The Office for Environmental Protection (OEP), the government’s own environmental watchdog, has confirmed that the government may have broken environmental law by the watering down of critical regulations on the pollution of rivers in England.
The disclosure was made in response to a legal complaint made by ClientEarth and the Worldwide Fund for Nature (WWF) in November 2022 against the Environmental Agency for its failure to monitor and enforce environmental protections on nitrogen pollution.
The complaint was based on Freedom of Information (FOI) requests submitted by WWF and ClientEarth. The FOIs revealed that between January 2020 to December 2021 the Environment Agency conducted 2,213 inspections of three key agricultural regulations, identifying breaches in almost half of farms. However, only one case was issued with a civil sanction.
According to ClientEarth and WWF, these inspections represented just 2 percent of farms each year, suggesting that the Environment Agency has “little idea of the scale of law breaking taking place and of the damage being currently done to the environment.”
Given the high levels of nitrogen pollution in England, WWF and ClientEarth accused the Environment Agency of “an unlawful abdication of its statutory responsibilities.”
In response to the WWF and ClientEarth’s complaint, the OEP agreed that the Environment Agency had potentially breached environmental law by failing to adequately assess environmental impacts on protected conservation sites before allowing farmers to exceed manure spreading limits. English rivers are particularly at risk of nitrogen-related pollution, with over half the country classified as vulnerable to nitrogen run-off.
The entrance to the Royal Courts of Justice in London, which houses the UK High Court. Credit: Derived from the original by Seth Anderson, CC BY-NC-SA 2.0
Shell’s board of directors officially has been served with a world-first lawsuit aiming to hold its corporate directors personally liable for alleged mismanagement of climate risk. The lawsuit, filed Thursday by UK-based environmental law organization ClientEarth, contends that Shell’s strategy to address climate change and manage the energy transition fails to align with the objectives of the Paris Agreement and leaves the company in a vulnerable position as society shifts away from fossil fuels.
ClientEarth alleges that inadequate climate strategy by Shell and improper management by the board amounts to violations under the UK Companies Act. ClientEarth, itself a token shareholder in Shell, filed its case in the High Court of England and Wales in London and is suing the company’s 11 directors. Institutional investors with collective holdings of over 12 million shares in Shell are supporting the legal action, which comes on the heels of Shell reporting a record $40 billion in profits in 2022.
“Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term,” ClientEarth senior lawyer Paul Benson said. “The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the Board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success — despite the Board’s legal duty to manage those risks.”
This is the first ever case targeting a company’s board over its handling of climate risk and alleged failure to prepare for the energy transition. As DeSmog previously reported, it is likely just the beginning of such litigation against corporate directors.
Climate Litigation Piling up Against Shell
ClientEarth initiated this new lawsuit last year when it gave notice to Shell’s board of its intention to sue and is the latest in a string of legal actions seeking to hold the oil major accountable for its alleged climate and environmental misdeeds. Earlier this month the environmental and corporate accountability group Global Witness lodged a greenwashing complaint with the U.S. Securities and Exchange Commission claiming that Shell was misleading investors and authorities on its renewable energy spending.
That complaint came just days after more than 11,300 individuals and 17 institutions from the heavily polluted Nigerian community of Ogale sued Shell in the UK High Court, adding to existing legal claims filed in 2015 by 2,335 residents of the Nigerian community of Bille — bringing the total to over 13,000 people from the Niger Delta taking Shell to court. These claims are demanding damages from oil spills that have devastated the local communities and their environment.
And in May 2021 the Dutch chapter of Friends of the Earth, Milieudefensie, won a landmark climate court case against Shell claiming the company’s business was not aligned with the Paris Agreement’s goals and human rights obligations. The court ordered Shell to slash emissions across its entire supply chain by 45 percent by 2030. Shell is appealing the verdict and appears to be ignoring its duty to comply, as the company has publicly committed to reducing only part of its supply chain emissions — not those released from using their products — by 2030 while continuing to invest in new oil and gas development.
According to ClientEarth, Shell’s board “has since rebuffed parts of the verdict, indicating that it is unreasonable and essentially incompatible with Shell’s business.” The case against Shell’s board of directors aims to compel the company to comply with the Dutch court verdict and with its legal obligations under the UK Companies Act. Additionally, Shell faces a raft of climate lawsuits in the U.S. brought by states and municipalities over its alleged deception and efforts to derail meaningful climate action despite advanced knowledge of climate risks decades ago.
In response to the new lawsuit targeting the company’s directors, Shell denied that it has acted improperly and said it would oppose ClientEarth’s efforts to pursue its claim through the court.
“We do not accept ClientEarth’s allegations. Our directors have complied with their legal duties and have, at all times, acted in the best interests of the company,” a Shell spokesperson said in an emailed statement.
“We believe our climate targets are aligned with the more ambitious goal of the Paris Agreement: to limit the increase in the global average temperature to 1.5°C above pre-industrial levels,” the spokesperson continued. “Our shareholders strongly support the progress we are making on our energy transition strategy, with 80% voting in favour of this strategy at our last Annual General Meeting. ClientEarth’s attempt, by means of a derivative claim, to overturn the board’s policy as approved by our shareholders has no merit.”
