Ithaca Energy plc is one of the largest independent oil and gas producers in the UK North Sea, with assets including the Cambo and Rosebank fields. In 2022 it sought, and was ultimately granted, listing on the London Stock Exchange.
As part of that process Ithaca submitted a ‘prospectus’ for approval by the Financial Conduct Authority (“FCA”), being the UK’s financial regulator. The FCA may only approve a prospectus if satisfied it meets the requirements of EU Regulation 2017/1129 (which remains UK law post-Brexit). That Regulation, aimed at investor protection, requires companies to disclose certain specific and material risks they face.
The FCA approved Ithaca’s prospectus. This resulted, in February 2023, in ClientEarth issuing a claim for judicial review. ClientEarth argue the climate risks associated with Ithaca’s business were not adequately disclosed, putting the FCA in breach of the Regulation when approving the prospectus. In particular:
• Although Ithaca’s prospectus includes a climate-related risk factor, the risks disclosed are of too general a nature to leave investors fully informed or to meet the Regulation requirements. Ithaca does not appear to explain how these risks affect its business specifically, or how significant these risks are for the company.
• The prospectus does not address the apparent conflict between Ithaca’s intention to develop new fossil fuel assets that would operate for decades and the International Energy Agency’s conclusion that no new fuel fossil fuel infrastructure can be built if the world is to meet a 1.5 warming target.
• Ithaca fails to explain how its business model and financial prospectus would need to change, or be affected, if the Paris Agreement goals are to be achieved and what impact that would have on their key assets, which include Cambo and Rosebank.
• The above information is vital to investors if they are to make an informed assessment of the company's financial position and therefore should have been provided in the prospectus.
The High Court’s permission is required for the claim to proceed to trial. A decision on permission is pending.