In a significant legal victory for Shell, the Court of Appeal of The Hague has reversed a previous ruling requiring the oil giant to cut its carbon emissions by 45%. The decision marks a pivotal moment in the ongoing legal battle over corporate responsibility in addressing climate change. The Hague appeals court concluded that it could not mandate Shell to reduce its emissions by a specific percentage, even though it acknowledged the company’s responsibility to limit its environmental impact for the benefit of society.

The legal proceedings began three years ago when environmental group Friends of the Earth and 17,000 Dutch citizens filed a lawsuit against Shell, demanding it align its operations with the climate goals set out in the Paris Agreement, the international climate change treaty signed in 2016.

In 2021, the court ruled in favour of the plaintiffs, ordering Shell to cut its CO2 emissions significantly to comply with global climate targets. The ruling was hailed as a groundbreaking moment in environmental law, as it was the first time a court had demanded a private company reduce its emissions in alignment with an international climate pact.

However, the appeals court’s recent ruling has changed the case’s course. The judges found that while Shell is obligated to address its contribution to climate change, they could not establish a specific “social standard of care” requiring the company to make a precise 45% emissions cut. The court ruled that, despite the pressing need to combat climate change, there is no universally accepted figure for the reduction companies like Shell should make. The ruling thus overturned the previous court’s decision and rejected the argument that Shell’s failure to meet the 45% reduction target violated its duty to society.

Shell expressed satisfaction with the court’s judgment, asserting it was already making substantial progress toward reducing its emissions. The company has set ambitious goals for the future, aiming to reduce the carbon intensity of its products by 15-20% by 2030, compared to 2016 levels. Furthermore, Shell is committed to achieving net-zero emissions by 2050. The oil firm argued that the original court ruling unfairly singled out one company for global climate challenges and pointed out that addressing climate change should involve a collaborative effort from governments, not just private companies. Shell further emphasized that the responsibility to change policies and transition to greener practices should lie with lawmakers, who could better enact large-scale systemic changes.

The case is not over yet, as Friends of the Earth Netherlands is considering taking the matter to the Dutch Supreme Court. Although the legal journey could stretch for several years, the environmental group remains determined to hold Shell accountable for its role in the climate crisis. Donald Pols, director of Friends of the Earth Netherlands, called the appeals court decision a setback but insisted that the fight was far from over. “It’s a marathon, not a sprint, and the race isn’t over,” Pols stated, underscoring that the organization would continue its pursuit of a favourable outcome in the highest court.

The initial ruling in 2021 marked a historic moment in the fight for climate accountability, where the court recognized that companies should adhere not only to local laws but also to international climate agreements. The Paris Agreement, signed by nearly 200 nations, aims to limit global temperature increases to well below 2°C above pre-industrial levels. The lower court’s decision to require Shell to reduce its emissions drastically was seen as a major step in integrating corporate responsibility into global climate policy.

However, the Court of Appeal of The Hague raised questions about the practicality of imposing specific emissions cuts on individual companies, noting that the science behind precise reduction targets is still evolving. The judges acknowledged that businesses like Shell must contribute to the global effort to mitigate climate change. Still, they also emphasized the lack of a clear global consensus on how much responsibility should fall on each entity.

Shell’s victory could have broader implications for corporate responsibility regarding climate change. It sets a precedent for how the courts might handle future cases involving large corporations and their environmental obligations.