However, the appellate court said “fossil fuel consumption is largely responsible for creating the climate problem” and that oil and gas companies have a duty to curb emissions.
The Hague District Court on May 26, 2021, ruled in favor of a group of plaintiffs led by Friends of the Earth Netherlands (Milieudefensie). The lower court ordered Shell to limit the annual volumes of carbon dioxide released into the atmosphere by its business activities and energy-carrying products by at least 45 percent net by 2030 relative to the 2019 level.
In Tuesday’s decision, which comes as countries gather at COP29 in Azerbaijan, the Court of Appeal affirmed that European civil courts can be entreated to enforce states’ obligation to protect citizens from climate change but concluded there was no legal and scientific basis to impose a specific 45 percent reduction figure on Shell.
Shell has set targets of cutting Scope 1 and 2 emissions by 50 percent by the end of the decade compared to 2016 and customer emissions from the use of Shell’s oil products by 15 to 20 percent by 2030 relative to 2021.
Milieudefensie’s side acknowledged that Shell’s Scope 1 and 2 target corresponds to a 48 percent reduction of operational emissions by the end of 2030 relative to 2019, according to the appeal decision published on the Dutch judiciary’s website. However, the plaintiffs told the court “there is nevertheless an impending violation of a legal obligation because Shell has adjusted its policy before, and this target offers no guarantee of further or permanent emission reductions”, the court document stated.
The court ruled, “To assume the impending violation of a legal obligation alleged by Milieudefensie et al., the court would have to find that it is likely that Shell will not have reduced its scope 1 and 2 emissions by 45 percent by 2030, despite Shell’s concrete plans and the measures Shell has already taken to implement those plans”.
“Milieudefensie et al. have not provided sufficient arguments in support of that”, it added.
The court said it could not also ask Shell to make a Scope 3 target that aligns with the plaintiff’s demand for a 45 percent overall reduction. While the court’s position is that Shell should make an “appropriate contribution” to address adverse climate change, “that alone does not justify ignoring the specifics of Shell’s supply portfolio and ignoring the possibility… that an increase in Shell’s scope 3 emissions in the shorter term could, on balance, lead to globally lower emissions”, it said.
The court acknowledged there is a “broad consensus” that to meet the Paris Agreement’s aim of limiting the increase in global temperature to 1.5 degrees Celsius, “reduction pathways must be chosen in which CO2 emissions are reduced by a net 45 percent by the end of 2030 relative to at least 2019 and by 100 percent by 2050”.
“However, these reduction pathways involve a global reduction, which amounts to a net 45 percent. This means that there are sectors and companies in countries that need to reduce more and there are sectors and companies in countries that are required to reduce less.
“Unlike Milieudefensie et al. argue in these proceedings, the court cannot determine what specific reduction obligation applies to Shell”.
Extent of Laws
The Court of Appeal, however, took issue with Shell’s interpretation of a European Court of Human Rights (ECtHR) ruling about states’ level of discretion in fulfilling rights obligations.
“From this case law of the ECtHR, Shell has drawn the conclusion that civil courts should exercise restraint with regard to ‘managing climate change’, including in civil law relationships”, the court said. “However, the fact that the ECtHR grants states a (wide) margin of appreciation as to the means to be deployed to combat climate change does not imply that the civil courts would be unable to rule that the social standard of care entails that there is a concrete legal obligation on the part of Shell to combat climate change. After all, the assumption of that legal obligation may equally leave room in the assessment of the means necessary to fulfill the legal obligation. Moreover, this concerns the ECtHR's restraint in reviewing states’ policies.
“It does not follow from this case law that national courts must exercise the same restraint where the protection of fundamental rights contained in the ECHR is concerned”.
Industry Obligation
The court also said oil and gas companies have an obligation to help address adverse climate change even when the laws of countries where they operate do not explicitly say so.
“Addressing climate change is something that cannot wait”, it said. “To combat the danger posed by climate change, everyone has a responsibility. To fulfill that responsibility, the focus does not lie exclusively on states. Especially companies whose products have contributed to the creation of the climate problem and have it in their power to contribute to combating it are obliged to do so vis-à-vis other inhabitants of the earth, even when (public law) rules do not necessarily compel them to do so”.
‘Growing Demand for Energy’
Welcoming the decision, Shell said the world needs to meet “growing demand for energy while tackling the urgent challenge of climate change”.
“There has been significant progress in the transition to low-carbon energy where governments have introduced policies to encourage investment and drive changes in demand”, it said in an online statement.
“As Shell has stated previously, a court ruling would not reduce overall customer demand for products such as petrol and diesel for cars, or for gas to heat and power homes and businesses. It would do little to reduce emissions, as customers would take their business elsewhere”.
‘Bright Spots’
Milieudefensie said the appeal result was a “setback” for climate campaigners but highlighted that the decision brought “bright spots” that serve “important points of reference to build on in their legal battle against large polluting companies”.
"This is a ruling for the entire business community and not just for Shell”, Roger Cox, one of the plaintiffs’ lawyers, said in a group statement online. “The court makes it abundantly clear that not only countries, but also companies have a responsibility to reduce their emissions in line with the Paris Climate Agreement”.
“This judgment will change nothing about our eagerness to keep fighting”, Milieudefensie said.
The case was initiated 2018 by organizations Milieudefensie, Greenpeace, Waddenvereniging, ActionAid, BothENDS, Fossielvrij NL and Milieudefensie Jong, with support from over 17,000 people.
