Earlier this week, Royal Dutch Shell won its appeal against a major climate ruling in the Netherlands in 2021 that had ordered it to reduce its greenhouse gas emissions (including end-use emissions) across its global operation by 45% by the end of 2030 as compared to 2019 levels.

Despite finding for Shell, the Hague Court of Appeal confirmed the lower court’s 2021 conclusions regarding human rights. In particular, that “there can be no doubt that protection from dangerous climate change is a human right”. Its decision underlines the central role that human rights law is now playing in climate litigation and will be relevant for climate litigation against companies in the future.

In this article, we briefly discuss Shell’s appeal against the 2021 decision, the key findings of the Hague Court of Appeal, and the potential significance of the decision for future climate litigation against corporates.

Shell’s appeal against the 2021 decision

Read our summary of the 2021 decision, which had found in favour of Friends of the Earth Netherlands (Milieudefensie), here. Shell raised ten separate grounds of appeal. Among other things, it argued that corporate emissions reductions were to be decided by legislators and were not a matter for the courts to declare. Shell argued that as the law did not impose an obligation on companies to reduce their CO₂ emissions by a certain percentage, the trial court’s 2021 decision that Shell had to reduce its global emissions by 45% as compared to 2019 levels by the end of 2030 should be reversed.

Key findings of the Hague Court of Appeal

In summary, the Hague Court of Appeal ruled that:

• Corporates have a duty of care under Dutch law to contribute to the mitigation of dangerous climate change by reducing their emissions, including as a matter of human rights law. Shell as a major oil and gas producer that “contributes significantly to the climate problem” has a “special responsibility” to reduce its greenhouse gas emissions;
• However, Shell does not have an “absolute [emissions] reduction obligation” of 45%, or any other percentage, and under EU law it will not have such an obligation for the foreseeable future. The existence of EU regulation on climate change, including the EU Emissions Trading Scheme and the Corporate Sustainability Due Diligence Directive, does not preclude the existence of an independent duty of care under Dutch law to reduce emissions. But that regulation is relevant to determining what actions are required in order for a company to comply with its duty of care in respect of climate change;
• Therefore, beyond complying with the relevant mandatory EU regulations that apply to large companies to reduce emissions, companies are “free to choose their own approach to reducing their emissions” in their climate transition plans, as long as it is consistent with the Paris Agreement’s climate targets.

An English translation of the Court of Appeal’s decision can be accessed here.

The significance of the Hague Court of Appeal’s decision

This decision is highly significant. Consistent with other climate litigation cases in recent years it indicates that, at least as a matter of Dutch law, companies are obligated to contribute to the mitigation of climate change.

However, the decision has also clarified that the Hague Court of Appeal does not see existing EU climate regulation as dictating a concrete emissions reduction rate to which individual companies are required to comply as a matter of law. While there are obviously jurisdictional differences, this decision will be relevant to the New Zealand High Court’s upcoming examination of similar issues in Smith v Fonterra. Among other things, the plaintiff in that case seeks percentage reductions to emissions by a range of large corporates.

Similar cases are also on foot in the United States and other parts of Europe. We will continue to monitor this area for further developments.

Friends of the Earth Netherlands (Milieudefensie) has said it will continue its fight against large polluters. It has not yet announced if it will appeal the judgment to the Supreme Court of the Netherlands, but either way we can expect it to continue to be active in the climate litigation space.

Get in touch

If you would like to discuss the potential impact of this decision on your business, or the risk of climate liability more generally, please get in touch with one of our experts.