Taking Shell to court, demanding business models' alignment with climate targets
Within our interview series "right.questions" right. based on science asked Laurie van der Burg and Freek Bersch from Milieudefensie (Friends of the Earth Netherlands) to share their experience in preparing a lawsuit against the energy company Shell; based on their substantial contribution to climate change and the lack of alignment of Shell's business model with climate targets. In order to delve deeper into this issue, right. based on science's Legal Analyst Marcela Scarpellini interviewed Laurie and Freek.
Do you see climate litigation against companies increasing up to a point that they become corporate material risks in the near future?
It is quite hard to predict but we hope it will, since one of the main reasons we are carrying out this case is to have a material impact on companies' decision making process. Companies in such a position become quite uncomfortable over the possibility that a judge will have a ruling on how they should operate their business, and in attempting to keep control over their own business they would ideally and preemptively decide to call the shots on how the company is to be managed before having a judge mingling in their affairs via specific verdicts. And as evidence against individual companies' contribution to climate change becomes stronger, the possibility for judges to make potentially detrimental decisions could increase.
It is also important to signal that at this point climate litigation is only one source of pressure for companies to get serious and more in line with their climate commitments, with other sources such as shareholder's pressure and engagement and political campaigns increasing considerably, leading to possible material impacts on companies that might force them to change due course.
After the court's ruling confirmation in the Urgenda Case dealing with efforts to curtail emissions at a country level, what do you find will be the precedent to have a larger impact on individual companies? Specifically, regarding Shell, what is the most compelling admission in the Urgenda case that you intend to use for the Shell Case?
There are several arguments of the Urgenda Case that we are using for this claim against Shell. We are turning to Human Rights arguments since in the Urgenda Case the Court agreed that in not doing enough to prevent climate change, Human Rights could be infringed upon.
"Duty of Care is one of our central arguments, ..."
Duty of Care is one of our central arguments. In order for it to be accepted the judge would have to agree that the Duty of Care expected to be exercised by a company must be understood equally as to how it is understood by the State. In the Netherlands, the Duty of Care is an open norm, which means that what is to be protected by it might evolve with time in order to reflect aspects that might need protection in certain time and under certain conditions. Considering that climate change is an issue of huge magnitude, the Court could interpret that the standard of the Duty of Care should be interpreted in order to take account of climate impact in regards to a company's duty to protect the environment.
We are also basing our claim on the existence of the precautionary principle, which was called for in Urgenda. Having evidence that Shell has vast knowledge of the impact of the damage their activities have, they are responsible to act based on what they know and even if not understanding each of the consequences of their activities in every detail, they are obliged to act with caution when faced with insufficient information.
One of the main arguments of the Urgenda case, that we think is relevant to the Shell case, is the court's determination that contributions towards climate change need to be substantial enough to have an impact on climate change. Having the court determined that Netherlands' contribution is substantial enough to have an impact on climate change, we think the court will be of the same opinion in the present case, considering that Shell's contribution is far larger than that of the entire Dutch State. Bearing in mind that since its establishment in 1890, Shell has been one of the largest individual contributors to the increased amounts of CO2 in the atmosphere, with 1.8% of the total increase directly attributable to Shell's corporate activities. If the judge follows a similar reasoning in regards to what is to be deemed substantial, it is likely that the same determination will apply to Shell.
The claim against Shell is based on the existence of a legal Duty of Care. In this case who is the Duty of Care owed to? Is the Duty of Care owed to the country? Could you explain how this is to be understood?
Under Dutch law, Milieudefensie is allowed to defend the public interest in court. By causing climate damage and undermining the Paris climate goals Shell is violating its Duty of Care to prevent unacceptable and avoidable harm to Dutch citizens. The Duty of Care is thus owed to the general public.
Do you regard current scientific information/metrics as thorough enough to help judges make decisions regarding specific harms derived from energy companies' activities?
I think so, it is enough. We are trying to include as much recent scientific research and impacts to climate change effects specifically in relation to The Netherlands, as possible. We have good scientific information in connection to damages derived from fossil fuels represented by Shell's contribution to climate change and are considering it as substantial. The impact on health and economics is not hard to prove. We should be able to convince the judge. The Urgenda case was focused on the urgency of the case and this is why we are not being lazy on the collection of evidence. This is the most important part of the case.
Would this claim be subject to reconsideration, on your behalf, should Shell decide to invest the same amount of money in renewable as in conventional fuels?
