Climate Justice at a Crossroads: Shell’s Case, Human Rights, and the Future of Corporate Climate Litigation

Introduction

In a recent turn of events, the appeal court reversed the landmark decision of the Dutch court ordering Shell, an oil and gas major, to reduce its carbon emissions and to demonstrate corporate responsibility in addressing climate change. The examination found an enticement and resulted in the annulment of the original judgment on November 12, 2024. While some consider the current situation a reversal, the authorized struggle has significant repercussions for climate law enforcement and the continuing efforts to keep companies accountable for their ecological changes.

This situation began in 2019, when Milieudefensie (the Dutch branch of Friends of the Globe) and over 17,000 other plaintiffs filed a lawsuit against Shell, arguing that the company was struggling to take appropriate action to reduce greenhouse gas emissions (GHG emissions). In 2021, the Hague District Court ruled in the case of Milieudefensie, ordering Shell to reduce its global carbon emissions by 45% by the end of 2030 compared to the 2019 period. This step was a bold one as it encompassed it all–Shell’s maintenance procedures, indirect emissions from energy consumption, and emissions from the use of its goods. The commanding officer based his findings on the observation that Shell had a duty of due diligence to protect Dutch citizens from the perilous climate crisis and that its policies lacked coordination with the Paris Agreement.

Current Scenario

Shell contested the 2021 ruling, and on 12 November 2024, the Hague Court of Appeal annulled the original decision. The appeals court acknowledged Shell’s “special responsibility” as a leading oil company to reduce emissions and affirmed that firms like Shell have obligations to safeguard human rights. However, the court was not convinced that imposing a specific legal target on Shell would effectively curb emissions from its customers. The court believed that if Shell decreased its fossil fuel output, other companies would merely step in to fill the void. Although the emission reduction target was overturned, the Court of Appeal did not fully absolve Shell, stating that it is reasonable to expect oil and gas companies to take into account the negative impacts of increasing fossil fuel supply when making production decisions.

To their reply and defence, Shell published this in their media release: “A court ruling would not reduce overall customer demand for products such as petrol and diesel for cars or for gas to heat and power homes and businesses. It would do little to reduce emissions, as customers would take their business elsewhere. We believe that smart policies from governments, along with investment and action across all sectors, will drive the progress towards net-zero emissions that we all want to see.” Looks like the play of words was enough to convince the court to overturn their previous judgment, which not only limited the exploitative advancements of Shell but also set firm grounds for further corporate climate litigation against other oil and fossil fuels giants.

Implications for climate change

The reversal of the original ruling carries important implications for climate change and the legal approaches used to address it. While the first decision was celebrated as a win for climate advocates, the appellate court’s ruling brings into question the effectiveness of holding individual companies accountable for their contributions to global emissions. Friends of the Earth activist Neele Boelens expressed his distress in a statement to Reuters: “To be honest, I was really disappointed. I was almost crying. At first, it looked really good for us, but then it just went downhill. It’s a setback for climate action. We will fight back, and we will come back strong.”

Before discussing the further implications and the human rights issues involved with this as a repercussion of the judgment, let’s first try to boil it down and look at what exactly it means for all the stakeholders involved.

Setback for Emission Reduction Targets

The court’s ruling undermines the case for enforcing specific emission reduction targets on companies, especially regarding Scope 3 emissions. The court pointed out the challenges in assigning responsibility for emissions resulting from the use of a company's products and the risk of carbon leakage if one company cuts back on production while others ramp up theirs.

Focus on Corporate Responsibility

Even though the court overturned the emission reduction target, it maintained that companies have a general duty of care to guard against the dangers of climate change. “Products from companies like Shell have caused the climate problem. These companies have a human rights obligation to everyone in the world to reduce their CO2 emissions,” Presiding Judge Carla Joustra said in a statement. This reinforces the notion that corporations are responsible for reducing emissions and lessening their environmental footprint.

Investment in New Fossil Fuel Fields

The court noted Shell's conflicting actions: pledging net-zero emissions by 2050 while simultaneously expanding its oil and gas operations. The court’s remark that Shell’s investments in new oil and gas fields might conflict with its duty of care opens the door for future legal challenges. This is in line with the scientific consensus that to keep global warming below 1.5°C, no new fossil fuel projects should be initiated.

Shell’s case and the over-arching human rights issue

The Shell climate litigation highlights important human rights issues, especially regarding the right to a healthy environment and the need to protect both current and future generations from the impacts of climate change. The initial ruling against Shell was based on the claim that the company’s greenhouse gas emissions significantly threatened these rights, especially for those living in the Netherlands. Judge Carla Joustra pointed out that safeguarding against global warming is a fundamental human right, which places an obligation on companies like Shell to cut back on their CO2 emissions. This view resonates with a growing international acknowledgment of the link between climate change and human rights, given that environmental harm disproportionately affects vulnerable communities, worsening existing inequalities.

Nonetheless, the appeal court’s decision to reverse the emissions reduction target raises concerns about how these rights can be enforced against corporations. While the court recognized Shell’s general responsibility to mitigate dangerous climate change, it was reluctant to impose specific requirements, expressing doubts about the effectiveness of such actions and the potential for unintended results. This situation highlights a conflict between holding businesses accountable and maintaining their operational freedom. Critics contend that the ruling favours economic interests over essential human rights, which could set a troubling precedent for future climate-related legal actions. Still, the affirmation of general responsibility for companies to decrease emissions lays the groundwork for future legal challenges based on human rights principles.

The Path Ahead for Climate Litigation

While the recent ruling represents a setback, the legal confrontation with Shell and other fossil fuel companies is not yet finished. The Court of Appeal’s decision opens up several possible paths for future climate litigation. The court’s decision to hold firm ground against increasing investments in oil and gas sets the stage for advancing corporate litigation against the giant corporations. Even in Shell’s case, the court was of the view that increasing investments in fossil fuels projects go against the general duty of care owed to the public at large and the principles of the Paris Agreement. 

To conclude, the Shell climate case underscores the intricacies and challenges of employing legal approaches to combat climate change. Even though the reversal of the emission reduction target is a major setback, the case has clarified key legal principles and paved the way for new legal actions. This is evident in the latest action taken by the climate activist group Friends of the Earth Netherlands by taking its court case against oil major Shell to the Netherlands Supreme Court. We can expect future climate lawsuits to increasingly target fossil fuel expansion, using due diligence laws and human rights obligations as legal grounds.