Appeal in climate case against Shell has started: this is at stake | climate

The lawsuit that Milieudefensie started against Shell in 2019 raised a series of fundamental questions about the responsibility that companies have to reduce their climate impact.

Government leaders worldwide have signed the Paris climate agreement, but what does that mean for an individual company? Can a judge force an oil giant to reduce not only its own emissions, but also the emissions resulting from the sale of fossil fuels to customers? And if so, can a judge also impose a specific CO2 target on a company?

In 2021, the Hague court answered those questions with a resounding ‘yes’. Shell’s climate plans did not go far enough, the judge wrote in the historic judgment. The international climate agreements should have made it clear to the oil company that Shell also had to do its part to reduce greenhouse gas emissions.

The judge gave Shell an order: 45 percent fewer emissions by 2030, compared to 2019. Shell is obliged to achieve that target for its ‘own’ emissions, on the drilling platforms and in the refineries. Emissions at customers, such as the millions of motorists who fill up with Shell petrol at the pump, are subject to a “major effort obligation” to achieve the target.

The ruling took effect immediately and in practice means that Shell will have to sell much less oil and gas. The company is not doing that yet and has no plans to do so.

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The Netherlands has no law that explicitly obliges companies such as Shell to reduce emissions. But according to the judge, Shell should have known that CO2 emissions must be reduced, because of climate science, the international treaties on climate and human rights and the social importance of emissions reduction. The company has not adhered to an “unwritten standard of care”.

In the appeal, Shell will probably focus primarily on that standard. When it comes to climate policy, such a standard does not exist, the company argues. The judge would have replaced the legislator by imposing a CO2 reduction target on Shell.

If we want to limit global warming to 1.5 degrees, we can only release very little CO2 into the air. But ultimately it is governments that are responsible for “the distribution of this scarce resource,” Shell’s lawyer wrote to the court.

“If this verdict is upheld, it will have far-reaching consequences for Dutch business, employment and the Dutch investment climate,” says Frans Everts, CEO of Shell Netherlands.

The appeal comes at an awkward time for Shell, because the oil company has just weakened one of its most important climate targets. Even though the previous objective was also inadequate according to the judge.

According to think tanks such as Carbon Tracker, Shell is far out of step with the goals of the Paris Agreement. The company still invests much more money in tapping oil and gas fields than in sustainable energy.

In addition, the new director Wael Sawan is actually more critical of sustainable investments than his predecessor. In the tender that the Netherlands held last month for the construction of a large new offshore wind farm, Shell did not participate for the first time in many years, two sources with knowledge of the decision told NU.nl.

It will be all the more reason for Milieudefensie to emphasize once again that the court must intervene to ensure that companies such as Shell take international climate agreements into account. “Shell always says it is a leader in the energy transition, but if you look at the facts and figures, it is disappointing,” says campaign leader Nine de Pater of Milieudefensie.

In the 2021 judgment, the court in The Hague also pointed out the consequences that climate change has for human rights. If the earth warms too quickly and parts of the Netherlands become unliveable, this is a violation of those rights.

According to the judge, UN guidelines for business show, among other things, that companies such as Shell have an obligation to take into account the impact of climate change on human rights. Milieudefensie points out that since last year, multinationals have also been called on to adhere to international climate goals through guidelines from the Organization for Economic Co-operation and Development (OECD).

During the appeal, Shell will take the uncomfortable position that although it considers human rights important, these types of international treaties are not legally binding on the company. For Milieudefensie it is yet another proof that Shell does not want to adhere to the values ​​that the company preaches.

The ruling in the appeal could have major consequences for Shell and other companies. If the court upholds the previous ruling, the option remains open to force the business community to adopt more ambitious climate plans through the courts. Milieudefensie itself is already preparing a case against ING, with the aim of forcing the bank to make more sustainable investments.

To strengthen their arguments, Milieudefensie and Shell have jointly submitted more than 60,000 pages of evidence to the court, from scientific reports to expert statements and company reports.

The court will take four days to hear the complex case. It is not yet known when the ruling will follow, but it will probably take several months.

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