Friday 28 July 2023

ClientEarth loses High Court fight against Shell directors

ClientEarth loses High Court fight against Shell directors

Environment campaign organisation ClientEarth has faced a setback in its ongoing High Court fight against directors of energy giant Shell.

The legal dispute centred on concerns raised by ClientEarth about Shell’s “climate change strategy,” as the organisation sought to make a “breach” of duties claim against the company’s directors.

During a May hearing, ClientEarth’s request to continue its claim was denied by a High Court judge, who considered written arguments at the time.

The organisation, being a shareholder in Shell, persisted in its efforts to persuade Justice Trower to reconsider his ruling.

However, despite presenting oral arguments during a recent hearing, ClientEarth’s bid was once again rejected by the judge.

Justice Trower concluded that ClientEarth’s application did not present a "prima facie" case for permitting to proceed with the claim.

Consequently, he dismissed the application and made an order to that effect.

In response to the ruling, Paul Benson, Senior Lawyer at ClientEarth, expressed disappointment with the decision.

Mr Benson said: "The Court has accepted that climate change poses significant and foreseeable risks to Shell. We firmly stand behind our claim that the Board is currently neglecting to address those risks adequately, to the detriment of its shareholders."

Responding to the news, Joanna Ford, Commercial Disputes Partner at Cripps, said: "The judge rightly highlighted that in complying with their duties, the Shell directors have various competing considerations that they must take into account.

"These factors are often finely balanced, and prioritising one above the others could lead to directors being accused of breaching their duties towards other stakeholders. This doesn’t mean that climate litigation claims are dead in the water, but there would need to be clear evidence of a serious breach for a claim to stick.

"The decision shouldn’t be seen as a licence for company directors to simply ignore ESG issues, however, and as we get closer to the net zero target date of 2050 there is likely to be less and less scope for directors to argue that climate issues shouldn’t weigh heavily into their decision making about the management of the companies they are in charge of."

Written by

Bruna Pinhoni

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