Litigation as a means to push fossil fuel companies to change their climate policies and investments
On 4 April 2018, Friends of the Earth Netherlands (Milieudefensie) sent a notice of intent to sue to Shell, giving the company eight weeks to reply to demands to align its business activities with the Paris agreement, failing which the environmental NGO will file a climate lawsuit against Shell. On 22 May 2018, Shell rejected a resolution calling for stronger climate targets at its annual shareholders meeting. On 28 May 2018, Shell sent a reply to Milieudefensie's letter saying they would not address the demands contained therin, and detailing the group's climate policies. The NGO announced that they will begin legal action.
Why is the case unprecedented?
Laurie Van der Burg: This case is unprecedented because it is the first climate case that demands an oil and gas major to align its business model with the climate goals set out under the Paris Agreement.
This case is not about compensation for damage caused or future damage, it is about getting Shell to prevent further harm by changing its business model.
What has made this lawsuit possible? What is the legal argument/cause of action?
Laurie Van der Burg: In 2017 Shell and the majority of its shareholders have formally decided that it is not in their financial interest to align Shell’s business model with the Paris climate goals. Also, scientific findings in recent years show that Shell’s activities and products are the source of about 2% of all greenhouse gas emissions since the industrial revolution.
Roger Cox: By causing climate damage and undermining the Paris climate goals that aim to avoid dangerous climate change, Shell is violating its duty of care to prevent unacceptable and avoidable harm to individuals, society and the environment. This is unlawful in relation to the public interest that Milieudefensie is allowed to defend in court under Dutch law. Not taking preventive measures to avoid unnecessary and unacceptable harm can be challenged in Dutch court as hazardous negligence, a tortuous act under Dutch law (in Dutch: ‘onrechtmatige daad’).
What practical and legal challenges can be expected should the case proceed to court?
Roger Cox: First the court has to decide whether Milieudefensie and the co-plaintiffs have standing and whether the court has jurisdiction to decide on this case. We expect this to be the case. Then the court will have to judge whether Shell’s business model is unlawful. In deciding on this matter the court will have to consider whether Shell is acting negligently towards Milieudefensie, in light of all relevant facts and circumstances (including the relevant science and international treaties such as the Paris Agreement).
Laurie Van der Burg: Questions that will have to be addressed in court are many and include: 1) To what extent does Shell need to act if governments do not directly force Shell to act on climate change, and 2) To what extent will a change in business model by Shell contribute to mitigating climate change impacts.
What are the concrete demands to Shell? What is FoE hoping to trigger with this lawsuit?
Laurie Van der Burg: The concrete demands to Shell, as laid down in our notice of intent to sue are:
- That Shell aligns its business model and investments with the climate objectives of the Paris Agreement;
- That Shell phases out its oil and gas production and reduces the emissions of its energy products to net zero by 2050;
- That Shell comes to an agreement with Milieudefensie on implementation, interim targets and public accountability.
If Shell does not meet these demands, Milieudefensie will go to court.
Roger Cox: With this case FoE NL/Milieudefensie is hoping to create a precedent that raises the legal pressure on oil and gas companies worldwide to act on climate change and keep fossil fuels in the ground.
Laurie Van der Burg: We also hope that it will contribute to the societal debate on climate change and the role of the carbon majors in causing climate change and delaying action on climate change.
Can you elaborate on the first demand to Shell in the notice letter refering to the company’s “legal responsibility” to align its corporate strategy and investment decisions to climate objectives laid down in the Paris agreement?
Roger Cox: Dutch law places Shell under a legal obligation to respect human rights and to act responsibly, in accordance with the applicable duty of care standard enshrined in Dutch law. If Shell breaches these obligations, the company is guilty of unlawful conduct vis-á-vis parties (at risk of) suffering harm as a consequence. This may result in a liability to pay out compensation, but also in a court order requiring the company to cease the wrongful actions, in order to avoid or limit harm as much as possible. Milieudefensie is aiming for the latter. Duty of care enshrined in Dutch law is an open legal standard to be substantiated on the basis of the circumstances of the case at hand. The standard is determined, inter alia, on the basis of scientific findings and treaty provisions. This so-called consequential effect of treaty provisions and science on the elaboration of the duty of care norm is generally recognised in jurisprudence and legal literature. It is by this effect that treaty provisions and objectives of the Paris Agreement may determine what ought to constitute socially responsible behaviour on the part of Shell according to Dutch standards, even if Shell is not a party to the treaty.
