ILMA Compoundings - Jul/Aug 2021 - 32

COUNSEL COMPOUND
A Deeper Look at the Shell
Climate Case
By Jeff Leiter
M
ost ILMA members have
read the news reports that
a Dutch court has ordered
Royal Dutch Shell to reduce its global
carbon emissions by 45% by 2030,
compared with 2019 levels. Importantly,
the decision covers not only
global emissions by the Shell Group,
but also those of its suppliers and
customers. Because the case is being
heralded as a tipping point in climate
litigation, let's take a deeper look
at the case and what it might mean
going forward.
Most of the climate lawsuits here in
the U.S. and elsewhere have focused
on recovering damages for alleged
harms caused by oil companies' past
activities. For example, a number of
U.S. coastal cities are suing the oil
companies for the costs to make them
more resilient to higher water levels.
The Dutch court's ruling, however,
requires an oil company, for the first
time, to align its climate strategy and
emissions to those set out in the Paris
Climate Agreement.
In its decision, the Dutch court
limited the class action to the interests
of current and future generations of
residents in the Netherlands and the
Wadden Sea area, ruling that the interests
of the world's population were not
allowable. The claimants in the case
nevertheless argued that Royal Dutch
Shell has a duty of care to take action
toward preventing dangerous climate
change through the corporate policies
it determines for the worldwide Shell
Group. The court based its decision
32
on Dutch tort law and the Dutch
Civil Code, using these legal standards
to conclude that, when applying Shell
Group's corporate policies, Royal Dutch
Shell must observe due care in relation
to those affected by its acts or omissions.
There are not enough column
inches to fully describe the court's
legal reasoning and interpretation of
the standard of care it applied to Shell.
The court did take into account a
JULY/AUGUST 2021 | COMPOUNDINGS | ILMA.ORG
range of factors, including the United
Nations Guiding Principles on Business
and Human Rights. The court
considered that because of the wide
acceptance of the U.N. Guiding Principles,
they were suitable as a guideline
in the interpretation of the relevant
Dutch standard of care. The court
applied the principles, which urge
companies to remedy or contribute
toward remediation where they have

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ILMA Compoundings - Jul/Aug 2021

Table of Contents for the Digital Edition of ILMA Compoundings - Jul/Aug 2021

ILMA Compoundings - Jul/Aug 2021 - Cover1
ILMA Compoundings - Jul/Aug 2021 - Cover2
ILMA Compoundings - Jul/Aug 2021 - 1
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ILMA Compoundings - Jul/Aug 2021 - Cover3
ILMA Compoundings - Jul/Aug 2021 - Cover4
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