The ruling Shell wanted. The precedent it feared.

In May 2021, a Dutch court delivered a landmark ruling that shook the global fossil fuel industry. For the first time, a company was legally ordered to cut its CO2 emissions when Shell was mandated to reduce its global emissions by 45 per cent by 2030, compared to 2019 levels. The lawsuit, spearheaded by Milieudefensie (Friends of the Earth Netherlands) and co-plaintiffs, marked a pivotal moment in corporate climate accountability.

As expected, Shell appealed the decision, and in November last year, the appeals court in The Hague overturned the ruling. This was widely perceived as a major victory for Shell – but the implications of this case are far more nuanced.

While the appeals court’s decision dealt a blow to the plaintiffs, many legal experts argue that the court’s acknowledgment of corporate responsibility for emissions sets a powerful precedent. The case also highlighted the challenges of calculating a company’s specific emissions reduction obligations, an issue at the heart of ongoing climate litigation. Some experts believe that this ruling, despite its outcome, may have opened the floodgates for more lawsuits targeting major polluters.

To unpack the complexities of this case and explore its broader implications, FairPlanet's Yair Oded spoke to Noah Walker-Crawford, a research fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and the Grantham Institute at Imperial College London. Walker-Crawford leads the project ‘Bridging the Evidentiary Gap: Climate Attribution in the Courtroom,’ which investigates how climate attribution science is influencing litigation.

In this deep-dive interview, he breaks down the legal arguments, offers insights into the Shell ruling's impact on ongoing climate cases and shares his predictions for the future of climate litigation.

FairPlanet: Can you tell us about Milieudefensie, the NGO that brought the lawsuit against Shell, and its coalition of co-plaintiffs? What was the core of their legal argument, and what were they demanding?

Noah Walker-Crawford: Milieudefensie is the Dutch branch of Friends of the Earth, which is a group of NGOs with chapters in a lot of different countries. They've been around for quite a few years, and they're involved in all different kinds of activities relating to the environment. In the past few years, they've become quite engaged in climate change, particularly in climate litigation. The Netherlands especially has been seen as quite progressive in terms of climate litigation, and the big first successful case against the government was in the Netherlands. That was the Organda case, which was brought by another NGO over what the government had to do. It basically was about making the government increase its targets for addressing climate change.That [case] was successful, and following that came this case against Shell.

The basic idea was that when the case was filed in 2019, if I'm not mistaken, there had already been a number of successful cases against governments, saying that governments need to increase their climate change ambitions in line with the Paris agreement and with other commitments they’ve signed up to - [arguing that] governments weren't doing enough to address climate change. And what the shell case is about is saying that if governments have a responsibility to address climate change, then so do corporations. 

In terms of climate litigation against corporations, there are sort of two basic approaches: ‘backward-looking’ and ‘forward-looking’ cases. The backward-looking cases are about damage that's already occurred, or basically holding companies responsible for their contribution to existing damages or risks. And then the other approach is forward looking - to say that companies need to change their behaviour going forward to prevent climate change from getting even worse.

And so this case against Shell was the first of this kind. It is what's referred to as the ‘corporate framework’ cases. And what the case demands, in basic terms, is to stay in line with the Paris commitments and other kind of related commitments: cut its emissions by 45 per cent by 2030 in relation to the level of emissions in 2019. This figure comes from the IPCC, the intergovernmental panel on climate change, which is a UN climate science body that said that globally all emissions need to be reduced by 45 per cent by 2030 to still have a chance of achieving 1.5 degrees. And it's seen also as kind of an interim target towards net zero by 2050, which there's this scientific consensus that that's what's needed. And so basically the idea is to say, ‘okay, if that's what everyone should be doing, then that's the very least that Shell should be doing as one of the major oil and gas companies.’ That was the basic argument in the case. 

The 'drug dealer's' argument

What were Shell’s main claims in its appeal, and on what legal basis did the Dutch appeals court overturn the 2021 ruling of the Hague District Court?

