The case’s central question is whether Shell has a private law duty of care to reduce 45% of its GHG emissions by 2030 compared to 2019. The Court of First Instance had indeed imposed this injunction. However, on appeal, the court says: Shell has an obligation to do her part against climate change which is based on the indirect horizontal effect of human rights, but this cannot be translated into a 45% target.

The court has two reasons for this: First, it reasons that it cannot apply a global target to an individual company; Second, such an order would not be effective. The case will likely be appealed to the Supreme Court. I think the following four points might be brought forward by Milieudefensie:

On the issue of the specific percentage

1. The Court of Appeal says that experts disagree on how much the oil and gas sectors should reduce – these are different percentages than what is required for the global average. Why did the Court not go for a minimum? After all, everyone, including the Court, agree that Shell must do something. The judgment includes tables with various possible percentages, none of which are zero.

1. In the context of searching for a possible minimum, the Court notes that the principle of Common but Differentiated Responsibilities is too general to inform what is equitable for Shell to do. At the same time, the relevant provision Article 6:162 DCC is highly normative, speaking of ‘maatschappelijke betamelijkheid’, i.e. what is desirable/deeming in society. Some pushback on this issue of climate justice read into the civil code seems likely. Why should Shell do less than what is required for a global average? The Court reasons that, solely since gas is less carbon-intensive than coal, the global average cannot be applied to Shell. Yet nothing in the judgment seems to indicate that Shell proved that it in fact does only sell gas to former coal-users. Even if it had, it would have been possible for the Court to account for such avoided emissions (colloquially known as “scope 4”) in a slightly altered injunction.

On the issue of effectiveness

1. Shell basically does two things: 1) producing fossil fuels; 2) trading in fossil fuels produced by others. The Court of Appeal interprets the 45% order as meaning that Shell can only cut in its trading, resulting in other traders stepping in, which would undermine the effectiveness of the order. Milieudefensie seems to have challenged this not convingly to the Court of Appeal, arguing that even this way to live up to the order would be effective.

Interestingly, however, the Court of First Instance imposed a ‘significant best efforts obligation’ on Shell to take necessary steps to stop, prevent and use its influence to limit scope 3 emissions ‘as much as possible’. I am curious how the Supreme Court interprets ‘significant best efforts obligation’ in the context of the energy transition: can one fulfill it by simply removing oneself from the value chain or is more effort required, for instance actively moving towards green energy or also cutting in the production side of the business? If it is true that merely stopping to sell is not effective at all, and that this is known from the outset, it seems that taking such a route can hardly be seen as one’s “significant best effort” but rather as an option of last resort if other efforts have already proved fruitless.

1. Lastly, it is likely that there will be debate on the extent to which the issue of effectiveness would undermine Milieudefensie’s ‘interest’ (voldoende belang) in the case. This interest is also of a principled nature. The court acknowledges that climate change does and will harm human rights. In this light, the Supreme Court dismissed a comparable effectiveness argument brought forward by the State of the Netherlands in the Urgenda case. The provision on sufficient interest is usually tested only marginally.

Milieudefensie has not yet decided whether it will take the case to the Supreme Court, though its lawyer said in a Dutch newpaper that he saw some possibilities for this, including an alleged violation of the right to an effective remedy. In the meantime, however, Milieudefensie has announced to continue with its case against the Dutch bank ING, which builds largely on the Court of First Instance's reasoning in Shell. In short, the last word has not yet been said on climate obligations for corporations in Dutch private law.

The judgement: https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:GHDHA:2024:2100

- Laura Burgers, assistant professor at the University of Amsterdam.
The above is an elaboration of an earlier post on LinkedIn