Landmark climate change judgment: the Hague Court of Appeal confirms Shell’s obligation to limit its CO2 emissions, but rejects NGOs’ claims

Milieudefensie and various other NGOs (“Milieudefensie et al.”) claimed that Shell has a societal duty of care to reduce its emissions by 2030 with 45% compared to 2019. In first instance the District Court of The Hague ruled in favor of Milieudefensie et al. On 12 November 2024, the Court of Appeal overturned the District Court’s decision and rejected the claims. The judgment can be found here and an informal English translation of the judgment here.  

In its decision, the Court of Appeal confirms that protection against dangerous climate change is a human right. Furthermore, the Court of Appeal rules that the protection against climate change has horizontal effect between private parties via the societal duty of care of Article 6:162 Dutch Civil Code. Therefore, not only states have an obligation to protect their citizens against the adverse effects of dangerous climate change, but also companies like Shell have to take action against dangerous climate change by limiting CO2 emissions. However, this duty of care doesn’t entail an obligation for Shell to reduce its CO2 emissions with a specific reduction percentage.

Milieudefensie et al. did not show an impending violation for scope 1 and scope 2 emissions

With regard to Shell’s direct emissions from installations that are owned or controlled by Shell (“scope 1 emissions”) and indirect emissions from third party installations from which Shell purchases energy for its activities (“scope 2 emissions”) the Court of Appeal considers that an impending violation of standards has not been established by Milieudefensie et al. Shell is incentivized to reduce its emissions via the EU emissions trading systems (ETS-2), which puts a price on emissions and has the target to reduce emissions by 42% in 2030 compared to 2005, and has reporting obligations under the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Corporate Sustainability Due Diligence Directive (CSDD). Shell has also committed to a reduction target of 50% for scope 1 and 2 emissions in 2030 relative to 2016 in inter alia its business plan and documents filed with the Securities and Exchange Commission. Lastly, the court considers that Shell has already taken big steps to achieve  its target, because it has reduced its scope 1 and 2 emissions by 31% by the end of 2023 compared to 2016. The claims with regard to the scope 1 and 2 emissions are therefore rejected.

Shell cannot be bound to a specific reduction for scope 3 emissions

In relation to Shell’s indirect upstream and downstream value chain emissions (“scope 3 emissions”), the Court of Appeal finds that even though Shell has the obligation to reduce these emissions, it cannot be bound by a specific reduction percentage. The 45% reduction that was claimed by Milieudefensie et al. on the basis of a consensus in climate science, doesn’t apply to every country and every business sector individually. A sectoral standard for oil and gas cannot be established at this moment on the basis of scientific consensus. In other words: the outcome might have been different if there had been a consensus on more specific emission reduction targets.  

With regard to the scope 3 emissions claim, the Court of Appeal also notes that Milieudefensie et al. have no interest in their claim, because Milieudefensie et al. had not established that an obligation for Shell to reduce its scope 3 emissions by a certain percentage would be effective in the sense that it would reduce worldwide emissions. If Shell reduces its emissions by limiting the resale of fossil fuels purchased by Shell from third parties, other resellers could take its place.

Limits to Shell’s expansion of supply of oil and gas?

Interestingly, the Court of Appeal on its own account dedicates some considerations obiter dictum on Shell’s planned investments in new oil and gas fields. Milieudefensie et al. had asserted that Shell’s current investment policy is not contributing to the Paris Agreement goals. The Court of Appeal considers that Milieudefensie et al. had not specifically claimed to order that Shell’s planned investments violate its societal duty of care, only that Shell should reduce its scope 1, 2 and 3 emissions by 45%.

Nevertheless, the Court of Appeal continues to consider that it deems it plausible that to keep the climate goals of the Paris Agreement within reach, not only measures reducing demand for fossil fuels, but also measures limiting the supply of fossil fuels will be necessary. The societal duty of care may require producers of fossil fuels to also take into account the negative consequences of a further expansion of the supply of fossil fuels for the energy transition. The Court of Appeal notes that Shell’s planned investments in new oil and gas fields may be at odds with this, but that in these proceedings the court of appeal doesn’t have to answer this question.

Further proceedings against Big Oil on the horizon

We expect that further proceedings against Big Oil are likely to follow, despite the rejection of Milieudefensie et al.’s claims in this case. Importantly, the Court of Appeal has confirmed in this case that protection from dangerous climate change is a human right and that companies like Shell have a societal duty of care to reduce CO2 emissions. This societal duty of care may lead companies to having to reduce investments in new oil and gas fields and to being bound to specific reduction percentages when international emission reduction targets become more specific.

Contact Lindenbaum to learn more

If you want to learn more about these or other cases, do not hesitate to contact the experts at Lindenbaum. Our attorneys have been litigation counsel in in several of the leading collective actions in the Netherlands and Europe. We look forward to speaking with you.