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Dutch Court Orders Shell to Decrease CO2 Emissions 45 Percent by 2030

engine no 1
Shell's Appomatox platform in the U.S. Gulf of Mexico (Shell)

Published May 27, 2021 9:02 PM by The Maritime Executive

In a decision with significant implications for the offshore oil industry, a Dutch district court ruled Wednesday that oil major Royal Dutch Shell must increase the ambition of its greenhouse gas reduction targets or run afoul of national human rights laws. 

The court found that Shell's current emissions trajectory will contribute to sea level rise, resulting in foreseeable harm to societies that live at low elevation - particularly the Netherlands, which has reclaimed thousands of square miles of land from the sea over the past seven centuries. To address this future harm, the court ordered Shell to cut its emissions by 45 percent by 2030 - a target that is more than double the size of Shell's existing, voluntary plan to cut emissions by 20 percent over the same period. In announcing the ruling, Judge Larisa Alwin acknowledged that the order would have serious consequences for Shell and could "curb the potential growth of the Shell group."

Shell immediately announced plans to appeal the "disappointing" court order, but it emphasized that it remains committed to achieving net-zero emissions by 2050. 

Though the court's decision may not have an immediate effect on Shell's operations, the order is widely expected to influence litigation in many jurisdictions with comparable human rights statutes. 

"This ruling will change the world," said Roger Cox, the lawyer for plaintiff Milieudefensie (the Dutch affiliate of environmental NGO Friends of the Earth). "This case is unique because it is the first time a judge has ordered a large polluting corporation to comply with the Paris Climate Agreement. This ruling may also have major consequences for other big polluters."

Board changes at Exxon

Climate sentiment is also having an effect at ExxonMobil, where on Wednesday the activist hedge fund Engine No. 1 succeeded in ousting two board members in a shareholder vote centered on the firm's climate goals, financial performance and capital allocations.

"The energy industry and the world are changing. To protect and enhance value for shareholders, we believe ExxonMobil must change as well," said Engine No. 1 in a statement. "We believe that for ExxonMobil to avoid the fate of other once-iconic American companies, it must better position itself for long-term, sustainable value creation."

The hedge fund wasn't alone in its assessment. "We believe Engine No. 1 has presented a compelling case that, without a more concerted response and well-developed strategy for confronting the business risks and challenges related to the global energy transition, Exxon’s returns, cash flow and dividend, and thus its shareholder value, are increasingly at threat," wrote proxy advisory firm Glass Lewis in a note before the shareholder meeting.