‘Legal first’ as environment lawyers sue Shell board for failure to divest from fossil fuels

Legal firm ClientEarth announced today (9 February) that its lawyers would seek the permission of the UK’s high court to pursue a claim against Shell’s board on the grounds it was failing to secure the long term future of the company.

It will argue that the company’s board is breaching its legal duty to promote the success of the company and act with reasonable care and diligence by failing to manage climate risks.

The specialist law firm can bring the action because it has a token shareholding in Shell. It claimed it had the support of some of the company’s other institutional investors, including pension funds, which together hold 12 million shares.  

ClientEarth said Shell’s board could secure the company’s future by putting sufficient emissions reductions targets in place in the short and medium term.

It argued that Shell’s current plan for the energy transition would see the company tied to “projects and investments that are likely to become unprofitable” as the world turned to renewable energy.

A Shell spokesperson told Windpower Monthly: “We do not accept ClientEarth’s allegations. Our directors have complied with their legal duties and have, at all times, acted in the best interests of the company.

The spokesperson added: “We believe our climate targets are aligned with the more ambitious goal of the Paris Agreement: to limit the increase in the global average temperature to 1.5°C above pre-industrial levels. Our shareholders strongly support the progress we are making on our energy transition strategy, with 80% voting in favour of this strategy at our last AGM.”