For the first time in the world, an oil company has been court-ordered to cut its contribution to the climate crisis. The decision on its own should lead to the prevention of hundreds of millions of tonnes of CO2 reaching the atmosphere, and the implications could be much bigger if courts elsewhere follow suit.
Royal Dutch Shell extracts and sells 665 million barrels of oil each year. Although it has never engaged in the funding of climate-change-denying groups on the scale of Exxon-Mobil or the Koch Brothers, it has a long record of more subtle discouragement of climate action. Nevertheless, Shell has an official target of “becoming a net-zero emissions energy business by 2050”.
Those currently on the board will likely be long retired by the time it comes to deliver, and this pledge may have been more than enough in many countries. However, courts in the Netherlands, have ordered their own government to adopt some of the fastest cuts to emissions in the world. Now they have done the same thing to Shell, with a ruling that by 2030 the company's emissions must be 45 percent below 2019 levels. Something about having a third of your country already below sea level probably focuses the mind on the importance of the oceans not rising too much.
Extracting and transporting all those fossil fuels make a large contribution to global heating on their own, but Shell's biggest impact is through Scope 3 emissions, the burning of products it sells to customers. The court ruling includes this, as well as the emissions of Shell's suppliers, so spinning off arms of the company responsible for the most emissions won't help. The decision also covers Shell's operations worldwide, not just in its home country (Shell HQ is in The Hague).
“Severe climate change has consequences for human rights, including the right to life,” Judge Jeanette Honee said. “And the court thinks that companies, among them Shell, have to respect those human rights.”
The seven environmental organizations that took the case to court are thrilled. "This is a turning point in history. This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris Climate Agreement," said Roger Cox of Friends of the Earth Netherlands in a statement.
The ruling can be appealed to a higher court, but while that occurs Shell faces pressure to act. Shell spokesperson Anna Arata agreed “Urgent action is needed on climate change," while highlighting the company's quite recent turn towards renewable energy and electric vehicle charging programs in a statement.
Theoretically, most of Shell's activities could simply be taken up by companies based in other countries, but Sara Shaw of Friends of the Earth International said: "Our hope is that this verdict will trigger a wave of climate litigation against big polluters, to force them to stop extracting and burning fossil fuels.”
Even if that doesn't succeed, some of these companies' shareholders may force action on their own. The New Yorker noted the same day as the decision was handed down 61 percent of Chevron shareholders voted to instruct the oil giant to cut Scope 3 emissions. The motion did not specify an amount or date, giving it little force, but sends a warning to the management who opposed it. Other climate change motions failed narrowly.
Meanwhile, at least two environmental candidates have been elected to Exxon's 12-member board on a platform of forcing change. The candidates were put up by hedge fund Engine No. 1, which seeks to leverage small investments in companies to make them more environmentally friendly. Although a minority, Engine 1's board members' presence may prevent repetitions of the secretive way Exxon sought to keep the world hooked on oil in the past.
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