Telling a Different Story Inside Shell
While Shell claims to support the Paris Agreement and says it will achieve net zero emissions by 2050, internal corporate communications obtained through subpoena by a U.S. congressional committee suggest that the company has no intention to genuinely pursue these objectives.
In an internal company slide deck on messaging around the energy transition, Shell clarifies that the net zero emissions goal is a “collective” ambition and challenge for society and is not a Shell goal or target. The company states that it “has no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years.”
Shell further advised its employees to refrain from suggesting the company would take climate action that risked its fundamental business strategy, writing: “Please do not give the impression that Shell is willing to reduce carbon dioxide emissions to levels that do not make business sense.”
In ClientEarth’s view, the oil giant’s failure to advance its own transition to net zero will only harm the company in the long run. “Long term, it is in the best interests of the company, its employees and its shareholders — as well as the planet — for Shell to reduce its emissions harder and faster than the Board is currently planning,” Benson said.
The High Court will next decide if it grants permission for ClientEarth’s case to proceed.
Original article by Dana Drugmand republished from DeSmog according to its republishing agreement.
“The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the board is persisting with a transition strategy that is fundamentally flawed.”
A group of activist investors sued Shell’s board of directors on Wednesday for failing to “deliver the reduction in emissions that is needed to keep global climate goals within reach.”
ClientEarth, an environmental law charity and institutional investor in Shell, described the case as the first time a company board is facing a shareholder lawsuit for inadequately preparing to transition away from fossil fuels.
“Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term,” Paul Benson, a senior lawyer at ClientEarth, said in a statement. “The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success—despite the board’s legal duty to manage those risks.”
The lawsuit, which is backed by large institutional investors that collectively hold 12 million shares of Shell, alleges that the oil giant’s 11 directors are violating the Companies Act, a U.K. law that requires corporate boards to “promote the success” of the business.
By failing to sufficiently manage climate risks and implement “an energy transition strategy that aligns with the Paris Agreement,” Shell is flouting its legal obligations, the lawsuit contends.
“Shell’s Board on the other hand maintains that its ‘Energy Transition Strategy’—including its plan to be a net-zero emissions business by 2050—is consistent with the 1.5°C temperature goal of the Paris Agreement,” ClientEarth notes. “It also claims that its plan to halve emissions from its global operations by 2030 is ‘industry-leading,’ however this covers less than 10% of its overall emissions.”
“It is in the best interests of the company, its employees, and its shareholders—as well as the planet—for Shell to reduce its emissions harder and faster than the board is currently planning.”
ClientEarth and its backers are asking the High Court of Justice in London to force Shell’s board to “adopt a strategy to manage climate risk in line with its duties under the Companies Act” and in compliance with a 2021 Dutch court ruling ordering the oil giant to cut its total carbon emissions by 45% by 2030.
“Long term, it is in the best interests of the company, its employees, and its shareholders—as well as the planet—for Shell to reduce its emissions harder and faster than the board is currently planning,” Benson said.
Jacqueline Amy Jackson, the head of responsible investment at London CIV—one of the institutional backers of ClientEarth’s lawsuit—said that “we do not believe the board has adopted a reasonable or effective strategy to manage the risks associated with climate change affecting Shell.”
“In our view,” Jackson added, “a board of directors of a high-emitting company has a fiduciary duty to manage climate risk, and in so doing, consider the impacts of its decisions on climate change, and to reduce its contribution to it.”
Shell said in response that ClientEarth’s suit “has no merit.”
ClientEarth filed its complaint a week after Shell announced that its profits doubled in 2022, surging to a record $40 billion as households across Europe and around the world struggled with high energy costs. The company said it returned $26 billion to shareholders last year through dividends and stock buybacks.
Earlier this month, the advocacy group Global Witness filed a complaint with the U.S. Securities and Exchange Commission accusing Shell of “lumping together some of its gas-related investments with its spending on renewables to inflate its overall investment in renewable sources of energy,” misleading investors and authorities.
“Shell’s so-called renewable and energy solutions category is pure fiction,” said Zorka Milin, a senior adviser at Global Witness. “The company is living in fantasy land if it thinks fossil gas has any place in the much-needed energy transition. Shell’s business model has always been, and continues to be, overwhelmingly based on climate-polluting fossil fuels.”
Shell is also facing lawsuits from nearly 14,000 Nigerians whose communities have been devastated by the company’s pollution and oil spills.
This is the second report this month to call for a ban on flaring in the next two years. A cross-party report by the House of Commons environmental audit committee made the same recommendation on 5 January.
Mr Skidmore was commissioned by the former prime minister, Liz Truss, to review UK proposals to reach net zero emissions by 2050.
Last year, the government accepted a ruling by the High Court that its net zero strategy was unlawful. The landmark judgement agreed with arguments by Friends of the Earth, ClientEarth and Good Law Project that the strategy failed to show how the UK’s legally-binding carbon budgets would be met.
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The review ran to 340 pages and had 129 recommendations.
It said flaring was responsible for 22% of carbon emissions on oil and gas fields. About 70% of oil and gas field emissions were from powering equipment on platforms, it said.
The offshore industry published a Methane Action Plan in 2021 to reduce emissions and flaring. This committed the industry to a 50% methane emission reduction by 2030, compared with 2018 levels. Shell has committed to zero routine flaring by 2025.
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Net zero: Tory MP warns government must take urgent action to meet climate goals
