Staff Writer
On Monday, a British judge dismissed a lawsuit accusing Shell’s management of improperly managing climate risks to the oil company. The activist investor group that filed the action intends to appeal, though.
In recent years, corporations have been the target of an increasing number of climate-related lawsuits as businesses feel increased pressure to intensify efforts to slow global warming.
After being sued by environmental organizations, Shell was already mandated by a Dutch court in 2021 to reduce its greenhouse gas emissions by 45 percent by the end of the decade.
This time, ClientEarth, a minor shareholder in Shell and an environmental law NGO, filed a complaint against the company’s executives in the High Court of England and Wales in February for “failing to manage the material and foreseeable risks the company from climate change.”
However, the judges threw out the case twice—once in May and again today after a hearing in early July.
ClientEarth expressed disappointment with the decision and stated that it will file an appeal.
A Shell representative referred to the dismissal as “the right outcome” and noted that the court had reiterated its finding that the validity of the claim was questionable.
ClientEarth’s “claim entirely ignores how directors of a business as large and complex as Shell must balance a range of competing considerations,” the company claimed in a statement.
In spite of disruptions and skepticism regarding its climate transition, Shell’s management earned majority support at its annual shareholders meeting in May.
Later, Shell announced a change of course, saying it would maintain oil production rather than gradually cutting it until 2030.
“The Board’s strategy to manage the risks of the energy transition was fundamentally flawed as it was,” said ClientEarth senior attorney Paul Benson.
In a statement, he continued, “Now the Board seems to be removing even any pretense that it will take significant action.
According to ClientEarth, Shell’s faulty climate policy violates English company law because it is at odds with the Paris Agreement and jeopardizes the business’s future commercial viability.
Shell’s future economic viability is in jeopardy because of the Board’s failure to take strong action to position the business for the quickly developing energy transition, according to Benson.
This is the first time a company’s board has been the target of a lawsuit for failing to adequately handle, claims ClientEarth
the change in the climate.
Shell’s first-quarter net profit increased by 22% to $8.7 billion, but the company has said a decline in gas sales will have an adverse effect on its performance in the second quarter.
