A blow to climate justice? The real impact of Shell’s courtroom victory

2 weeks ago

Shell won the appeal in the groundbreaking Milieudefensie / Friends of the Earth Netherlands climate case. The court decision in favor of the oil and gas giant shocked climate activists. But now the dust has settled, it turns out that not only Shell is encouraged by the decision. Milieudefensie thinks it can fuel their second climate case against ING Bank. Why? And what is the wider impact on business and climate action? I took a dive into the evidence.

* Quoted sources (highlighted) below this article

“This hurts,” said Donald Pols, director of Milieudefensie / Friends of the Earth Netherlands on Tuesday, November 12th, in a first reaction. Tears were shed in the courtroom. The Court of Appeal of The Hague decided to overturn the 2021 ruling that ordered Shell to cut its carbon emissions by 45% in 2030.

Milieudefensie started the landmark climate case against the oil and gas firm in 2019, along with six other organisations and 17,000 Dutch citizens as co-plaintiffs. The 2021 ruling marked the first time a judge had ordered a private company to reduce CO2 emissions and align its corporate policies with the Paris Climate Agreement.

Environmental organizations, businesses, media and people across the globe had their eyes set on the courtroom on Tuesday 12th. The stakes were high.

Shell: pleased with the court decision

Pols didn’t hide his disappointment about the ruling. “It is a setback for us, for the climate movement and for millions of people around the world who worry about their future.” Vulnerable communities who are bearing the brunt of climate inaction and greenwashing by corporations will feel they are let down – again.

For Shell, the anxiously anticipated judgement must have been a relief. CEO Wael Sawan stated he is “pleased” and said the court’s decision was “the right one for the global energy transition.” He added that his company continues the work to halve emissions from its operations by 2030: “We are making good progress in our strategy to deliver more value with less emissions.”

But global media reacting to the Court decision were not so sure. A CNN headline said it all: “Court rules this major oil company can continue to pollute”. Other fossil fuel giants – and their shareholders – will be delighted to know that they are safe from the jurisdiction of the 2015 Paris climate agreement, reporters noted.

Is this a fatal blow to climate justice?

COP29 negotiators, world leaders fail to act

The ruling came as the prospects for climate action in other vital areas also look bleak. COP 29 climate talks were underway in petrostate Azerbedjan, but the leaders of the 13 biggest carbon-emitting nations, including China and the US, skipped this year. Negotiators were struggling to proceed towards a badly needed climate finance deal.

The apparent lack of political will is aggravated by the latest climate facts. Far from the “transition away” from burning fossil fuels that was pledged by the world’s nations in Dubai a year ago, new data shows that planet-heating CO2 emissions from coal, oil, and gas will hit a new record in 2024.

Meanwhile, President-elect Donald Trump is gearing up to slash climate progress made under Joe Biden, appointing fossil fuel lobbyists to key positions and preparing to withdraw the United States from the Paris climate agreement.

This will no doubt embolden far-right leaders in Europe. Following the recent electoral wins for climate-denying extreme right parties across the EU, Europe’s Green Deal is in danger of being dismantled. Even the re-elected commission president Ursula von der Leyen, who launched the ambitious carbon reduction programme in 2019, is now catering more to industry demands for deregulation.

The obligation to counter climate change

It seems evident: the timing of the court ruling couldn’t be worse. Yet beyond the media headlines reflecting shock and disappointment at the apparent carte blanche for corporate polluters, there are silver linings to the ruling.

Roger Cox, the celebrated lawyer leading the Shell case on behalf of Milieudefensie, admitted that they didn’t expect this outcome. “But today was not black or white,” he pointed out in an NPO Radio 1 interview after leaving the Court of Appeal. While the conclusion was disappointing, the judges agreed with key points raised by his legal team.

In fact, the Court’s wording was crystal clear: “Companies like Shell, which contribute significantly to the climate problem and have it within their power to contribute to combating it, have an obligation to limit CO2 emissions in order to counter dangerous climate change,” the judgement says.

Companies can’t hide behind politics

In 2022, the UN has recognized the right to a clean, healthy and sustainable environment as a human right.

Shell has subscribed to international standards like the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, which are explicit about the need to respect human rights. The oil and gas firm must act on that commitment and protect people from harmful pollution.