Laurie Van der Burg: Article 2 of the Paris Agreement shows that there is global agreement that a warming of around 2C is dangerous to humanity. Because of this agreement, judges will have to take the well below 2C threshold as a starting point when defining what danger and consequential damages are unacceptable and constitute dangerous negligence. All this is explained in the English version of the notice letter we sent to Shell that you can download on our website.
How would an agreement btw FoE and Shell be implemented and monitored?
Laurie Van der Burg: To be perfectly honest, based on recent actions and statements by Shell, we do not think it likely that we come to an agreement and thus we expect that we will go to court. Recently released reports by Shell (Sky Scenario, Energy Transitions) and Shell’s recent rejection of the Follow This resolution, filed by green shareholders of Shell asking the company to set targets in line with the Paris Agreement, show that Shell and Friends of the Earth NL/Milieudefensie have very different views on what actions Shell should be taking to meet its legal obligation to prevent unacceptable and avoidable harm to individuals, society and the environment. In the unlikely case that we do come to an agreement, Milieudefensie will also come to an agreement with Shell on how it should be implemented and monitored.
What role can citizens have in this lawsuit? What is the value and meaning of adding one’s signature in support of a court case? Can public mobilization influence the court, or alternatively push companies to change behavior?
Laurie Van der Burg: Citizens have an important role in this lawsuit as their support shows that it is not just Milieudefensie/FoE NL who believes Shell needs to stop its climate wrecking behaviour.
In addition, by joining the case as co-plaintiffs, Dutch citizens have a chance to take climate justice in their own hands and get our lawyer to defend their interests in court.
Roger Cox: We do not believe that public mobilization can or should influence the courts, but a public debate on the topics related to our case is nevertheless important to raise awareness on the severeness of climate change and the history of climate deception by the fossil fuel industry. In addition, the public pressure can indeed raise the pressure on Shell and other fossil fuel companies to act even if we would not win the case.
Have you heard from Shell since sending the notice letter? How do you think Shell will react? Did you engage with the company prior to filing?
Roger Cox: Sending the notice letter can be seen as part of our efforts to engage with Shell. In it we have extended the invitation to Shell to sit down with us and discuss the content of the notice letter.
Shell has been given 8 weeks to respond. So far we have not yet received an official reply but I am sure we will.
Laurie Van der Burg: Shell has for now released a brief statement is response to our letter, saying: “The Shell Group has long recognised the climate challenge and the role of energy in enabling a decent quality of life, we strongly support the agreement in Paris to limit global warming to two degrees Celsius or less, but we believe climate change is a complex societal challenge that should be addressed through sound government policy and cultural change to drive low-carbon choices for businesses and consumers, not by the courts.” This reactions is the exact same reaction Shell released in response to the lawsuits in the US. Based on Shell’s recently published Sky Scenario and Energy Transition report and Shell’s rejection of the Follow This resolution we think it is highly unlikely that Shell is willing to meet our demands to avoid a lawsuit. This would mean that we will go to court to demand climate justice.
What impacts could the lawsuit have for corporate accountability and climate justice?
Laurie Van der Burg: If Milieudefensie wins this case that would be a major win for corporate accountability and climate justice. It would mean that Shell will need to adapt its business model to bring it in line with the Paris goals and reduce the greenhouse gas emissions of its energy products to 0 by 2050. It would also mean that Shell will have to wind-down its oil and gas production activities. This implies that Shell will no longer be able to continue to threaten the climate by spending tens of billions on oil and gas production a year.
Roger Cox: A win would create a clear signal that fossil fuel companies can no longer hide behind the argument that they are just meeting demand and do not have to change their business model nor take responsibility for climate change if governments do not force them to do so. Also such a verdict would create a historic precedent which can inspire people across the world to take climate justice into their own hands and hold fossil fuel companies accountable in the courts. This was also the effect of the Urgenda case, which I won in 2015 (the decision is currently under appeal) and which unleashed a wave of climate cases against states across the world (Belgium, Switzerland, Norway, United States).
Laurie Van der Burg: Such a verdict would also warn the boards, shareholders, accountants, banks and supervisors of fossil fuel companies, that they will have to take liability for climate change into account when making investment decisions. If not, they might even face liability claims themselves for not taking the Paris climate goal into account.