ESG Enforcement Tracker

Key facts:

On 26 May 2021, the Hague District Court ordered RDS to reduce the Shell Group’s global carbon emissions by net 45% by the end of 2030, compared to its 2019 levels, through the group’s corporate policy. This obligation extends to the Shell Group’s “entire energy portfolio and to the aggregate volume of all emissions”.

The court decided that the obligation on the Shell Group to reduce emissions arises from the unwritten standard of care laid down in the Dutch Civil Code. This provides that acting in conflict with what is generally accepted according to unwritten law is unlawful. In order to assess the standard of care, the court interpreted the relevant facts and circumstances, the best available science on dangerous climate change and how to manage it, and widespread international consensus that human rights offer protections against dangerous climate change and that companies must respect human rights.

The court found that RDS was not presently in breach of its obligation to reduce its carbon emissions. However, there was an imminent risk of breach of this obligation. The court noted that, as one of the largest producers and suppliers of fossil fuels globally, the Shell Group’s CO₂ emissions (including those of its suppliers and consumers) exceed those of many countries including the Netherlands. As these emissions contribute to climate change and climate change causes serious human rights risks, the court found that the Shell Group must respect human rights.

The court made clear that RDS is in a position to set group policy and has complete freedom as to how to reduce the Shell Group’s emissions and that the sacrifices to be made by the Shell Group are outweighed by the interest in fighting climate change.

RDS filed a statement of appeal with the Dutch Court of Appeal in the Hague in March 2022.

On 12 November 2024, the Court of Appeal in The Hague issued its judgment in respect of RDS’s appeal. The Court of Appeal ruled that protection against dangerous climate change is a human right, and that the duty to mitigate against the effects of climate change is not solely the responsibility of governments and states. Instead, companies, including Shell, also have a responsibility to take measures to combat dangerous climate change. In particular, the court held that companies have an obligation to limit CO₂ emissions to combat dangerous climate change, even if that obligation is not explicitly laid down in public law regulations of the countries that they operate in.

However, the Court of Appeal overturned the District Court’s ruling by refusing to impose a specific emission reduction target for RDS, concluding that there was insufficient scientific consensus about a specific reduction percentage or pathway that an individual company such as RDS should adhere to. The court held that it was therefore not possible to impose on RDS a specific legal obligation to cut its emissions by 45% by 2030 as compared to 2019.

This decision may be appealed to the Dutch Supreme Court.