A Dutch court verdict against Royal Dutch Shell Plc will determine whether it has a legal responsibility for climate change, in a case that will be overseen by Big Oil executives worldwide.
A group of judges from a lower court in The Hague will rule on Wednesday in a case closely followed by environmentalists. Although the verdict is only legally binding in the Netherlands, it is expected to be examined as a new area of litigation and may guide the deliberations of judges elsewhere.
Shell was sued by Milieudefensie, the Dutch arm of Friends of the Earth, whose lawyers spent two weeks in court earlier this year arguing that the company is violating human rights by extracting fossil fuels and which undermines the goal of the Paris Agreement to limit temperature rises to less than 1.5 degrees Celsius.
Oil companies around the world have the so-called duty of care that they must respect in the countries they operate to prevent oil spills and other unintentional acts of pollution. A verdict that would hold them accountable for the greenhouse gas emissions caused by the burning of fossil fuels they have extracted would be a major victory for environmentalists, who have increasingly turned to the courts for reform. According to the climatecasechart.com database, at the last count, there were about 1,700 cases of climate change targeted at governments and businesses.
“It is certainly a very important case,” said Eric De Brabandere, a professor of international conflict resolution at Leiden University in the Netherlands. “Not only is it directly targeting such a large oil company, but it is also indirectly attacking the entire oil extraction industry.”
Shell acknowledges that it has a role to play in the fight against climate change and says it is doing so, but that it is best achieved through cooperation rather than legal action.
“Dealing with climate change is a huge challenge and requires a global, collaborative approach,” Shell legal director Donny Ching said at the company’s annual meeting last week. “I don’t think litigation helps us.”
Milieudefensie gathered 17,000 people to sign as plaintiffs in its complaint, which it says is “the first time a court has been asked to order a polluting transnational corporation to issue less CO₂ to save the climate.”
“Judges around the world are facing cases of climate change and are looking for other judges to get benchmarks,” said Michael Burger, executive director of the Columbia Law School’s Sabin Climate Law Center.
Recent decisions have not gone the way of Shell in both countries where the Anglo-Dutch company is listed jointly. Thousands of Nigerians can sue Shell in London for environmental damage to the West African nation, the UK’s highest court said in February. A month earlier, a Dutch court ordered Shell’s Nigerian unit to compensate locals for oil spills 13 years ago in a case also filed by Milieudefensie.
New York City suffered a setback last month in its effort to get Shell, Exxon Mobil Corp., BP Plc and other energy companies to help cover the public costs of fighting climate change, as a court of federal appeal ruled that the global problem demands a policy rather than a legal action.
The liability of a corporation for violating the non-signatory Paris Agreement may not be compatible with international law. Although the case is being heard in The Hague, the seat of the International Court of Justice and the International Criminal Court, it is being held under Dutch law in a local court of first instance.
“The proof will be: to what extent Shell has an obligation to reduce climate change, and that’s not a fact,” De Brabandere said. “International law does not really apply to companies, but to governments which then have a duty to apply them to companies.”
A Dutch environmental group successfully sued the Dutch government in 2015, pushing it to reduce greenhouse gas emissions. The Dutch Supreme Court upheld the decision in 2019 and said “the state is obliged to do its part”.
Last week, the International Energy Agency put the spotlight back on energy companies, telling them to stop developing new oil, gas and coal fields today or face a dangerous rise in global temperatures.
“Fossil fuel extraction days are numbered and traditional oil exploration companies will have to quickly switch to green alternatives,” said Angus Walker, a partner at London-based firm BDB Pitmans. “Shell may have to read the writing on the wall and catch up, whether or not he wins this case.”
Other large oil companies clash Wednesday. Activist investor Engine No. 1 wants to replace a third of Exxon Mobil’s board at the annual meeting to try to force a climate-friendly review of the world’s largest oil exporter. American producer No. 2 Chevron Corp. will face advocates for its goals at the annual meeting on the same day.