Eleven of Shell’s most senior figures are being sued for climate inaction in a world-first case that seeks to hold company directors personally liable for hollow net zero goals, as the fossil fuel titan records an annual profit of US$40 billion ($57.6 billion).
ClientEarth, which describes itself as “the world’s most ambitious environmental organisation”, was founded by James Thornton, a Wall Street lawyer who won over 80 cases forcing the Reagan administration to clean up polluted water. The group employs 250 lawyers and policy experts in eight offices around the world.
In bringing the unusual case, ClientEarth joined forces with heavy hitters Nest, a 10 million member workplace pension scheme, and London CIV, an asset manager for London’s local government pension scheme, as well as Sweden’s national pension fund AP3, French asset manager Sanso IS and Danske Bank Asset Management.
ClientEarth lawyer Paul Benson said Shell doubling down on new oil and gas projects “isn’t a credible plan — it’s a recipe for stranded assets”.
“The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the board is persisting with a transition strategy that is fundamentally flawed, despite the board’s legal duty to manage those risks,” Benson said.
“Long term, it is in the best interests of the company, its employees and its shareholders — as well as the planet — for Shell to reduce its emissions harder and faster than the board is currently planning.”
London CIV’s Jacqueline Amy Jackson said “the board of a high-emitting company has a fiduciary duty to manage climate risk” while Nest chief investment officer Mark Fawcett added that he hoped “the whole energy industry sits up and takes notice” of the landmark litigation.
But a Shell spokesperson said 80% of its shareholders voted for its energy transition strategy and that directors have “at all times, acted in the best interests of the company” and their “legal duties”.
Does suing for climate action work?
ClientEarth, which has a token shareholding in Shell, is suing under the UK Companies Act, but the case will be a test case regarding corporate director responsibility for properly preparing a company for net zero transition — and not wasting investor money in the meantime.
It comes as Shell confirmed an eye-watering record annual profit of US$40 billion, a figure which comes as people struggle to pay their energy bills the world over. And it’s not the only one. Santos, Exxon, Chevron and BP have all posted record profits in recent weeks too.
ClientEarth would be bolstered by a Dutch court’s ruling that Shell must slash carbon emissions from its oil and gas products by 45% by 2030 in a case brought by Friends of the Earth and no fewer than 17,000 co-plaintiffs. Shell is appealing the verdict.
But similar high-profile litigation has yielded little fruit so far. In 2021 in Australia, a group of eight teenage climate crusaders and an octogenarian nun took then-environmental minister Sussan Ley to court over greenlighting fossil fuel developments and failing to protect their future.
Originally the court found Ley did have a duty of care to young folks (though didn’t grant an injunction on a project in question, a Whitehaven Coal expansion, as the plaintiffs requested) — but the Federal Court overturned the verdict.
Ley said she took her responsibilities in protecting the environment under the Environment Protection and Biodiversity Conservation Act very seriously, though it wasn’t enough to compel her to release the government’s shocking State of the Environment report while overseeing the portfolio.
In Canada, environmental groups tried to sue the British Columbia government over its climate targets, but the case was dismissed on a mere technicality by a Supreme Court justice last month.
Law charity Ecojustice said the government didn’t explain how its climate plans would achieve the province’s key greenhouse gas emissions targets for the years 2025, 2040 and 2050, specifically for the oil and gas sector in 2030.
The judge said a report that showed British Columbia is expected to miss its 2025 target by approximately two million tonnes of carbon dioxide equivalent was “disappointing, in my view”, but ultimately complied with the province’s requirement to disclose climate plans.
Should companies and governments be sued for climate inaction? Will we see more cases appearing in Australia? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
