Activist investors sue Shell bosses over climate risks

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British energy giant Shell has been hit with a new lawsuit over climate change. Activist investors are accusing the company’s leadership of mismanaging risks. Corporations have faced a growing number of climate-related lawsuits in recent years as they come under pressure to step up efforts to curb global warming.

Shell was already ordered by a Dutch court in 2021 to slash its greenhouse gas emissions by 45% by the end of the decade after it was sued by environmental groups. This time, ClientEarth, a minor Shell shareholder, has filed a lawsuit in the High Court of England and Wales against Shell bosses:
for failing to manage the material and foreseeable risks posed to the company by climate change.
Shell, which reported recorded annual profits last week, denies the allegations.

Breach of legal duties

Client Earth said in a statement that the group’s current plan:

will tie the company to projects and investments that are likely to become unprofitable as the world cleans up its energy systems.

That puts the company’s long-term commercial viability at risk, and also threatens efforts to protect the planet, further increasing the risk to the company.

ClientEarth alleges the Shell board “breached legal duties” by “failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement”. Under the landmark 2015 Paris deal, nations pledged to reach net-zero carbon emissions by the middle of the century. This is an attempt to limit the average temperature increase to 1.5C.

ClientEarth said its legal action had the support of institutional investors holding more than 12 million shares. Meanwhile, Shell stressed such investors were not claimants but had instead sent ClientEarth letters of support.

Read on...

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Shell is facing criticism over its net-zero plans from the wider environmental lobby. They accuse it of “greenwashing“, or marketing a company as overly climate-friendly. Earlier this month, according to non-profit Global Witness, Shell had “misleadingly” exaggerated its spending on renewable energy:

The US Securities and Exchange Commission (SEC) has been urged to act over Shell’s most recent annual report in which it stated 12% of its capital expenditure was funneled into a division called Renewables and Energy Solutions in 2021.

Global Witness allege that:

just 1.5% of Shell’s capital expenditure has been used to develop genuine renewables, such as wind and solar, with much of the rest of the division’s resources devoted to gas, which is a fossil fuel.

Increasingly, massive profits from energy companies are being met with ire on social media. Greenpeace UK didn’t have much patience for Shell’s massive profits:

Wildlife presenter and conservationist Chris Packham was horrified at how climate inaction would be remembered:

Activist Howard Beckett expressed disgust at Shell’s profits:

Anti-privatisation campaign group We Own It compared Britain’s failings to France, where energy prices are capped:

Likewise, MP Zarah Sultana rightly pointed out how manufactured the cost of living crisis is:

Manufactured crises

The energy sector as a whole has faced growing calls to step up efforts to transition away from fossil fuels. Furthermore, the wider world is scrambling to acheive a net-zero emissions economy by 2050. In spite of that, British oil giant BP on Tuesday 7 February reduced its target for cutting carbon emissions after reporting that its underlying profit had more than doubled last year to $27.7bn.

As larger and larger profits roll in for energy companies, it’s becoming even more clear that the government doesn’t care about people struggling to heat their homes. Instead, it wants big business to flourish, so the rich get richer, and the poor stay poor. There’s more than enough wealth to go around, but the grim logic of capitalism means that ‘crises’ are actually just the system working as it’s supposed to.

Featured image by Unsplash/Justus Menke

Additional reporting by Agence France-Presse

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