There is a growing global trend in terms of class action lawsuits surrounding the production of misleading information or fraudulent information in securities disclosures, which law firm Webber Wentzel partner Garyn Rapson said was dominating the environmental, social and governance (ESG) class action space, followed closely by climate-related class action lawsuits.

Speaking at a webinar on March 3, Rapson said that, to date, more than 1 800 class action lawsuits had been brought against countries and companies for failures to have appropriate climate change policies, procedures and strategies in place.

He warned that, although the oil and gas industry was at the forefront of class action lawsuits, the South African mining industry should be more aware that they face a similar risk.

“We'll see more climate action against mining companies in the near future,” he added.

Another growing trend noted by Rapson was in terms of legacy environmental and health and safety-related class action lawsuits, particularly in Africa, creating a relatively high risk for mining companies and other industrial companies.

“Nigeria has had at least three class action lawsuits lodged against oil and gas companies for historic oil spills,” he said, noting that South Africa too has seen several class action lawsuits in relation to silicosis and pneumoconiosis.

Rapson expected that, as ESG relevance and importance continued to grow, more diverse and varied class action lawsuits could be expected in future.

One of these was “modern slavery”, in which lawsuits could be brought over excessively long hours for too-low pay, a lack of diversity, harassment, discrimination in the workplace, abuse and potentially even failures of corporate governance.

“This is a growing area. The litigators are becoming more robust and we are definitely seeing a variety of different ESG-related class action lawsuits,” he noted.

COMMUNITY WOES

Webber Wentzel partner Merlita Kennedy noted that there was a general trend of “tumultuous relationships between mining houses and surrounding communities, which often finds its way into court.”

In a 2021 report by political party ActionSA, 94% of surveyed community members living in affected mining areas said they had never been consulted by the mining companies.

Moreover, the report stated that 98% of the surveyed community members did not know what a social and labour plan (SLP) was.

In 2018, the South African Police Service estimated that about 35 protests took place across South Africa’s mining communities every month.

“This makes for a very volatile situation,” Kennedy noted.

Moreover, industry body the Minerals Council South Africa noted in a publication released last year that “communities themselves say they are being excluded from the benefits of their own resources”.

In February, nongovernmental organisation Amnesty International, together with human rights organisation the Centre for Applied Legal Studies, released a report in which mining communities were surveyed, and their “lived experience” was discussed.

“The efficacy of the SLPs once again came into question, and the finding was that SLPs are generally badly drafted,” Kennedy said.

She noted that communities were increasingly mobilising themselves to bring class action lawsuits against mining, oil and gas companies.

Since 1994, there have been 18 class action lawsuits brought in South Africa.

Kennedy said none of these class action lawsuits proceeded to final determination in court. Class actions, by their nature, are costly, financially risky and often more publicised than regular litigation because of the number of individuals involved, which means the risk for reputational fallout is much greater.

“South Africa is becoming the centre of class action lawsuits in Africa,” she said.

With South African communities increasingly protesting against mining companies, Webber Wentzel noted that the focus was often centred on ESG concerns, with not only negative results for the neighbouring mining companies and other businesses in the area, but also for the communities.

“Proper communication with the communities will mitigate the unrest, while proper ESG compliance will mitigate the risk of future class actions,” Kennedy concluded.