By Sarah McFarlane
A Dutch court on Wednesday ruled that Royal Dutch Shell PLC is
partially responsible for climate change and ordered the company to
reduce its carbon emissions, a first-of-its-kind ruling that adds
fresh pressure on oil-and-gas companies already facing heightened
scrutiny from governments and investors.
The ruling, issued by the district court in The Hague and
stemming from a lawsuit, found Shell must curb its carbon emissions
by 45% by 2030, compared with 2019 levels. This is in line with
United Nations guidance for member states aimed at preventing
global temperatures rising more than 1.5 degrees Celsius above
Lawyers said the ruling, which Shell said it expects to appeal,
could set a precedent in other Western jurisdictions, particularly
in Europe, opening oil companies to new legal jeopardy over their
carbon emissions. The court didn't stipulate how the ordered
reductions should be met, or how it might monitor or enforce its
Friends of the Earth Netherlands, a local offshoot of the global
environmental nonprofit network based in Amsterdam, led the civil
lawsuit against Shell. It alleged the company's production of oil
and natural gas contributed to climate change, violating a
so-called duty of care to those affected by it and not meeting the
company's human-rights obligations. It asked the court to force
Shell to reduce its carbon emissions. Shell's current
emissions-reduction targets are based on intensity -- the amount of
carbon in any unit of energy -- which could see its overall
emissions still rise.
The court said that Shell wasn't in breach of its obligation to
reduce carbon emissions but that there was an "imminent breach" and
therefore set the reduction requirement. The case was heard in
December in The Hague. Shell has dual headquarters in London and
The Hague, which was why the environmental activists brought the
Shell argued that climate change is a broader societal issue and
that it wasn't appropriate to ask an individual private party to
reduce its carbon emissions.
On Wednesday, the company said that it was disappointed with the
ruling and that it was investing billions of dollars in low-carbon
energy, including electric-vehicle charging, biofuels and
"We want to grow demand for these products and scale up our new
energy businesses even more quickly," a Shell spokesman said.
The case comes as oil companies face growing scrutiny over their
carbon emissions. Activists have long accused the industry of
contributing to global warming, alleging the burning of the fossil
fuels they produce and sell is contributing to man-made climate
change. The industry argues it has a responsibility to produce the
oil and natural gas that the world needs.
More recently, governments and shareholders have also ratcheted
up the pressure on the industry. Elsewhere Wednesday, Exxon Mobil
Corp. investors vote on a bid for four board seats by activist
shareholders seeking a company commitment to reduce carbon
Several major oil companies have set out plans to reduce their
production of fossil fuels, invest more in renewable energy and cut
carbon emissions. Shell earlier this year said it would gradually
reduce its oil output and expand in electricity and biofuels, while
reducing the carbon intensity of the energy products it sells by
20% by 2030 and 100% by 2050.
Seeking an endorsement of that plan, Shell last week held an
industry-first shareholder vote on its energy-transition strategy,
which was approved by around 89% of investors.
However, a separate additional resolution calling for Shell to
make more ambitious low-carbon investments and carbon-emissions
reductions was supported by about 30% of shareholders. Support for
the resolution, put forward by Follow This, a group of more than
6,000 shareholders in oil companies, was roughly double that of a
similar resolution last year.
Wednesday's verdict could open up a new source of pressure on
oil companies, lawyers and consultants say. The Dutch case is
different to other climate actions because rather than seeking
damages, it seeks preventive action by forcing Shell to reduce its
future carbon emissions via its corporate policy.
"This case epitomises the expanding fronts where fossil fuel
companies are coming under pressure: On top of investors and
regulators demanding carbon cuts, now heavy-emitters are facing
censure through the courts," said Will Nichols, head of environment
and climate change at risk analysis company Verisk Maplecroft. "We
can expect this case to embolden activists and pressure
The case built on a ruling from the Netherlands supreme court in
December that said the government needed to do more to prevent
climate change. That case, brought by climate activist group the
Urgenda Foundation, resulted in the government being ordered to
reduce greenhouse-gas emissions by 25% by 2020, from 1990 levels.
The government had previously targeted a 17% reduction, which the
court said was insufficient to meet U.N. climate goals.
Under the 2015 Paris climate accord, which the U.S. rejoined
earlier this year, governments agreed to limit global temperature
rises to 2 degrees Celsius above preindustrial levels, with an
ambition of 1.5 degrees.
Environmental groups welcomed Wednesday's ruling. "This case is
unique because it is the first time a judge has ordered a large
polluting company to comply with the Paris Climate Agreement," said
Roger Cox, lawyer for Friends of the Earth Netherlands.
Write to Sarah McFarlane at email@example.com
(END) Dow Jones Newswires
May 26, 2021 12:18 ET (16:18 GMT)
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