
The Court of Appeal of The Hague has ruled on the appeal in the case between Milieudefensie and Shell. The court rejected the claim to reduce CO2 emissions. An important ruling because it crosses out the earlier 2021 ruling in which, for the first time worldwide, a court imposed a far-reaching reduction obligation on an individual company.
In this case, Milieudefensie and a number of other organizations claimed that Shell must reduce its CO2 emissions by 45% by 2030. This includes emissions from its suppliers and customers (scope 1, 2 and 3). Shell was said to be acting unlawfully, violating human rights and was obliged to reduce its CO2 emissions on the grounds of the social standard of care.
First, the court assessed whether protection from climate change should be considered a human right. Milieudefensie invoked the right to life protected in Article 2 and the right to respect for private and family life protected in Article 8 ECHR. The court considered important judgments and regulations that established that protection from dangerous climate change is considered a fundamental right that finds protection in the aforementioned articles. From this, the court concluded that protection from dangerous climate change is a human right. It recognized that states have an obligation to protect their citizens from the adverse effects of climate change. In addition, companies, such as Shell, may also have a responsibility to take measures to counter dangerous climate change.
Next, the court considered the indirect horizontal effect of human rights. Provisions on human rights are addressed to the government, but can have an effect on private law relationships by giving substance to open norms, such as the social standard of care. In order to give substance to this standard, the question of what action can be required of a person or company when that action is not prescribed by specific rules is considered. The court held that companies, which are significant contributors to the climate problem and have it in their power to contribute to combating it, have an obligation to limit CO2 emissions in order to counter dangerous climate change, even if that obligation is not explicitly laid down in regulations.
The court also looked into European regulations. Since the court's previous ruling, many new regulations have been drafted by the European Union to combat dangerous climate change. That climate legislation does not set a tight reduction rate for every single company. Nor does it establish that companies that comply with the regulations to combat climate change have no further obligations to reduce their carbon emissions. These further obligations could come from a special responisbility. However, any obligations companies already have under existing law would have to be taken into account.
The court then discussed the need for action under the Paris Agreement. The court found it plausible that measures must be taken to reduce the demand for fossil fuels and meet the climate goals of the Paris Agreement. The supply of fossil fuels must also be reduced. The social standard of care requires fossil fuel producers to take responsibility in this regard. Oil and gas companies can also be required to take into account the negative impact that further expansion of the supply of fossil fuels has on the energy transition when investing in the production of fossil fuels. Shell's proposed investments in new oil and gas fields may be at odds with this but that was not relevant to the claim in these proceedings. The court stated that the issue in this case was whether an obligation can be imposed on Shell to reduce its scope 1, 2 and 3 emissions and that does not follow from the aforementioned.
Furthermore, the court considered the following on the Environmental Defense claim. To allocate an injunction to prevent a future standard violation, it is required that an imminent violation of a legal obligation exists. Milieudefensie argues that this violation exists because Shell will not have reduced its emissions by at least 45% by the end of 2030 compared to 2019. With regard to scope 1 and 2 emissions, Shell countered that they have set a goal of reducing these emissions by 50% by the end of 2030 compared to 2016. Milieudefensie also argues that there is an imminent violation of a legal obligation because Shell has adjusted its policy frequently and their target does not guarantee that further reductions will occur. In this, the court did not follow Milieudefensie. Shell has committed itself to their objective and has already largely achieved it. To assume the imminent violation of a legal obligation alleged by Milieudefensie, the court would have to find that it is likely that Shell will not have reduced its scope 1 and 2 emissions by 45% by 2030, despite the concrete measures Shell has already taken to implement those plans. Milieudefensie was not able to make an imminent violation of a legal obligation plausible. Regarding scope 3, it has not been established that a reduction of Shell Trading's resale activities, will lead to a reduction in CO2 emissions. Thus, the court concluded that such an injunction with respect to scope 3 emissions is ineffective and Milieudefensie has no interest in the claim.
Although the court granted the claim in a previous ruling, the Court of Appeal of The Hague held that the social standard of care does not result in an obligation for Shell to reduce its CO2 emissions by 45%. There is insufficient evidence in climate science to impose a specific reduction percentage that an individual company like Shell would have to comply with. It is also significant that Shell is already in the process of reducing its own emissions (scope 1 and 2). The court also held that an obligation on Shell to reduce scope 3 CO2 emissions by a certain percentage is ineffective. Shell could meet that obligation by no longer trading in fuels purchased from third parties. Other companies would then take over that trade, ultimately still not reducing CO2 emissions. Finally, the court stated that prescribing reduction percentages is not up to judges, but a task of the legislature.
Now, the question that remains is whether either of the parties will appeal. Despite the court's failure to grant Milieudefensie's claim, the organization was vindicated on many issues. The court stated that Shell is responsible for climate change, has a special responsibility to protect people from climate change and that Shell must limit emissions from its customers. With this finding, the court has provided leads for Milieudefensie to appeal. It also sets a precedent for other environmental cases against companies. On the other hand, it is also not inconceivable that Shell would want to appeal, to protect itself against new claims about, for example, investing in new gas and oil fields.
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