The executive board of Shell could potentially be sued for not acting in accordance with its pledges for decarbonization.
ClientEarth, an law firm focusing on environmental issues (and also a Shell shareholder) announced yesterday that it has informed Shell if its intention to move forward with a lawsuit aimed at the 13 directors of the company.
The law firm claims that the board haven’t done enough to align the company’s activities with the Paris Climate Agreement from 2015 which they are bound to do according to English law.
The Paris Agreement was designed to litmit global temperature growth to 1.5 degrees Celsius and outlined specific actions for fossil fuel companies.
This is the first case of its kind and it marks a shift in how energy companies are being put under pressure to act on their pledges for reducing CO2 emissions.
“The longer the Shell Board delays, the more likely it is that the company will have to execute an abrupt ‘handbrake turn’ to retain commercial competitiveness and meet the challenges of inevitable regulatory developments,” Paul Benson, a ClientEarth lawyer, said in a statement.
ClientEarth says it has informed Shell and expect the company’s formal response before filing the necessary paperwork for the trial to go ahead.
“These challenges cannot be solved by litigation,” said a Shell spokesperson after the announcement.
At last year’s annnual shareholder meeting over 30% of shareholder voted in favor of implementing the emissions for targets in sync with the Paris Agreement.
There have been a number of initiatives recently to make Shell act on reducing its emissions while also transitioning to potentially more profitable business models in the long-term.
In 2021 activist investor Dan Loeb took a $750 million stake in Shell, which is roughly equal to 0.4% of the company, and made a case that splitting the company into two. Half would focus on legacy activities that according to him don’t have a long runway of profits ahead of them (like fossil fuels), and the other would focus on liquid natural gas and renewables where he thinks there is more potential.