Judge Larisa Alwin of The Hague District Court ordered Shell to ensure its net carbon emissions were 45% lower in 2030 compared to 2019, a move she said would have “far-reaching consequences” for the Anglo-Dutch company.
Alwin said Shell’s current climate strategy was not concrete enough and added that the company was required to take additional human rights measures.
The decision follows a legal campaign led by Milieudefensie, the Dutch wing of Friends of the Earth. Donald Pols, director of Friends of the Earth Netherlands, called the decision a “monumental victory”.
Shell said it would “appeal today’s disappointing court ruling.”
The ruling could set a precedent for similar cases against the world’s largest polluting companies, which could now face similar lawsuits.
“Legally, economically and socially, the decision matters,” said Thom Wetzer, who heads the sustainable law program at the University of Oxford. “All companies in the energy sector and all large emitters will be warned and will have to accelerate their decarbonization plans.”
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Shell announced reductions in the carbon intensity of the fossil fuels it produces and sells from 2016 levels, starting at 6% by 2023, 20% by 2030 and 45% by 2035 .
The goals are part of its ambition to become a net zero emissions company by 2050. Carbon intensity is a measure of carbon per megajoule of energy sold, rather than an absolute measure of carbon emitted.
Alwin said his move would require “a policy change” on the part of the company that could “dampen the potential growth of the Shell group.”
“The interest served with the reduction obligation outweighs the commercial interests of the Shell group,” she added.
Climate disputes against fossil fuel companies have escalated in recent years. Until recently, business tended to focus on liability lawsuits, with companies being asked to pay damages for past behavior.
But the legal case against Shell is one of a growing number of so-called human rights-based cases that seek to radically change a company’s strategy and potentially disrupt its business model.
The Shell share price has remained stable on the news.
However, Nick Stansbury of Legal and General Investment Management said that “while the market does not appear to have responded, there is a valid question as to whether this is a watershed moment in the same way that the Big Tobacco’s first lawsuits ”.
While rival BP has set targets for cutting fossil fuel production, Shell has refused to take similar steps, saying such steps would be arbitrary and would not take into account the high demand for hydrocarbons.
Although he announced that he would invest billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels, he stressed that he didn’t would go that at the rate of the company.
In response to this point, the judge said in her ruling that the energy group “must do more than follow the development of society and comply with the regulations of the countries where the Shell group operates”.
While acknowledging that Shell “cannot solve this global problem on its own”, she said that does not “relieve” the company of its responsibility to reduce emissions “which it can control and influence”.
The judge added that Shell “is free to comply with its reduction obligation as it sees fit”.
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