As Big Oil is coming off one of its most profitable years in history, it still faces the existential crisis of Climate Change. To this end, environmental law firm ClientEarth is suing 11 of Shell's directors, personally, for "mismanaging climate risk, breaching company law by failing to implement an energy transition strategy that aligns with the landmark 2015 Paris Agreement," says NBC News. The suit is the first of its kind, and ups the ante for Big Oil and its boards of directors who may now be personally at risk if they fail to act on climate change.
- “The shift to a low-carbon economy is not just inevitable, it’s already happening," Paul Benson, a senior attorney with ClientEarth, stated. "Yet the Board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success — despite the Board’s legal duty to manage those risks."
- A Shell spokesperson released a statement opposing the claim, noting " “Our directors have complied with their legal duties and have, at all times, acted in the best interests of the company. […]ClientEarth’s attempt, by means of a derivative claim, to overturn the board’s policy as approved by our shareholders has no merit. We will oppose their application to obtain the court’s permission to pursue this claim."
A Record Year
While 2022 was a banner year for Shell, Exxon, BP, and the other Big Oil players, it was also one of the hottest years on record. So how do you get some of the most profitable companies on Earth to stop profiting off, well, the destruction of the earth? “There has really only ever been one way to get the world off oil and gas and that is not to expect the companies who benefit most from that industry to lead the way,” Adrienne Buller, research director at the UK think tank Common Wealth, told the Financial Times. “These companies are set up to maximize returns to their shareholders and they’re doing exactly that.”
While Shell has plans to be carbon neutral by 2050, ClientEarth and other environmental groups clearly think Earth’s habitability may be permanently ruined by then unless things change. So, the question is, who will push Shell (and others in Big Oil) towards change? Seems like it may have to be external forces.