Is the Shell CO2 Verdict the Ruling of the Century?

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In a groundbreaking ruling, global petrol giant Shell is ordered by a Dutch court to up its short-term objectives in reducing its CO2 footprint. To reduce its net emissions by 45% in 2030 compared to 2019. Not just for itself but also for its clients. Environmental activists such as Milieudefensie, and Greenpeace, initiated the lawsuit. The verdict reminds us of the earlier Urgenda rulings, obliging the Dutch government to do more to meet its obligations under the Paris Agreement. A ruling that survived in the Dutch supreme court, and led to similar legal activism in Germany and elsewhere. Therefore, the expectation is that also the Shell verdict will not materially change after appeals and will inspire similar legal action against other big polluters.

What is the reasoning of the court? The court finds that there is an imminent breach of the reduction obligation of Shell as its company objectives are not concrete enough and contain too many caveats. Given that oil, coal, and gas are the major contributors to global warming, realizing concrete short-term goals is critical to meeting the ambitions of the Paris Agreement. Shell and its global clients are one of the largest polluters in the world as its products and production processes emit nine times as much CO2 as a country like the Netherlands. Shell has known since the 1960s that oil and gas consumption is disastrous for the climate. But, despite this knowledge, it has done too little so far and continues to spend billions of euros every year on oil and gas exploration.

Sustainability as a manufacturing responsibility

The District Court of The Hague said: “Shell must do its part to help combat dangerous climate change”. The implications are not geographically limited. In this case, the verdict extends to Shell’s 1100 subsidiaries worldwide, even though only the headquarter is in the Netherlands. This ruling might not just open the doors for French and American activists to sue the likes of Total France or ExxonMobile. It will have ramifications for chemical industries, fashion, travel, and any other global manufacturer as well. Fashion manufacturers are big in pollution. The steel industry, for example, Tata Steel, goes without the need for any further explanation. The board of Air France KLM will definitely have taken notice. In food, Nestlé concluded that most of its food products do not meet the standards for healthy food. And, what about the CO2 footprint of all these unhealthy products?

It is a ruling that can not be ignored as also investors and other activists have taken notice. It is no longer sufficient to take care that a number of products get a green logo. The whole lifecycle of all products and services, from cradle to grave, needs to be taken into account. For example, by making products modular and repairable as the Fairphone. Because continuing to ignore full climate responsibility will catalyze new lawsuits against companies with high CO2 emissions. Ignoring rulings will damage reputations and might lead to significant claims. Not just in the Netherlands, globally.

The Shell verdict therefore, might well be the ruling of the century. Forever changing the way multinationals conduct business.