Historically, climate protection has primarily been the responsibility of the state. In 2021, The Hague District Court’s Shell judgment triggered a wave of climate litigation against corporations in civil courts worldwide, aiming to compel companies to do more to protect the climate. But on 12 November 2024 the Court of Appeal overturned the Shell ruling.
Climate litigation against corporations
Climate litigation – referring to litigation aimed at preventing climate change, limiting its effects or holding parties liable for the damage caused – has become widespread across many countries and jurisdictions. Climate litigation cases have traditionally been brought against governments, but nowadays are increasingly filed in civil courts against corporations. They usually involve NGOs or strategically selected plaintiffs, claiming to represent ostensibly affected groups, bringing lawsuits in carefully chosen cases. The plaintiffs are also keen to attract media attention and push lawmakers and businesses to adopt further climate-friendly measures. Forward-looking climate litigation is used to compel companies to reduce future emissions, while backward-looking climate litigation aims to establish corporate liability for damage already caused by allegedly harmful climate practices. The legal challenge lies in establishing a specific future duty to act or civil liability for purported climate-related harm. “Climate litigants” in Germany and elsewhere have not yet been able to win any civil cases of major significance, making The Hague District Court’s 2021 Shell judgment a clear exception. This has now been overturned on appeal. The appeal judgment provides new insights into the current trends in international case law on climate litigation.
The suit against Shell plc
In April 2020, several non-governmental organisations, notably the Dutch environmental organisation Milieudefensie (also known as Friends of the Earth Netherlands), along with thousands of individual plaintiffs brought a class action lawsuit against the oil and gas company Shell before The Hague District Court (Rechtbank). The plaintiffs demanded a reduction in emissions in line with the Paris Agreement, i.e. a 45% reduction by 2030 and net-zero emissions by 2050.
- In its ruling of 26 May 2021, The Hague District Court ordered Shell to reduce its CO2 emissions by a net 45% by 2030 as compared with 2019 levels. The District Court based its ruling that companies have a duty to combat climate change on the general duty of care under Dutch tort law (Article 6:162 Burgerlijk Wetboek), taking into account the UN Guiding Principles as well as Articles 2, 8 ECHR and the resulting right to be protected against dangerous climate change. The District Court ruled that in developing an appropriate corporate policy, Shell had particularly to take into account the target – as set out in the Intergovernmental Panel on Climate Change (IPCC) report – of reducing Scope 1 to 3 emissions (i.e. direct and indirect emissions from the upstream and downstream value chain) by 45% as compared with 2019 levels by 2030. According to the District Court, Shell had not yet sufficiently fulfilled this “obligation to deliver specific results”.
- The Court of Appeal overturned the Shell ruling on 12 November 2024. It agreed with the lower court that protection against dangerous climate change was a human right that had to be taken into account, at least indirectly, when interpreting Dutch tort law. Consequently, companies were obliged to take appropriate measures to combat climate change.
The Court went on to conclude, however, that choosing the right measures was fundamentally the company’s responsibility and held that EU law, particularly the CS3D and CSRD, did not impose an absolute emissions reduction obligation.
But the Court also found that according to the standard of care under Dutch tort law, merely fulfilling European requirements was not enough, as this standard of care could establish a more extensive obligation to reduce Scope 1-3 emissions. The nature and scope of the obligation had to be assessed on a case-by-case basis, with more being expected of Shell as a major player in the fossil fuel market. The Court of Appeal came to the final conclusion, however, that no obligation to reduce emissions by 45% or any other percentage could be inferred from the standard of care under Dutch tort law. Specifically, the 45% reduction (or any other percentage) agreed by climate science did not apply to every country and every business sector individually.
The Court also pointed out that Shell had moreover already undertaken to reduce Scope 1 and 2 emissions to the required levels and had taken measures which the plaintiffs had not sufficiently demonstrated to be inadequate, so that even if an obligation to reduce emissions by 45% were to be assumed, there would be no risk of infringement.
Assessment and conclusion
The reversal of the Shell judgment – one of the most far-reaching climate change decisions to date – marks a significantly more moderate approach to climate litigation. In a fundamental departure from the District Court’s assessment, the Court of Appeal found that, at least under Dutch law, there is no tortious obligation over and above EU requirements to take measures to reduce emissions to a specific extent. The decision is also more nuanced than it appears based on its operative provisions alone. The Court of Appeal ruled that while Shell could not be required to meet specific emissions reduction targets, it did have an obligation under Dutch law to reduce CO2 emissions by taking appropriate measures chosen by it. The Court therefore left the door open to companies being held liable under civil law in the event of an insufficient reduction in emissions.
The ruling is not yet final and is expected to be appealed.
What does this mean for companies? Defining and communicating targets and measures for reducing emissions are likely to become increasingly important, also in light of the transition plans to be drawn up under Article 22(1) CS3D (cf. also the obligation to report on transition plans under Article 19a(1), (2) CSRD). Companies must be especially cautious when formulating voluntary commitments to targets and measures – also with a view to climate litigation – and must ensure that targets and measures are continuously adapted to the changing legal framework.
The Dutch ruling has no direct impact on the question of companies’ obligations under German law to reduce emissions in the future, but parts of it could (again) be used to drive new climate lawsuits in Germany.
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