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It’s been less than a year since gas giant Shell lost a landmark climate case in the Netherlands, and it’s once again facing serious legal action. This time, however, its company executives are being directly confronted, not the conglomerate.
A change of tact is clearly required to get fossil fuel companies to listen. While hidden behind the guise of sprawling multinationals, what better way to remind executives of their personal responsibility than to hold them legally accountable?
For a brand desperate to appear environmentally conscious on social media, and failing miserably might I add, Shell has been completely resistant to change. Solely responsible for 1% of all global emissions annually, it was the ninth biggest polluter for 16 years straight, according to the Carbon Majors database.
At Shell’s 2021 internal round-up meeting, more than 30% of shareholders reportedly voted against the board of directors and called for Paris-aligned emission targets. With no such resolution in sight, these 13 executives instead continue to refute a court order from May to reduce its carbon footprint by 45% before 2030.
The crux of their argument is that the burden of responsibility should fall with governments alone, and not businesses. As expected, this has served only to land Shell in yet more trouble – and with executives popping their heads above the parapet, they’re now directly in the firing line.
"Board’s failure to properly manage climate risk to #Shell means that it is breaching its legal duties…This will be the 1st time ever that a company’s board has been challenged on its failure to properly prepare for the #NetZero transition." @ClientEarthhttps://t.co/YkkriJjM8Q
— @ShellsLies (@shellslies) March 15, 2022
Explaining the new lawsuit
Confirmation broke today (March 15th) that environmental law charity ClientEarth is going after Shell’s board members with a ‘first of its kind’ lawsuit intended to impact their private wallets.
Its claim is that the 13 member consortium has failed to behave in a manner befitting the UK Companies Act. This legislation means directors are bound to act in a way that promotes the company’s success while exercising reasonable care and diligence.
On the latter two requirements, ClientEarth lawyers allege that the Shell board has failed to ‘properly prepare for the net zero transition.’ It claims that not only is this irresponsible in the wider vision of global decarbonisation targets, but also leaves the company at risk of an inevitable slump in asset value that will have a knock-on effect to consumers.
‘They are exposed to what we call stranded asset risk, where their assets – for example their facilities, their physical infrastructure – the value of that is just going to reduce or it will become a liability as the net zero transition progresses,’ says ClientEarth lawyer Paul Benson.
The counter claim, predictably, is that Shell is working to become a net-zero business by 2050, including an ‘industry leading’ target to halve emissions from global operations by 2030. It’s marketing spiel we’ve heard before, but indications are that the necessary steps aren’t being taken now to achieve these goals.
