Shell’s board of directors sued over ‘flawed’ climate strategy in first-of-its-kind lawsuit

Shell’s board of directors are being personally sued over their alleged failure to properly manage risks associated with the climate crisis.

The lawsuit says the British oil giant’s 11 directors have breached their legal duties under the UK’s Companies Act by failing to bring their climate strategy in line with the Paris Agreement.

Environmental law charity ClientEarth, which filed the lawsuit, says it is the first case in the world that looks to hold corporate directors personally responsible for failing to prepare for the energy transition.

“Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term,” says Paul Benson, a senior lawyer at ClientEarth.

“The shift to a low-carbon economy is not just inevitable, it’s already happening.”

But the Shell board is persisting with a transition strategy that is “fundamentally flawed,” Benson claims. He says it leaves the company seriously exposed to the risks climate change poses to their success in the future - “despite the board’s legal duty to manage those risks”.

ClientEarth filed the first of its kind climate case at the High Court of England and Wales in its capacity as a shareholder.

The legal claim also has the backing of institutional investors and pension funds who together own over 12 million of Shell’s 7 billion shares. These investors include pension funds like Nest - the UK’s largest workplace pension scheme - and London CIV in the UK and Swedish national pension fund AP3.

In a letter to the board of directors notifying them of the legal action last year, ClientEarth said its lawsuit was in the “best interests” of the company as the economy “inevitably shifts away from fossil fuels.”

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