Even if national legislation does not oblige companies to further reduce their emissions, they have their own responsibility. Cox: “The Court said that as a company, you can’t hide behind politics and existing laws. You must have a good climate policy and implement it, moving towards net zero in 2050.”

The obligation to limit greenhouse gas emissions is anchored in various EU environmental regulations. Recently launched EU Directives to promote responsible business conduct and disclosure, the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) reinforce the requirement to implement a climate transition plan.

No obligation to cut emissions by 45%

Yet the court differed from Milieudefensie regarding its demand that the oil and gas giant reduce its CO2 emissions by 45% in 2030 – the winning argument in the 2021 case. The percentage reflects the interim target agreed upon by climate science if the world wants to accomplish its “race to zero” in 2050 and stop global warming.

But this time, the judges agreed with Shell.

They said data shows it is well on its way to reducing its emissions. And in any case, it isn’t up to the court to put a specific number on the firm’s efforts.

“Even though Shell, as a major oil and gas company, has a special responsibility and climate change is largely caused by companies in industrialized countries, this does not mean that the court can apply the general standard of 45% to Shell,” presiding judge Joustra concluded.

A new angle in the ING climate case?

Milieudefensie and its co-plaintiffs didn’t win the case, but the court ruling set new doors ajar. Roger Cox: “The judges mentioned some interesting things that will further advance climate litigation.”

Take future fossil fuel exploitations: “The Court hinted that Shell’s planned investments in new oil and gas fields may violate its obligation to provide protection against climate change,” Cox explained. “That could give us an additional angle in our case against ING Bank.”

Milieudefensie announced this second climate case against the largest bank in the Netherlands in January this year.

It wouldn’t be the first time that elements of a lawsuit are used as arguments in new proceedings targeting companies. The 2021 Shell decision gave rise to a wave of other climate litigation cases.

Over 26,000 global climate lawsuits

Nine de Pater, campaigner at Milieudefensie / Friends of the Earth Netherlands said in an interview with DW: “We clearly saw that some of the arguments that we used in the court case against Shell were very useful in these cases.”

More than 2,600 climate lawsuits involving government or businesses in over 55 countries are recorded in databases run by the Sabin Center for Climate Change Law at Columbia University.

According to De Pater, even if “court cases take a long time, so you don’t see an impact right away,” climate lawsuits are changing the narrative. “They help to fuel debate about the responsibility of polluting companies,” she added.

Impacting governance beyond the courtroom

In a 2023 assessment, the London School of Economics and Political Science (LSE) estimated that more than half of the registered climate cases were ruled in favor of climate action.

The judgements have significant impacts beyond the courtroom, too. They can change companies’ climate governance and drive new policies that translate into hard emissions limits. This happens even if a case itself is unsuccessful, LSE found.

It’s no wonder that interest in climate litigation and the risks for companies is spilling over to a wider range of stakeholders, including investors, regulators, and regional bodies such as the EU.

No significant reversal

Lawyers agree that we must look behind the headline that Shell’s appeal succeeded.

Ahshurst, a leading global law firm, said this is not a significant reversal for climate litigation. Instead, “the decision underscores the ongoing judicial recognition of corporate responsibilities in mitigating climate change.”

As climate-related natural and human disasters intensify and pressure mounts to hold corporations accountable for their actions, courts around the globe may face a growing number of lawsuits.

Ahshurst: “The Court of Appeal’s commentary on the duty of care for private companies in relation to climate change and human rights is likely to support future climate claimants.”

Legal risks for companies

Milieudefensie is first in line. Recovered from the initial shock, the organization re-emerged with new energy on Friday 15th. In a press release, it confirmed its plans to sue ING Bank. “We have looked closely at the court ruling and we see in it a solid basis to demand better climate policies from ING,” said Donald Pols.

“Therefore, together with our tens of thousands of co-plaintiffs, we will continue our case to hold the banker of the climate crisis accountable.”

So, far from being a fatal blow to environmental action, the Shell decision shows that the legal risks for companies that aren’t serious about their climate obligations are substantial.

Litigation remains a key instrument in the fight against climate change. And that is much needed, especially at a time when actors in other fields fail to take decisive steps forward.

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