Oil giant Royal Dutch Shell will have to reduce its carbon emissions by 45% by 2030 (from 2019 levels) following a ruling of a Dutch court. That’s a much larger drop than the company’s current aim of 20%. Civil society largely celebrated the move, which they argue will have implications for other fossil fuel companies around the world.
This is the first time that a court has ruled a company has to reduce its emissions in line with the global climate targets, according to Friends of the Earth, the environmental organization that brought the case against Shell. It comes a week after the International Energy Agency asked fossil companies to stop drilling for oil and gas right now.
A spokesperson for Shell said the company will appeal the court’s “disappointing” decision. “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,” the source said in a statement.
Shell argues its carbon intensity targets are aligned with the Paris Agreement, which seeks to limit global temperature increases. But that doesn't seem to be the case. Friends of the Earth said the company’s investment on fossil fuels shows it doesn't take climate change seriously, and the cour agreed, finding that Shell’s emissions are a “very serious threat” to Dutch residents.
The lawsuit was filed in April 2019 by seven activist groups such as including Friends of the Earth and Greenpeace on behalf of 17,200 Dutch citizens. The court found that Shell’s business model “is endangering human rights and lives” by posing a threat to the Paris Agreement, arguing the company has an “individual responsibility” to reduce its emissions.
Shell told the court there was no legal basis for the case and that governments alone are responsible for meeting Paris targets. Nevertheless, the court found that “since 2012 there has been broad international consensus about the need for non-state action” on climate change because “states cannot tackle the climate issue on their own.” This is an extremely point, because it means that legally, companies (and not just countries) also have climate responsibilities.
"This is a turning point in history," Roger Cox, lawyer for Friends of the Earth Netherlands, said in a statement. "This case is unique because it is the first time a judge has ordered a large polluting corporation to comply with the Paris Climate Agreement. This ruling may also have major consequences for other big polluters.”
Oil companies are facing growing pressure from shareholders and activists to abandon fossil fuels and instead invest into cleaner energy sources. The ruling "may sound revolutionary, but, in fact, it is in line with what long term investors are increasingly asking companies to do anyway," Cees van Dam, a research at Rotterdam School of Management, told CNN.
Shell held its annual general meeting last week and shareholders voted overwhelmingly in favor of the company’s energy transition plans. Nevertheless, a growing minority rejected the strategy, insisting the oil giant needs to do much more in the fight against climate change. Shell’s CEO Ben Van Beurden said the company’s strategy was “comprehensive and ambitious.”
This is the third environmental case Shell has lost in recent times. In February, the United Kingdom Supreme Court ruled that thousands of Nigerians can sue Shell in English courts over environmental damage. Meanwhile, in January, a Dutch court ordered Shell to compensate locals for oil pipeline leaks that occurred more than a decade ago.