PRESS RELEASE
Court states that Shell is obliged to reduce its CO2 emissions, but could not determine a concrete percentage
The Court of Appeal has overturned the landmark 2021 ruling that mandated Shell to reduce its emissions by 45% by 2030 (Scope 1, 2, and 3, compared to 2019 levels). The Hague court stated that Shell is obliged to reduce its CO2 emissions, but could not determine a concrete percentage. Milieudefensie (Friends of the Earth), who initiated the lawsuit, stated “we will keep fighting until all polluters have adopted sustainable practices.”
Response Follow This
“The court’s decision to relieve Shell from the obligation to cut its carbon emissions by 45% is a setback in the fight against the climate crisis,” responds Mark van Baal of Follow This, a shareholder group that aims to compel oil majors to reduce emissions through shareholder votes at their annual general meetings.
“Nevertheless, the court states that the company has an obligation to reduce its emissions. Currently, Shell lacks targets for significantly reducing its Scope 3 emissions by 2030,” adds Van Baal.
“The court’s decision makes clear that investors, the owners of the company, have a key role in holding the company to its climate obligations and steering them towards clean energy.”
Despite the court’s earlier decision, Shell has continued its oil and gas investments supported by the majority of its shareholders, including prominent investors such as BlackRock and Norges Bank. These shareholders have voted against emissions reduction resolutions at Shell’s annual general meetings, even as they publicly commit to achieving the goals of the Paris Climate Agreement.
This legal setback intensifies the call for investors to reevaluate their positions. “Investors must reconsider their support for Shell’s inadequate climate strategies and align their votes with their moral, environmental, and financial duties,” Van Baal adds.
If Milieudefensie appeals, it will be up to the Dutch High Court (Hoge Raad) to take a final decision.
Background
Follow This climate resolutions
Since 2017, Follow This has filed shareholder resolutions at Shell, requesting the company to set emissions reduction targets in line with the Paris Agreement, a similar ask as the court’s ruling in 2021. Since the landmark ruling in 2021, 19-20% of shareholders voted for these resolutions.
Hard and formal evidence
Shell’s Management’s consistent advice to shareholders to vote against these resolutions was used as hard and formal evidence in the case, demonstrating that despite the company’s pledge to support the Paris Accord, it did not want to take meaningful action.
Best interest of Shell
“Embarking on the clean energy transition is in the best interest of the long-term future of Shell,” notes Van Baal. “Because its lucrative carbon-based business model will end as soon as fossil fuel companies have to pay for climate damage. To be prepared, Shell should invest the profits from fossil fuels in the business models of the future.”
