Is the latest ruling against Shell two steps forward, one step back for establishing corporate …

Shell, a major player in the fossil fuel industry, has been at the center of several high-profile climate change lawsuits in recent years. From a failed attempt by ClientEarth to pursue a derivative claim in England and Wales to the recent overturn of an order by the Hague Court of Appeal in the Netherlands, Shell has certainly faced its fair share of legal challenges.

In the case Milieudefensie et al. vs Royal Dutch Shell plc, the Hague Court of Appeal reversed a groundbreaking order that required the Shell group to reduce its carbon dioxide emissions by 45% by 2030 relative to 2019 levels. This decision has significant implications not only for Shell but also for future climate litigation against other corporates.

When it comes to climate change litigation against corporates, it’s often an uphill battle. Claimants typically target governments or big polluters like oil and gas companies in an effort to influence their environmental policies. However, these claims often run into legal roadblocks, especially when it comes to interfering with company decisions and policies.

One exception to this trend was the 2021 ruling in the case Milieudefensie et al. vs Royal Dutch Shell plc, where the court extended the duty of care under Dutch law to private companies in relation to climate change. This marked a significant victory for climate activists and set a precedent for future cases.

In recent years, so-called “corporate framework” cases have become more popular, with over 20 such cases currently ongoing worldwide. While there have been some successes, such as the New Zealand Supreme Court accepting the possibility of a climate-related duty of care, there have also been setbacks, like the English Court rejecting a claim against Shell’s directors.

What does the Milieudefensie v Shell decision mean in practical terms? The court of appeal confirmed that companies like Shell have a duty to mitigate the effects of climate change by reducing carbon emissions. While there is no specific requirement to achieve a set percentage reduction, companies are expected to align their approaches with the legally binding Paris Agreement’s climate targets.

Moreover, the court emphasized the importance of reducing demand and limiting the supply for fossil fuels. Companies, like Shell, are expected to consider the negative consequences of investing in new oil and gas fields, as this could exacerbate the issue of fossil fuel supply.

Overall, the recent decision in the Milieudefensie v Shell case highlights the growing importance of corporate responsibility in combating climate change. It sets a precedent for future climate litigation and underscores the need for companies to prioritize sustainability and environmental protection in their business practices.