In what they claim is a first in British law, activist environmental lawyers Client Earth announced today they are suing oil leviathan Shell, accusing it of neglecting shareholder interests by allegedly slowing its retreat from exploitation of planet-cooking oil and gas.
The lawyers say the petrochemical behemoth is breaching its duties under the Companies Act, downplaying science-demonstrated climate dangers, which imperil the energy supermajor’s sustainability as a going concern.
No other company’s board of directors have even been so challenged at law, say the plaintiffs.
The company is pledged to by a Net Zero business by 2050. But the litigants say Shell’s decarbonising business plan is too slow. On current progress, only 5% of its current net carbon emissions would be cut this decade.
“Shell’s shareholders need certainty that the company is using their capital effectively in its navigation of the global energy transition and is genuinely pursuing the climate goals that it says it is” said Peter Benson, at Client Earth.
“It is in the best interests of the company, its employees and its shareholders – as well as the planet – for Shell to reduce its emissions faster than it is currently planning”.
The UK case echoes a May 2021 judgement in a Dutch court. Judge Larisa Alwin then upheld Friends of the Earth’s case brought on behalf of six campaigning groups that the company’s declarations about cutting its emissions were insufficiently rigorous to comply with the Paris climate accords.
Shell last week posted global profits of just over £32 billion. Around 95% of its sales are made outside the UK. Last year It invested a record total of $3.3 billion / £ on its renewables activities and developing sustainable, non-fossil fuels. But Bloomberg analysts noted that sum was still less than half of what it had invested in 2022 in traditional hydrocarbons.
Chief finance officer Sinead Gorman told analysts that Shell’s accelerating profits would bring no speeding up of its investment in greening the company.
“Our philosophy has been a real pivot toward energy transition investments” said Gorman. ”But we will make sure those investments go into the areas where we can see line of sight toward attractive returns to be able to reward our shareholders.”