Shell wins appeal against Dutch climate ruling to slash emissions

A Dutch court on Tuesday dismissed a landmark climate ruling against Shell, after the oil giant was ordered to drastically reduce its global carbon emissions back in 2021.

The outcome, which comes during the opening days of the COP29 climate summit in Azerbaijan, marks the latest twist in a precedent-setting case that could have far-reaching implications for the future of climate litigation.

The appeals court in The Hague said that while Shell is required to reduce its carbon emissions, it could not determine the extent of these cuts. The case against Shell, therefore, was dismissed entirely.

In May 2021, The Hague district court ruled that Shell must reduce its greenhouse gas emissions by 45% from 2019 levels by 2030.

The verdict, which came when Shell had its headquarters in The Hague, also said the company was responsible for all emissions across its value chain, including those from the products they sell — known as Scope 3 emissions.

It was the first time in history that a company was found to have been legally obliged to align its policies with the Paris Agreement, a framework which seeks to avoid the worst of what the climate crisis has in store by limiting the average global temperature increase to between 1.5 and 2 degrees Celsius.

The ruling was regarded as a watershed moment in the climate battle and sparked a wave of lawsuits against other fossil fuel companies.

The case was brought against Shell in 2019 by Milieudefensie, an environmental campaign group and the Dutch branch of Friends of the Earth, alongside six other bodies and more than 17,000 Dutch citizens.

An appeal against Tuesday’s outcome could still be brought before the Netherlands’ Supreme Court, although Milieudefensie has not said whether it plans to launch an appeal.

“The court of appeal denied the claims of Milieudefensie because the court was unable to establish that the social standard of care entails an obligation for Shell to reduce its CO2 emissions by 45%, or some other percentage,” the court said in a statement.

What’s more, the court said it deemed an obligation for Shell to sharply reduce its Scope 3 emissions by a particular percentage as “ineffective” because other companies could step in to take over that trade and “this would consequently not result in a reduction in CO2 emissions.”

Shell welcomed the decision to overturn the 2021 verdict.

“We are pleased with the court’s decision, which we believe is the right one for the global energy transition, the Netherlands and our company,” Shell CEO Wael Sawan said in a statement.

“Our target to become a net-zero emissions energy business by 2050 remains at the heart of Shell’s strategy and is transforming our business,” he added.

Shares of London-listed Shell were trading slightly lower on the news. The stock price is down around 1% year-to-date.

Shell appealed the 2021 decision and subsequently moved its headquarters to the U.K., a relocation that was criticized for being partly motivated by the courtroom defeat. The Hague district court ruling had only been legally binding in the Netherlands.

In appeal hearings held earlier this year, the British oil major argued that the case had no legal basis.

Shell’s lawyers said demands for companies to curb greenhouse gas emissions could not be made by courts, but only by governments, Reuters reported. The company also said the court ruling would force it to shrink its business without any benefit to the fight against climate change.

“This ruling affects us deeply,” Donald Pols, director of Milieudefensie, said in a statement.

“It is a setback for us, the climate movement and millions of people around the world who are worried. But anyone who knows us a little knows that we never give up,” Pols said.

“It is encouraging that the judge determines that Shell is responsible for reducing emissions and that companies must also respect human rights. It is a marathon and not a sprint and the race is not yet run,” he added.

The burning of coal, oil and gas is by far the largest contributor to the climate crisis, accounting for more than three-quarters of global greenhouse gas emissions.

“The judgment will be a disappointment for climate campaigners who have celebrated a number of high profile climate successes in the courts in the past few years,” Tom Cummins, partner at global law firm Ashurst, said in a statement.

“Climate campaigners will also point to the court’s finding that companies like Shell are subject to the obligation to limit emissions to counter climate change, and have their own responsibility in achieving the targets of the 2015 Paris Agreement,” Cummins said.

“That finding is likely to be relied upon in similar litigation in other jurisdictions.”