The case was filed in 2019; then the initial lower court verdict came in 2021, and that was a success, which was quite surprising at the time because it was the first case of this kind and really sent shockwaves through the industry, because this meant that, potentially, a lot of other companies could be sued in a similar way. On appeal, Shell said the law shouldn't be applied in this way, [and] argued that there wasn't sufficient evidence to determine what level of emissions reduction is necessary. They also made some arguments saying that it would be very difficult to implement a verdict. 

Shell lost on all the legal points [whether they have any kind of obligation to address climate change to begin with or to reduce their emissions, which the court said they do]. Where Shell was successful was on their scientific arguments. The first major point where they convinced the court was in saying that you can't apply this global target of 45 per cent reduction to an individual company because the circumstances for each company, for each sector, et cetera, are going to be different. They said that you'd need to calculate it for the individual company, but argued that it's very difficult to do. That's where they really ended up convincing the court.

The other major point was that even if the court ordered them to reduce their emissions by 2030 - they could implement the verdict in such a way that it wouldn't lead to an actual emissions reduction. One part of Shell's business is actually extracting oil, refining it and selling it. But another major part, [about] two thirds of their business overall, is just buying and selling oil [and gas]. So they're basically a broker for fossil fuels. And they said that they could reduce this brokerage business, but that wouldn't cause any less oil and gas to be extracted or burned, which would allow them to comply with a verdict without actually [making] any meaningful contribution to reducing climate change. It's also called the drug dealers argument: ‘If I don't do it, someone else will do it.’ It's quite controversial, this argument, but those were the two points that convinced the court ultimately. 

The case heavily referenced Shell’s scope one, two, and three emissions. Can you briefly explain what these categories mean and why they were central to this lawsuit?

Scope one, two and three are essentially different ways of categorising greenhouse gas emissions. If you're a company - scope one emissions are the emissions you produce directly. So if you have a factory, let’s say, that refines oil and is burning off some oil in the process, those are CO2 emissions that you're producing directly. 

Scope two refers to emissions that you produce indirectly through company operations. Say if you send your employees on a plane to go to another country and that plane is producing emissions, that's scope two. Scope three includes emissions further up or down the supply chain. So, for example, if Shell extracts oil out of the ground, refines it, and then sells it at their gas station, ultimately the emissions are caused by the end user, by the consumer who puts it in their car and burns it. Those are considered to be scope three emissions. 

It’s a question of who is responsible for which category of emissions, and it's a bit complicated in practice because one person's scope one emissions are another person's scope three emissions. If I fill up my gas tank at the Shell gas station and drive my car, then I'm producing scope one emissions, and those same emissions are Shell's scope three emissions. Shell argued vehemently that bear no responsibility for scope three [emissions], but the court said that companies do definitely have a responsibility for scope three emissions as well. 

What This Means for Climate Litigation

The Grantham Institute describes the Shell case as part of a broader category of “corporate framework” litigation, which challenges the legitimacy of corporate climate policies. With more than 20 such cases pending globally, how might Shell’s appeal victory impact their outcomes?

That's a really interesting question. like I said earlier, the Shell case was the first corporate framework case, and after the the 2021 successful verdict against Shell, a bunch of other cases were filed. For example, there is one against Total in France; there are several cases against car companies in Germany over moving towards electric vehicles; there is another one against a Swiss cement company called Holcim in Italy; there is one against ENI, which is the biggest Italian energy company.

The verdict [in Shell’s case] is quite positive for these other cases in terms of whether companies have a legal responsibility to address climate change. The court said-  absolutely, yes. Where the case failed was over the evidentiary issues of how can you calculate an individual company's responsibility?

The court basically said it would have to be calculated for this individual company, and the other cases take different approaches in this regard. So while some of them use these universal global targets like the 45 per cent target in the Shell case, others are more specific. For instance, in the case against Total in France they use sector-specific targets with separate targets for oil and gas emissions reductions. Meanwhile, in the case against VW in Germany, they basically break down this global target for the company and have this complex calculation where they say argue how many electric cars VW should be producing in relation to internal combustion engine cars.

The indication after the Shell verdict is that perhaps for these cases to be successful, they'll have to be more specific, but we'll have to see, of course, since the Shell case has just been appealed as well.

In a previous interview with The Guardian, you mentioned that research is rapidly advancing to bridge the gap between global emissions targets and company-specific reduction obligations. Can you elaborate on this?

