Update: ClientEarth granted hearing in climate case against Shell directors

Judge has ruled case will not proceed as it 'imposes specific obligations on directors' for how to manage climate risk

22 May 2023

Following the dismissal of a claim by ClientEarth against Shell’s directors for failing to manage risks posed by climate change, the NGO has asked the judge to reconsider.

In a statement, ClientEarth said: “We’ve now been granted a hearing, at which we’ll ask the Court to reconsider the decision to dismiss our claim. If the decision is overturned, we will go ahead with the lawsuit.”

15 May 2023

ClientEarth and its supporters are “extremely disappointed” with the UK High Court’s decision not to permit its case against Shell’s board of directors to proceed and will be considering its next steps.

In February this year the non-profit filed what it called a world-first lawsuit against directors for failing to manage the material and foreseeable risks posed to the company by climate change.

The lawsuit, filed in the High Court of England and Wales, alleged Shell’s 11 directors have breached their legal duties under the Companies Act by failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement.

It was backed by institutional investors representing £4.5trn in assets under management including UK pension funds Nest and London CIV, Swedish national pension fund AP3, French asset manager Sanso IS, Degroof Petercam Asset Management in Belgium, as well as Danske Bank Asset Management and pension funds Danica Pension and AP Pension in Denmark.

On Friday, a UK High Court judge ruled the case will not be permitted to proceed.

In his judgement, Mr Justice Trower said ClientEarth’s application and evidence “do not disclose a prima facie case for giving permission to continue the claim” and would therefore be dismissing it.

As part of ClientEarth’s case the NGO set out six duties in which Shell directors must consider climate risk, but Justice Trower agreed with Shell that these were misconceived, adding that they sought to “impose specific obligations on the director as to how the management of Shell’s business and affairs should be conducted”, which is for directors to decide.

Justice Trower went on to say that although ClientEarth has demonstrated that Shell faces material and foreseeable risks as a result of climate change (to which Shell broadly agrees), it hadn’t demonstrated the directors had breached their duty in managing those risks.

He added there is no “universally accepted methodology as to the means by which Shell might be able to achieved the targeted reductions [to emissions]…this means that it is very difficult to treat what is said as providing a proper evidential basis for alleging that no reasonable board of directors could properly conclude that the pathway to achievement is the one they have adopted.”

On Twitter ClientEarth said: “We are extremely disappointed by the High Court’s decision not to permit our case against Shell’s board of directors to proceed.

“ClientEarth has the legal right to appeal this decision. We are currently reviewing the terms of the Court’s judgment in full, and considering our next steps. More to follow next week.”

Tony Burdon, CEO at Make My Money Matter, which supported pension funds in backing the case, also said he was “extremely disappointed with the decisions from the Courts”.

“We believe Shell’s current emissions reductions plans are deeply flawed, posing risks both for the planet and the millions of pension holders in the UK invested in the company”, he added. 

“If this case won’t be heard in the courts, the UK pensions industry must use its immense power – and the estimated £20bn it has invested in Shell – to ensure the company has serious, ambitious and robust net-zero targets. They can do this by voting against Shell’s directors at its AGM next week. It’s what pension holders expect, and it’s what the planet needs.” 

A spokesperson for Shell said: “This is the right outcome. The court has clearly found that ClientEarth’s claim is fundamentally flawed and has dismissed it. 

“The claim was utterly misconceived and a clear misuse of the English courts. Our directors have always complied with their duties and acted in the company’s best interests.”


Natasha Turner

Natasha was global editor at ESG Clarity, part of Mark Allen Financial, and a financial journalist for seven years. She has been shortlisted for Story of the Year and Investment Journalist of the Year...