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The Guardian: Shell is being sued by environmental activists

9-2-2023 |

The directors of oil major Shell are being personally sued over their climate strategy, which the claimants say is inadequate to meet climate targets and puts the company at risk as the world switches to clean energy.

Environmental lawyers ClientEarth have filed the lawsuit against the 11 directors at the high court in England.

It is the first case in the world seeking to hold corporate directors liable for failing to properly prepare their company for the net zero transition, ClientEarth said.

ClientEarth, which has a token shareholding in Shell, is suing under the UK Companies Act, and is supported by a group of large pension funds and other institutional investors. It argues a global transition to low-carbon energy is inevitable as world governments act to end the climate crisis and that Shell’s failure to move fast enough threatens the company’s success and would waste its investors’ money on unneeded fossil fuel projects.

Shell recently announced a record annual profit of $40bn, driven by the high energy prices resulting from Russia’s war in Ukraine.

But, as climate litigation increases across the world, the company has suffered a flurry of recent legal and regulatory challenges. These include a Dutch court order to cut emissions from its oil and gas by 45% by 2030 and a claim that Shell is investing less in green energy than it says.

“Shell may be making record profits now, but the writing is on the wall for fossil fuels long term,” said ClientEarth lawyer Paul Benson. “The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the board is persisting with a transition strategy that is fundamentally flawed, despite the board’s legal duty to manage those risks.”

ClientEarth is asking the high court to order Shell’s board to adopt a strategy to manage climate risk in line with its duties under the Companies Act, and in compliance with the Dutch court’s order for big cuts in emissions.

The high court will now decide whether ClientEarth’s claim will proceed.

Source: The Guardian