ClientEarth has filed a lawsuit against the board of oil giant Shell for breaching their legal duties by failing to manage a range of climate risks.
In a February 9 announcement, ClientEarth revealed that the lawsuit was targeting all of Shell’s 11 directors for allegedly failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement.
ClientEarth is asking the High Court of England and Wales for an order requiring the board to adopt a strategy to manage climate risk in line with its duties under the Companies Act, and in compliance with the prior Dutch Court judgement.
“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,” said ClientEarth Senior Lawyer Paul Benson. “Long term, it is in the best interests of the company, its employees and its shareholders for Shell to reduce its emissions harder and faster than the board is currently planning.”
According to the environmental activist, the lawsuit has won the support of a group of institutional investors with more than half a trillion U.S. dollars in total assets under management including European pension funds Nest, London CIV, AP3, Danica Pension and AP Pension, as well as asset managers Sanso IS, Degroof Petercam Asset Management and Danske Bank Asset Management.
“Robust short- to medium-term strategies are needed to meet the goals of the Paris Agreement, whereas the company’s new oil and gas projects in development pose risks to investors in terms of carbon lock-in and stranded assets,” said Mark Fawcett, Nest’s chief investment officer.
Shell’s board, which oversaw $40 billion in profits in 2022, is fighting the lawsuit, maintaining that its energy transition strategy is consistent with the Paris Agreement and that its plan to halve emissions from its global operations by 2030 is “industry-leading.”
ClientEarth retorted that the strategy excludes short- to -medium-term targets to cut Scope 3 emissions, despite these accounting for more than 90% of the company’s overall emissions.