Shell court ruling ‘breaks new ground’ in corporate responsibility

Green Party spokesperson and former MEP Molly Scott Cato speaks to Green World about the significance of the recent court ruling in the Netherlands that will see Shell obliged to cut its carbon emissions by 45 per cent by 2030.

Shell HQ

Royal Dutch Shell building, Mr. Documents Uploader (CC BY-SA 4.0)

Molly Scott Cato

What’s your reaction to the court ruling in the Netherlands?

This is a very exciting ruling because it breaks new ground in requiring companies to act in a responsible way in this climate emergency. What is especially encouraging is that the ruling does not relate to any particular previous legal undertaking or contract by Shell but is based on the 'unwritten standard of care' that the court considers the company is bound by and which it 'has interpreted based on the facts, widespread consensus and internationally accepted standards'. The court also made reference to Shell's corporate policy, suggesting that companies will no longer be able to make greenwash statements in the documentation and then fail to live up to it in their practice. This is a precedent meaning that in future courts can hold them liable for sustainability standards they have promised.

Shell has previously set out ‘carbon neutral plans’ for itself. Do you have any thoughts on whether this ruling will be far-reaching enough? 

The court case makes it clear that, at least for the Dutch courts, global climate agreements can overrule carbon plans drawn up by individual companies. The judge ruled that Shell was bound by the Paris Agreement, so potentially this could mean that all global companies could face similar legal rulings about the need for them to change their practices to stay within Paris targets, which effectively means to stay within 1.5 degree of warning. She also ruled that 'the interest served with the reduction obligation outweighs the Shell group’s commercial interest'.

What actions do you anticipate big polluting firms will take in response to this ruling? 

Some of the law used to require the 45 per cent reductions by Shell was specific Dutch law, namely article 6:162 of the Dutch civil code but the judgement also relied on articles 2 and 8 of the European Convention on Human Rights – the right to life and the right to family life – that all European companies are subject to and that we are still party to in the UK after Brexit and could be used in any case against a corporation headquartered in the UK.

Most corporations have already understood that politicians are serious about the climate emergency and they are planning rapid CO2 reductions. However, this court ruling is likely to increase the pressure for more urgent action and to strengthen the hand of those inside corporations who are driving the pace of change. And it signals to the big polluters who were hoping to game the system or play a chicken-game with regulators that they could face costly legal action unless they begin to act responsibly.

What is required on the part of governments and/or the justice system to ensure polluting businesses extracting resources (such as gas and oil) are working to decarbonise?

We have this ruling because Dutch Friends of the Earth tested the law by taking a case. This sets a precedent that other campaign groups across the world can follow with any company that is failing to take action commensurate with the climate emergency. As Roger Cox, the lawyer for Milieudefensie, said, these other groups should 'pick up the gauntlet' and follow their example of using the courts to enforce climate responsibility on corporations.