As our readers are well aware, climate change and stakeholder litigation is on a global uptrend as it has never been before. Whether claims are brought against governments or companies, whether these claims are accepted or dismissed, and whether they involve domestic or cross-border matters, there is already a plethora of precedents worldwide involving climate issues and stakeholder litigation, each playing their own part on the grand scheme of legal measures and instruments available for fighting global warming. However, only a handful of these precedents are as significant as the decision issued on May 26th, 2021, by the Hague District Court in Milieudefensie et. al. v. Royal Dutch Shell.
In summary, the Hague District Court has ordered Shell to reduce its CO2 emission levels by 45% by 2030, compared to 2019 levels. In this Blog Post, we provide an overview on this decision and on how it may be a game changer when it comes to climate change and stakeholder litigation.
The case was first opened in April 2019, when the environmental group Milieudefensie (Friends of the Earth – Netherlands) filed a class action lawsuit against Shell, alleging that the company’s contributions to climate change violated the duty of care established under Dutch law, as well as Shell’s human rights obligations.
The Court’s consideration of the duty of care is central to their ruling in favor of the plaintiffs. This duty involves an unwritten standard of care, which is a broad concept open to the court’s interpretation. Indeed, the ruling determined that, through the duty of care, Shell has an obligation to contribute to the prevention of dangerous climate change effects, which it can do by putting in place relevant corporate policies for the company as a whole.
The Court also determined that the right to life and the right to respect for family life were to be contemplated under the duty of care and, in light of the landmark 2019 Urgenda decision, climate change constitutes one of the most pressing threats to present and future generations. Based on such human rights issues, the Court decided in favor of Milieudefensie and required Shell to reduce the emissions of the Shell Group by 45% by 2030. Shell is free to determine the means to achieve this reduction, but the Court determined that the obligation is one of result. The court also determined that Shell has an obligation to influence its suppliers and consumers to also make efforts to reduce their greenhouse gas emissions on a best efforts basis.
Even though the decision is subject to appeal, it is the first-ever ruling to command a private company to comply with emissions reduction targets. The decision speaks volumes as to how fast climate litigation is evolving as, historically, these types of claims were only brought and successful against governments. This should embolden activists, NGOs and stakeholders in general, while also making courts around the world more comfortable in issuing similar decisions, further reinforcing the surge of climate and stakeholder litigation cases. What’s next remains to be seen, but corporations should be prepared as climate and stakeholder litigation are not expected to lose momentum anytime soon.