The kind of science that goes into calculating these emissions reductions targets is called integrated assessment models, which are these massive models that are a projection of how society, the economy and emissions will develop in the future based on different scenarios of industrial change, increasing use of renewables, et cetera. And it projects how all the different factors can interact, and sets these pathways, saying, globally, this is what kind of emissions reductions we need to achieve certain targets to limit global warming to 1. 5 degrees Celsius or to achieve net zero by 2050. The science is developing quite rapidly, which potentially means that there will be a better evidentiary basis for these cases in the future. 

In this context, then, what level of scientific consensus would courts require to impose legally binding emissions targets on corporations?

In the trial, there were all these discussions around how you can calculate an emissions reduction pathway for Shell, and there were experts from both parties who were putting forward different numbers.

Those numbers are always going to vary a bit, because there are different approaches to this kind of modeling and there are always going to be different assumptions you need to incorporate. At the same time, these models are always updated with real-time data, and so the figures are always going to vary a bit. What was interesting in the trial was that even Shell's hired experts said that there had to be an emissions reduction, though a lot lower than what milieu was saying. And the way the court understood this is that they said, ‘Oh, there are all these different figures, which means there's a lack of scientific consensus.’

For me, there needs to be some clarification about what scientific consensus means, because the scientific consensus doesn't mean that scientists are always going to agree on all of the figures. All the experts agree that there needs to be an emissions reduction. All the numbers are pointing in the same direction. I think that's the key point where Shell really was able to convince the court in a way that some of the scientists I've spoken to who work in this field don't think it’s an entirely correct understanding of what the science is. 

"The science is developing quite rapidly, which potentially means that there will be a better evidentiary basis for these cases in the future."

So from your perspective, the hope is that the courts would eventually consider the broader trends and their implications, rather than focusing on isolated details.

Yes. I mean, it's also a challenge to explain science to courts. Science and law are both trying to figure out the truth about the world in some sense, but they have very different ways of doing that.They ask different questions and take different approaches to understanding what's going on. 

Broadly speaking, science is much more open-ended. It's always a constant conversation. It's always being revised. Whereas in a court of law, the court wants to establish the facts. They want to know what's the truth so they can make a decision about the case. And, of course, courts do account for the fact that there is often going to be uncertainty and there are different standards of evidence that are applied and different kinds of cases; but still, it's a challenge because science is complicated and evolves rapidly, and the judges aren't scientific experts - they’re lawyers.

Did the Court Just Unlock a Wave of Environmental Lawsuits?

While the ruling was a setback for climate litigation, some legal experts believe it leaves room for future cases against major polluters. Lawyer Roger Cox, for instance, noted that the court reaffirmed corporate responsibility to align emissions reductions with the Paris Agreement. Beyond the specific implications for the 20 corporate framework cases, what aspects of the ruling provide a foundation for continued legal action?

I would say the verdict was very, very positive, and it was about as positive as it could have been while still being a dismissal of the case.

If you take a look at the verdict, over half of it is basically the court laying out their opinion of why corporations do have obligations to address climate change in line with the Paris agreement [and] human rights commitments. They say, for example, that, climate change affects people's human rights, which means both governments and corporations have a duty, a legal responsibility to address the issue. And so I think the case provides very fruitful ground for new kinds of claims going forward. 

For example, one thing the judges mentioned in the verdict is that in their opinion, new oil and gas exploration most likely isn't in line with this corporate duty to address climate change in line with the Paris commitments. And while they said this case isn't about whether Shell is allowed to open up new oil fields and [therefore] couldn’t make any ruling on the issue, it was [nonetheless] an invitation to bring new cases against Shell over new oil and gas exploration.

Have past court rulings on emissions influenced policy decisions? Can you point to any cases where legal verdicts directly led to regulatory changes or prompted executive or parliamentary action to curb corporate emissions?

Absolutely. There's been a lot of successful climate litigation against governments.

The first big successful case was in the Netherlands in 2015. Then, that legal strategy of suing governments over climate commitments was replicated in a lot of other countries and led to immediate legislative change. For example, there was a successful verdict in Germany in 2021 at the German constitutional court where, the court said that the government was violating the human rights of future generations by not doing enough about climate change. Then the government immediately changed the German law which outlines how the country addresses climate change.

