Eleven of Shell's board members are being sued over allegedly mismanaging climate risks, intensifying scrutiny of big oil firms over their efforts to stem global warming.
Environmental law firm and activist investor ClientEarth filed the legal claims in England’s high court on Wednesday, claiming Shell’s board was failing to implement policies in line with the 2015 Paris Agreement set at limiting global temperature rises to 1.5C.
“Shell’s board has acknowledged that the energy transition creates material risks to its business,” but “is failing to meet its statutory duties to manage those risks,” said Will Hooker, a partner at Pallas, which is working with ClientEarth.
Shell responded by saying it did “not accept” the allegations and that its directors had set emissions targets aligned with their legal duties.
This week, Shell won a high court ruling for Greenpeace protestors to leave one of its North Sea rigs while also discovering potentially the largest natural gas deposit in the area in a decade.
Experts have warned that firms will struggle to meet emissions targets if the focus remains on oil and gas, which provided bumper profits last year, rather than committing to clean fuels.
Activists have also increasingly targeted big oil firms, alleging they not doing enough to reduce carbon emissions, including Chevron, ExxonMobil, TotalEnergies and BP.
In an update on Tuesday with its results, BP scaled back pledges to cut fossil fuel production.
Shell’s emissions are forecast to fall by just 5% by 2030, according to the Australian Centre for Corporate Responsibility, far below a net 45% reduction ordered by Dutch courts in 2021.
“If you scratch beneath the surface, the proportion of investment currently going to renewable energy is, relatively speaking, minuscule,” commented ClientEarth lawyer Paul Benson.
Shell spent US$3.5bn on renewable technologies in 2022, 15% of what it paid out on buybacks alone, which aimed to inflate its share price.
This has led to claims of greenwashing, including from Fossil Fuel Free Media director Jamie Henn, who suggested: “These companies aren’t serious about a clean energy transition.
"It’s mostly marketing and greenwashing, strategies that have gotten a tiny commitment here and then an empty promise there. They’re not adding up.”