Shell Wins Appeal in Landmark Climate Case

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On Tuesday, November 12, 2024, the Hague Appeals Court overturned a landmark 2021 decision ordering oil giant Shell to reduce its greenhouse gas emissions 45% from 2019 levels by 2030.

While the court acknowledged that Shell is obliged to reduce its emissions – given that “protection against global warming is a basic human right” – it agreed with Shell that imposing an emissions target could have adverse effects, including potentially causing some customers to use coal, which would be ever worse in terms of emissions. The court further held there was “no solid basis” for the 45% target imposed by the lower court, finding that “a civil court cannot determine to what reduction target Shell should be held” given available scientific data.

The rulings comes at a time when the Dutch oil giant is on-trend with various other international corporations whose climate and sustainability commitments have been backsliding of late. For example, it watered down near-term emission reduction goals in its March 2024 strategy update. It is therefore difficult to imagine that absent specific, legally-binding targets Shell will take the court’s admonitions about its “special responsibility” to cut CO2 emissions seriously.

However, some climate advocates believe that the appeal court’s decision - though disappointing - nevertheless affirms various important principles that could serve as the basis for future claims against big polluters. These principles established that:

• The obligation to reduce emissions in line with the Paris climate agreement is not limited to countries, as companies also bear that responsibility;

• In principle, a court can order companies to meet absolute emissions reduction goal, provided scientific research advances sufficiently to set specific actionable targets; and

• Corporations have responsibilities when it comes to human rights protection, including in the context of climate change.

Further, according to Thom Wetzer, an associate professor of law and finance at the University of Oxford, the court’s assessment of Shell’s oil and gas development plans as potentially “at odds” with the fact that it is “reasonable to expect oil and gas companies to take into account negative consequences of a further expansion of the supply of fossil fuels,” aligns with the argument that such expansionist projects are “fundamentally at odds with the Paris agreement.”

The critique may inspire more cases against specific fossil fuel development projects or investments, which could pave the way for judges to demand climate impact assessments before regulatory approvals are issued.

Please contact our firm at 647-725-4308 or info@greeneconomylaw.com for legal assistance in connection with climate policy or green business matters.

Dutch Court Orders Oil Giant Shell to Reduce Emissions in Historic Climate Case

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Last week, the Hague district court ordered oil giant Royal Dutch Shell to reduce its greenhouse gas emissions 45% from 2019 levels by 2030. The ruling appears to mark the first instance of a court requiring a major corporation to lower emissions on account of their climate impact. The decision follows a line of recent cases, beginning with the Dutch Urgenda case, in which European courts have ordered governments to strengthen national emission reduction targets.

Dutch environmental organization MilieuDefensie led the legal challenge, arguing that Shell’s lacklustre emission-reduction policies are contributing to harmful climate change affecting current and future Dutch residents, including inhabitants of the Wadden Sea area. This, the group claimed, constitutes a violation of the unwritten standard of care requirement of Book 6 Section 162 of the Dutch Civil Code, “which [establishes] that acting in conflict with what is generally accepted according to unwritten law is unlawful.”

This nebulous area of Dutch law concerns damages arising on account of torts (harm). The harm at issue in this case was the harm associated with climate change that Dutch residents are likely to suffer, and which Shell’s activities (including its scope 3 emissions) are exacerbating. To interpret the unwritten standard of care applicable with respect to Shell’s activities, the court made reference to numerous legal and scientific items of authority, including the European Convention on Human Rights, the UN Guiding Principles, the IPCC reports, and several others. Ultimately, the court found Shell’s emission reduction policies did not satisfy the required standard of care.

The judgment against Shell in this case should and likely will be regarded as a powerful precedent. This seems especially likely considering the parallels between this decision and Urgenda; practically every climate litigation matter brought against governments over the last five years cites Urgenda, which was also decided in the Netherlands. Provided the ruling is not overturned on appeal - which Shell says it’s likely to pursue - this case may soon find itself the subject of similar popularity in climate action cases brought against corporations.

Those interested in climate litigation matters against both governments and corporations may enjoy the Sabin Center for Climate Change Law’s Climate Litigation Database, according to which there are at least nine other non-US cases to compel lower corporate emissions.