On May 26th, climate litigators won a historic victory against Royal Dutch Shell in The Hague District Court over the oil and gas giant’s contribution to climate change.

Their challenge, filed in 2019 by Friends of the Earth Netherlands, other NGOs and 17,379 Dutch citizens, alleged that Shell was in breach of its duty of care under the Dutch Civil Code, informed by its human rights responsibilities, by contributing dangerously to climate change.

In a historic judgment, the Court agreed. Shell has been ordered to slash its net carbon dioxide emissions by 45% by 2030, in line with the global emissions pathway for meeting the 1.5°C temperature limit set out in the Paris Agreement...

This is a major win in itself, but the wider victory is the judgment’s reach beyond Shell and its fossil fuels peers: the legal implications are relevant to the business plans of all high-emitting companies, along with their investors, financiers, and advisers...

ClientEarth lawyers give six reasons why:

1.‘Net Zero means Net Zero’ 

Judges found that the climate ‘ambitions’ and strategy previously set out by Shell disregarded its legal responsibilities because they fell way short of the broad international consensus on what is needed to limit climate impacts on human rights.

By grounding its decision on the science underpinning net zero goals, the Dutch court has set a new corporate climate action benchmark.

Litigation risk – and the market, reputational and strategic risks relating to net zero transition – has now become very present for companies that purport to be addressing climate change, while failing to align with a 1.5°C future...

2.‘Risk to you, impact on me’

Ultimately, the court found that Shell’s inadequate climate policy constituted a breach of its legal duty of care towards Dutch citizens...

3.‘Whole business approach’ 

As a matter of Dutch law – itself informed by international standards and laws – fossil fuel producers and sellers have a legal obligation to set adequate targets for emissions reduction, which includes ultimately changing their product offerings to reduce end-use emissions...

4.‘Companies and investors lagging behind’ 

High-profile investor engagement has been one of the driving forces behind companies increasing their climate ambition, but strategies and action still lag behind social expectations and scientific developments.

The court’s decision has forced Shell to catch up, to move faster than its existing commitments and those of its competitors. Investors need to move rapidly to keep pace, or risk not only their clients’ capital, but also their engagement efforts becoming obsolete...

5.‘Costs of inaction’ ...

6.‘Shrinking room for manoeuvre’...