Oil and gas giant, Shell has recently been in the Court of Appeal in the Netherlands following a decision in support of environmental campaign groups in the country, including Friends of the Earth.

The 2021 ruling ordered Shell to cut its carbon emissions by 45%, compared to its 2019 levels, by 2030. The first instance ruling covered emissions from both Shell’s operations and the fossil fuels it sold.

Shell appealed on the basis that the original district court decision was flawed on a number of grounds, including that it should only be nation states that should make such “sweeping demands” and that such a cut to its business’ carbon emissions would only shift output towards its competitors without any benefit to the planet.

Appeal court decision

In its decision, the appeal court ruled that whilst Shell was obliged to reduce its carbon emissions, there is insufficient consensus. “In climate science, there is currently insufficient agreement on a specific reduction percentage that an individual company such as Shell should adhere to.” The court noted that Shell is already working towards reducing its Scope 1 and 2 emissions, which include emissions from its operations, but said it would be ineffective to force Shell to reduce its Scope 3 emissions, which cover emissions from the fuel it sells.

Interestingly, the court also explained that whilst Shell could, in theory, meet its Scope 3 target by ceasing or cutting trade in fossil fuels, other companies “would take over that trade” which would consequently not result in a reduction in carbon emissions.

The appeal judgment may not be the end of the matter. The climate groups have the option to bring their own appeal to the Netherlands’ Supreme Court. It is important to note that the appeal court did agree with the climate activists that Shell had an obligation to cut its greenhouse gas emissions to protect people from global warming.

Comment

It is not known whether the climate groups will bring their appeal to the Netherlands’ Supreme Court however this decision does demonstrate that courts are prepared to acknowledge the climate crisis and agree that companies, such as Shell, have an obligation to reduce their emissions.

Environmental groups around the world are increasingly attempting to force companies to take climate change more seriously by taking them to court. We expect this trend in environmental litigation to continue in the UK, including an increase in disputes relating to claims of Greenwashing (e.g. misleading or deceptive claims about the environmental benefits of products or services)