By verdict of 26 May 2021, Royal Dutch Shell PLC (RDS), based in the Netherlands, was sentenced by the The Hague District Court to reduce the CO2-emissions of the Shell Group and of its subsidiaries, suppliers and customers (including the carbon dioxide emissions related to all of the group’s activities and sold energy-carrying products) in order to ensure a net reduction of these emissions by at least 45% at the end of 2030, compared to 2019 levels.
The claim was brought in 2019 by, amongst others, environmental group Friends of the Earth Netherlands (Milieudefensie) and a number of individual co-plaintiffs. The claims of the individuals were denied, but the claims by the seven environmental groups were accepted as admissible given their statutory goal of preventing hazardous climate change. The claim was based on tort: article 6:162 Dutch Civil Code (Burgerlijk Wetboek).
Climate Change Litigation
The Court concluded that RDS has the legal obligation to ensure through the RDS group’s corporate policy that the CO2 emissions of the RDS group, its suppliers and its customers are reduced. According to the Court, this follows from the unwritten duty of care applicable to RDS. The following circumstances have played a role in the decision of the Court:
- the policy-determining position of RDS in the group;
- the level of CO2 emissions by the group;
- the consequences of these CO2-emissions for the Netherlands and the Waddenzee wetland area;
- the right to (family) life of the inhabitants of the Netherlands and the wetland;
- the UN Guiding Principles (as a soft law instrument to define the unwritten duty or care);
- the control and influence of RDS on the CO2 emissions of the group and their business relations;
- the requirement to prevent hazardous climate change;
- possible reduction paths;
- the double challenge to prevent hazardous global warming and to satisfy the energy need of the growing world population;
- the ETS (European Emission Trade System) and other cap-and-trade systems that apply in the world;
- the permits and ongoing obligations of the group;
- the effectiveness of the duty to reduce emissions;
- the responsibility of the State and society;
- the burden for RDS and the group to fulfill the duty to reduce the emissions; and
- the proportionality of the duty to reduce the emissions of RDS.
The court has provided a detailed analysis of these facts and circumstances leading to the courts decision that RDS must fulfill her duties as an obligation to guarantee a certain result (resultaatsverplichting).
Statement by RDS
An RDS spokesperson said: “Urgent action is needed on climate change which is why we have accelerated our efforts to become a net-zero emissions energy company by 2050, in step with society, with short-term targets to track our progress. We are investing billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels. We want to grow demand for these products and scale up our new energy businesses even more quickly. We will continue to focus on these efforts fully and expect to appeal today’s disappointing court decision.”
Possible consequences
This verdict might have far reaching implications for other multinationals with large carbon emissions and for the energy industry. We are happy to discuss this verdict and the possible consequences for the enforceability of environmental duties for your business. For more information please contact André Gaastra.
Further reading
–> Greenhouse Gas Protocol
–> 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories
–> Paris Agreement 2015