No, it would not. It does not matter what the ratio is, but what matters and what the claim is based on is on their respect of the Paris Agreement, which in our view means staying within the carbon budget and leaving the stuff in the ground. Of course, we recognize that investing in renewables facilitates society's transition into the right direction and at the end of the day, the more investment is done in renewables the easier it might be to get away from fossil fuels. But, also at the end of the day what determines temperature increases is the net output of greenhouse gases and not the amount of disposable wind and solar energy.
In the event that companies are, in the near future, allowed to continue emitting and exploiting new reserves, do you see it likely that courts could oblige big emitters to pay contributions towards future possible damages (some sort of adaptation tax)?
Not sure if it is likely to happen, but it is not a solution to the problem. If it were to happen, it would not solve anything. It is about how to reduce emissions, so earth systems stay within their limits. Throwing money to the problem is not a solution considering that the planet cannot ingest money in order to catalyze larger amounts of CO2 at faster rates.
"The problem with Shell's Sky scenario is that they are trying to make us believe this is a way that the world would evolve, failing to take into account their role in it, in shifting the direction."
Do you see scenario analysis, if used appropriately, e.g. in line with TCFD recommendations, as a tool that companies can use to justify and explain their rationale behind their business decisions? And get away with it in court?
I would hope not, because if you look at Shell's Sky scenario, it is trying to tell us that Shell foresees an energy transition taking place until 2050, but is dependent on complex factors that cannot all be controlled by Shell. The problem with Shell's Sky scenario is that they are trying to make us believe this is a way that the world would evolve, failing to take into account their role in it, in shifting the direction. They claim that it is not possible to stop producing fossil fuels since demand is to rise, but they neglect to take their agency into account when configuring the scenario. If you remember what Maarten Wetselaar -Shell's Integrated Gas & New Energies Director- said in a recent speech: that they had to ruthlessly look for new markets for gas, you can see that scenario analysis is being used as a tool for proving why certain business decisions make sense and should be allowed. But when used in combination with activities such as lobby investments, handouts to governments and institutions in order to create markets that will demand your products, scenario analysis becomes a tool to justify a future that a company is helping design, a frame for covering up their own agenda and not a tool for envisioning different futures, which is the main purpose of scenarios.
What is the relationship you see between Shell's corporate behavior contributing to Human Rights' violations and its obligation to exercise the Duty of Care in relation to its corporate policy and subscribed commitments?
The Duty of Care standard is an open legal standard enshrined in Dutch law. The Duty of Care standard that applies in a particular situation is determined on a case by case basis, based on relevant scientific findings and treaty provisions. The Duty of Care law prescribes that Shell is not allowed to cause serious, avoidable harm. Even though Shell is not a party to the Paris Agreement, the Paris Agreement helps us to define what is considered a dangerous level of global warming, and thus, indirectly, is relevant to this case. Similarly, the likelihood of Human Rights' breaches in case the harm (dangerous climate change) materializes (which of course is already the case) also helps us to understand whether we can speak of significant harm and determines the level of precaution that should be taken. Shell is not a signatory to the UN Human Rights Declaration or the ECHR, but it has signed the UN Guiding Principles and the OECD Guidelines on Multinational Enterprises, which prescribe that businesses ought to respect Human Rights. According to us, knowingly and willingly contributing to climate change-related Human Rights' breaches is in violation with Shell's commitment to respecting Human Rights.
"Measuring the contribution of a single company to climate change. I think it is highly important and is what our basic demand is about, ..."
In the case against Shell, the letter addressed to it claims that Shell is evidently contravening the Paris Agreement by continuing to exploit and burn oil. Would it make a difference if you could demonstrate how much or in what amount Shell is contravening the Agreement?
I absolutely think it is relevant and would be very helpful. If I understand correctly this is what you guys (right. based on science) work on? Measuring the contribution of a single company to climate change. I think it is highly important and is what our basic demand is about, about compliance with the Paris Agreement. So quantifying the alignment or deviation with the target would help judges evaluate the fairness or lack of fairness of companies targets and would also allow judicial rulings to contribute to the problem in real, measurable terms. This is yet not yet part of the summons.
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Freek Bersch is currently working as Campaign Lead Economic Justice at Miliedefensie (Friends of the Earth Netherlands).
Laurie van der Burg is a postgraduate with a interdisciplinary, environment-focused background and experience in research, writing, project management, and campaigning. Passionate about mitigating climate change. Currently working as a Campaigner and Researcher at Miliedefensie (Friends of the Earth Netherlands).
Marcela Scarpellini studied law at the Universidad Católica Andrés Bello in Caracas (Venezuela) and studied with an LL.M. at the University of Stockholm (Sweden) in the field of environmental law. Marcela is in charge of the legal aspects regarding 2°C-compatibility within right.