And that happened in a number of other countries as well: France, Ireland, and more recently last year there was a case in the UK over the government's permission to grant a license for oil and gas exploration. The legal argument in this case was that in granting this permission, the government should take into account the scope three emissions - the emissions from the oil and gas that would be extracted - which hadn't been done previously. And the UK Supreme Court said - absolutely, this has to be taken into account. This decision led to the halting of existing processes of granting new licenses for oil and gas exploration because now scope three emissions have to be taken into account.

We've seen that in a number of countries around the world, and these cases also build on each other. But like I said, the most success has been in cases against government so far and less so against corporations.

Another thing to mention in this context is that litigation is really a response to political failure. If there were enough happening at a political level, it wouldn't be necessary to bring these cases. It's kind of an act of desperation to say, okay, if not enough is happening at a political level, then you can try and move it forward through legal means or leveraging the law to address climate change.

When claimants ask companies like Shell to reduce emissions, do they specify how this should be done? For example, should companies scale down production, transition to cleaner technologies, or take other measures? Given that fossil fuels still underpin critical industries - from transportation and healthcare to food production - do you see risks in forcing companies to reduce production before viable alternatives are fully in place?

In the Shell case, Milieudefensie wasn't asking for Shell to reduce their emissions in any specific way. It left it up to Shell how they could reach this target. And most of the other cases are structured in a similar way, although it varies. I mentioned earlier this Volkswagen case, which is very specific in terms of requiring them to produce a certain number of electric vehicles. But that's maybe more of the exception. I think the key point in this is that these companies need to be part of the energy transition, and these cases are compelling them to take a more active role in promoting this transition. 

At this point, these companies have a choice whether to continue investing more in fossil fuels and dirty energy or to invest more in the technologies that we need to move towards more cleaner forms of energy production. And part of the problem now is that these companies still see that there's a big profit to be made by investing in fossil fuels, which means they have less of an incentive to move in the right direction, even though they have a big capability to push things in that direction. 

But, of course, it's important to say that he energy transition isn't simple or straightforward; we can't just shut off all the fossil fuels from one day to the next. There are big questions of equity and justice involved in this as well. On that note, many are saying that the global north needs to move much more quickly, especially because it has a much bigger historical responsibility in causing climate change, whereas the poor and more vulnerable people in the Global South should be given more leeway because a lot more emissions have been produced historically in the Global North. 

These are key issues in the UN negotiations around climate change as well, how to deal with these issues of global justice and equity in the global energy transition. But I think these companies absolutely have a part to play, and these cases are about getting them to move in the right direction. 

What makes you optimistic about the future of climate litigation?

What makes me optimistic is that more and more courts are recognising that climate change is a legal issue and that the law can be used to address it. Even if the case against Shell wasn't successful, the court definitely recognised that law has an important role to play in this.

And what also makes me hopeful is that the science is significantly improving around emissions reduction pathways and climate modeling. We have a better and better understanding of how global warming is causing local impacts affecting people around the world, whether it's in terms of glacial retreat or hurricanes or sea level rise, and who is contributing how much. And that means there's better and better evidence for these sorts of cases going forward.

Is there a specific case you recommend people follow to stay updated on ongoing litigation?

Yes, absolutely. There is a very interesting one - the case of Luciano Yuya, a Peruvian farmer, against RWE, a German energy company and one of the biggest European emitters. The lawsuit is trying to set a precedent for holding major greenhouse gas emitters responsible for their contribution to climate change and get them to pay up for climate damages. It has to do with a glacial retreat leading to a risk of flooding in the Peruvian Andes.

It is one of the first cases of that kind, and out of all these cases it is the one that's gotten the furthest. The court has already been convinced on the legal arguments and said that, in principle, they think that corporations can be held responsible for their contribution to climate change. Now they are looking at the evidence. It's been going on for 10 years and there is a hearing happening [in March]. It’s going to be very interesting to see what comes out of that.

I've also been involved in that case since the very beginning. So I'll be in court for that next month. 

Image by Jahanzeb Ahsan.