Environmental law charity ClientEarth on Wednesday sought to revive its landmark lawsuit against Shell SHEL-N over its climate strategy, telling a London court the energy giant is “uniquely vulnerable” to a shift away from fossil fuels.
ClientEarth’s lawsuit was initially rejected in May by Judge William Trower, but the group asked him to reconsider his decision at London’s High Court on Wednesday.
The group argues Shell cannot achieve its aim of net zero by 2050 under its current climate transition strategy and its directors are therefore breaching their duties to shareholders to promote Shell’s commercial success.
ClientEarth, which is also a Shell shareholder and says it is supported by some institutional investors, wants to bring a so-called derivative case on behalf of Shell against its directors, in one of the first lawsuits of its kind.
If allowed to proceed, it could open the door for investors in other companies to sue company boards that fail to adequately manage climate-related risks.
Shell’s lawyers argued in court filings that the case should be dismissed, saying ClientEarth is wrongly using litigation to “advance its own policy agenda”.
The company also said that the courts should not be dragged into determining or supervising companies’ business strategies.
Shell plans to reduce the carbon intensity of its products – which measures greenhouse gas emissions per unit of energy produced – by 20 per cent by 2030, 45 per cent by 2035 and by 100 per cent by 2050 from 2016 levels.
But ClientEarth’s lawyer Edward Brown said Shell’s strategy will not help it meet its net zero goal, which will have severe adverse repercussions on shareholder value.
“We are on the precipice of potentially very significant change,” he said. “Shell’s business is heavily reliant on fossil fuel products.
“In due course, whether because of hard legislation or soft consumer preferences, those products will become untenable and that puts Shell in a uniquely vulnerable position.”
ClientEarth is seeking a court order requiring Shell’s board to adopt a climate transition strategy in line with their duties to shareholders.
Shell’s lawyer Robert Howe said in court filings that the company’s plans were “a matter of the directors’ good faith business judgment”.