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Shell Case to Fuel More Climate Suits Targeting Companies

May 26, 2021, 7:18 PM

A Dutch court ruling that directs Royal Dutch Shell Plc to more than double its greenhouse gas emissions cuts will likely spur environmental advocates to push more big-emitting companies for deep reductions.

The ruling directing Shell to cut emissions 45% by 2030 from 2019 levels—up from a pledge of a 20% by 2030—"means we may see similar lawsuits in other countries against other global corporations,” said Michael Gerrard, director of Columbia Law School’s Sabin Center for Climate Change Law.

The suits could force oil and other big-emitting corporations to cut emissions on a global scale, he said.

The ruling, if it withstands an appeal, would broadly apply to Shell’s emissions beyond its Netherland refineries to include its global supply chains and other operations, which could impact its U.S. operations, Gerrard said. The Dutch ruling is the first time environmental litigants “have won this kind of case on climate change grounds” by targeting a global corporation, he said.

Shell: ‘Disappointing’ Decision

Royal Dutch Shell issued a statement Wednesday defending its approach, arguing that it has embraced the need to take significant climate action. The company said it “fully” expects to appeal “today’s disappointing court decision.”

Shell is investing billions of dollars in low-carbon energy technologies including electric vehicle charging, hydrogen, renewables and biofuels, it said.

Netherlands’ highest court has upheld a previous landmark climate ruling known as the Urgenda climate case. The Dutch Supreme Court in its December 2019 ruling found that the Dutch government was obligated to make significant emissions cuts on human rights grounds consistent with a European Convention that sets human rights protections.

The Netherlands decision “is certainly not binding on U.S. courts,” which seldom give decisions overseas much weight and have generally taken a dim view of making corporations liable for contributing to global climate change, Gerrard said.

“But it is binding on the operations of Shell, and Shell has operations in the U.S.,” he said.

Companies Squeezed

Wednesday’s ruling is also raising eyebrows because it explicitly orders Shell to makes emissions cuts consistent with those pledged under the 2015 Paris accord, said Ken Rivlin, partner and head of the Allen & Overy’s Global Environmental Law Group.

“This will undoubtedly put wind in the sails of other litigants who are aspiring” to score similar wins elsewhere, Rivlin said.

But he cautioned it’s still “a Dutch case, and it’s easy to overdramatize the significance” on the climate law landscape for now.

The ruling also lays bare the challenge for companies trying to take ambitious climate and sustainability actions including steps to cut emissions while maintaining value for shareholders, Rivlin said. The ruling “is a harbinger of the growing onslaught of litigation, shareholder actions and similar campaigns to influence corporate behavior, reduce climate impacts, and promote social justice,” he said.

Roger Cox, lawyer for Friends of the Earth Netherlands, said the Dutch ruling could have significant consequences for big emitters. Friends of the Earth was among the climate activist groups that filed the lawsuit against Royal Dutch Shell in 2019.

“This is a turning point in history,” Cox said in a statement, in part because it marks the first time a large corporation has essentially been ordered to make cuts consistent with national commitments under the Paris agreement.

Under the accord, nations pledged actions to keep global temperatures from rising by more than 2 degrees Celsius above pre-industrial levels and to make best efforts to hold planetary warming to 1.5 C.

To contact the reporter on this story: Dean Scott in Washington at dscott@bloombergindustry.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com; John Hughes in Washington at jhughes@bloombergindustry.com

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