A New Climate Lawsuit Aims at Shell's Board of Directors

A New Climate Lawsuit Aims At Shell's Board of Directors

A group of Shell shareholders is suing the oil company’s Board of Directors for not developing an adequate climate strategy, thereby mismanaging its climate risk. The lawsuit "is the first ever case of its kind,” according to environmental law nonprofit ClientEarth, the organization pursuing litigation. ClientEarth is arguing that the Board’s current strategy is putting the company’s long-term value at risk by ignoring climate change. If successful, Shell would be forced to develop a new climate strategy that hits Paris Agreement targets. Under Shell’s latest plan, emissions would actually rise by 4%, not reduce.

This isn’t the first time Shell has been sued for dragging its feet to stop its polluting business model: a Dutch court ruled last year that the oil giant was "obligated” to cut carbon emissions by 45% before 2031. A ruling which Shell is appealing.

NBC: Dutch Court Orders Shell To Cut Carbon Emissions By 45% by 2030, May 27, 2021.

ClientEarth: This Is What The Law Can Do, May 26, 2021.

Why This Matters

Shell is one of the biggest oil companies in the world, so it singularly has a massive impact on climate change and is responsible for almost 2% of human-caused emissions. Fossil fuels are far and away the biggest contributors to the climate crisis, accounting for 70% of global emissions. This new legal approach to holding oil giants accountable involves challenging the company’s board about their climate decision-making as it relates to profits.

As ClientEarth puts it: "[Shell’s] current strategy and insufficient targets put the enduring commercial success of the company and employees' jobs at risk, and is no good for people or the planet.”

Between 1965-2017, the top 20 companies have contributed 480,169 MtCO₂e in total carbon emissions, or 35% of cumulative global emissions. This whopping amount is mostly from the combustion of their products -- each company on this chart deals in fossil fuels. (Source: Visual Capitalist, October 25, 2019.)

TED: How to get big oil to stop climate change | Mark van Baal, January 22, 2022.

Climate Accountability Lawsuit Advancing

This particular case is being brought against Shell UK, but plenty of lawsuits against major fossil fuel companies are also happening stateside. Earlier this year, a US federal appeals court ruled in favor of a case brought by the city of Baltimore, arguing fossil fuel companies must cover the cost of climate change damages can move forward. In February, a circuit court judge in Hawaii ruled in favor of the city and county of Honolulu in its legal case to hold Big Oil companies responsible for climate change impacts on the island. Similar suits have been filed by cities including Oakland, CA, New York, and Charleston, SC; and states including Minnesota, Delaware, and Rhode Island.

Still, Big Oil is pushing back in court and not giving much to legislative lawmakers. Last fall, top executives from oil giants ExxonMobil, BP, Chevron, and Shell testified before Congress and failed to turn over requested documents about funding disinformation campaigns. A report by the House Committee on Oversight and Reform argued that the four companies spent hundreds of millions lobbying the government to protect fossil fuel interests with only "a tiny fraction" going toward the pro-climate policies they claim to support.

Another hearing by the Committee was held on Feb. 8 to examine climate pledges versus actions taken by that same four oil giants. Testimony was heard by climate experts from the fields of science, policy, and finance. The message was consistent: climate change is happening, fossil fuel companies must act urgently, and Big Oil is doing too little (if anything at all) to meet its climate pledges.

Mark van Ball, founder of Follow This, a coalition of climate conscious shareholders, stated: "Shareholders sent an unequivocal message: we need oil majors to cut emissions. However, Shell, BP, Chevron, and Exxon still intend to grow their emissions this decade, and they have no intentions to stop doing so.”

Oversight Committee: Chairwoman Maloney's Opening Statement - Examining Big Oil's Climate Pledges, February 8, 2022.

Oversight Committee: Rep. Khanna's Opening Statement - Examining Big Oil's Climate Pledges, February 8, 2022.

Follow This: Follow This testifies in US Congress Hearing about Big Oil’s Climate Pledges, Feburary 15, 2022.