ClientEarth to face Shell bosses in court over climate inaction

Environmental law charity ClientEarth has announced plans to sue Shell’s board of directors over their flawed strategy to limit the risks of the climate crisis.  

The group says the 11 Shell directors have breached their legal duties to manage and mitigate potential risks to the company’s success by failing to form an adequate climate strategy.  

The lawsuit, which will challenge Shell’s energy transition strategy, has been filed with the High Court in England and Wales.  

ClientEarth has received extensive support from institutional investors and pension funds which together hold more than 12 million shares in the company and more than half a trillion US dollars in total assets under management (AUM).  

Shell announced record profits last week, as the company made £32.2bn in 2022, the highest amount in its 115-year history.  

ClientEarth Senior Lawyer Paul Benson said: ‘Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term. 

‘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, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success – despite the Board’s legal duty to manage those risks.’ 

He added: ‘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.’  

Mark Fawcett, Chief Investment Officer of the UK’s largest pension fund Nest, said: ‘Investors want to see action in line with the risk climate change presents and will challenge those who aren’t doing enough to transition their business. We hope the whole energy industry sits up and take notice.’  

While Shell claims its energy transition strategy is in line with the Paris Agreement, limiting temperature rises to 1.5°C, third-party assessments have found this isn’t the case.  

Benson said the company’s reduction targets ‘barely touch the sides’, as its strategy excludes short and medium-term targets to cut emissions from its products, despite this making up more than 90% of its overall emissions.  

In 2021 a Dutch court ordered that Shell must cut CO2 emissions by 45% by 2030, but net emissions are estimated to fall by just 5%.  

The company has also been accused of greenwashing, as it publicises investments in renewables, while non-profit Global Witness found just 1.5% of capital was going into these initiatives.  

‘If you scratch beneath the surface, the proportion of investment currently going to renewable energy is, relatively speaking, miniscule. Although boosting dividends and buybacks might placate some investors temporarily, the Board is wasting a golden opportunity to position the company for the energy markets of the future,’ continued Benson. 

Photo by Jethro Carullo