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15 Nov 2023


Court fails to engage with key climate risk arguments in Shell directors case dismissal

The Court of Appeal has refused to hear ClientEarth’s... lawsuit against Shell’s Board of Directors – the first derivative action worldwide to seek to hold directors personally liable for climate risk mismanagement.

ClientEarth’s case argued that the Board had breached its legal obligations under company law by failing to properly manage climate risk facing Shell...

The High Court of England and Wales dismissed the lawsuit without considering the merits earlier this year, which ClientEarth appealed.

Responding to the decision, Paul Benson, ClientEarth senior lawyer, said: ”…The High Court confirmed that corporate directors have a duty to manage climate risk, which is significant in itself. While this claim did not pass procedural hurdles, the legal risk facing boards is still very real...”

ClientEarth brought the lawsuit in its capacity as a shareholder... The claim alleged Shell’s 11 directors had breached their legal duties under the Companies Act by failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement, contrary to their stated objectives.

Procedural objections raised by the Court included the notion that, as an environmental legal organisation, ClientEarth could not be acting in the best interests of the company. ClientEarth believes this to be a missed opportunity on the part of the judiciary to interpret the law in a way that takes the severity and urgency of climate risk into account…

ClientEarth’s lawsuit received the support of institutional investors with more than 12 million shares in the company, and more than half a trillion US dollars (£450 billion) in total assets under management…