Shell’s Board Of Directors Sued For Not Doing Enough For Climate Change
Shell’s Board of Directors sued for not doing enough for climate change
The Board of British energy company Shell Plc (SHEL) is being sued for not taking enough steps to help the company make the transition away from fossil fuels.
Environmental law firm ClientEarth, which is also a Shell shareholder, said on Tuesday that it had notified the company of its lawsuit against Shell’s 13 executive and non-executive directors. The law firm has said that the Board’s failure to put in place a climate plan, which aligns with the Paris Agreement must be considered a breach of their duties as per British law.
The case is the first-time ever that someone has held a company’s board of directors personally liable “for failing to properly prepare for the net zero transition.”
In a statement, Paul Benson, a ClientEarth lawyer, said, “Shell is seriously exposed to the physical and transitional risks of climate change, yet its climate plan is fundamentally flawed. The longer the 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.”
The not-for-profit law firm, which has a strong track record of emerging successful in climate-related cases, said that it had notified Shell and will await the firm’s response before officially filing papers in the High Court of England and Wales to take the claim forward.
If the case goes to the court, the Board at Shell must match its climate plans with the goals of the 2015 Paris Agreement. The court can also declare that Shell’s board is in breach of its legal duties. If the claimants lose, however, they could be liable for the full costs of the case.
In response to the legal action, Shell told CNBC via email that it was delivering on its global strategy that supported the Paris accord. This includes plans to transform its business “to provide more low-carbon energy for customers.”
Under the Paris Agreement, countries and states undertake efforts to limit global heating to 1.5 degrees Celsius above pre-industrial levels by bringing down greenhouse gas emissions.
A Shell spokesperson said, “Addressing a challenge as big as climate change requires action from all quarters. The energy supply challenges we are seeing underscore the need for effective, government-led, policies to address critical needs such as energy security while decarbonizing our energy system. These challenges cannot be solved by litigation.”
The law firm has called other shareholders to join the legal team so that they could form a formidable force against depleting oil and natural gas resources.
Shell has faced legal action over its climate strategy before. In May 2021, a Dutch court had ordered the company to reduce its global carbon emissions by 45 percent by the end of 2030, compared with 2019 levels. It also said Shell is responsible for its own carbon emissions and those of its suppliers, known as Scope 3 emissions.
The Shell spokesperson said that they do not agree with the ruling and would fight it in the court.
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