.

“Without this vital information, investors will not be able to assess how Ithaca might be affected by the global net zero transition.” 

ClientEarth’s action comes one week after it filed a London claim against oil giant Shell’s directors over alleged climate mismanagement.

(Reporting by Kirstin Ridley Additional reporting by Huw Jones; Editing by Mark Potter)