Climate Change Litigation & Corporate Responsibility. A Comment on “Milieudefensie and Others vs. Shell” (2021)

 

Carlo Vittorio Giabardo

1.     Introduction

On May 26, 2021, The Hague District Court (commerce division, first instance) ordered Royal Dutch Shell (hereinafter RDS, the multinational giant oil & gas company) to reduce the total emission of CO2 of the entire Shell Group by 45 per cent, compared to the levels of 2019 (much more than planned). The reason is that, even if RDS’ current amount of emissions is not contrary to existing regulations and thus is not unlawful per se, its current corporation policy and future climate targets violate the private law obligation by which everyone must act in compliance with the “due standard of care”, as to not cause unjust harm to others (see Art. 162, §2, Book 6, Dutch Civil Code). The judicial order is expressively qualified as “immediately enforceable” and RDS has already announced that it will appeal it. The official text of the decision, in English, is fully available here.

The decision, which is the first of this kind, even it lies in the same line of reasoning of the milestone case “Urgenda” (2019), set another historic precedent and is expected to have a huge impact on fossil fuel business at large. In particular, this ruling raises crucial questions in climate change litigation, such as (a) the space of private law (and tort law especially) in addressing climate change, and (b) the increasing role judges and courts are playing in the global regime in designing climate policies, not only in States, but also in private businesses. These are the main aspects I will briefly elucidate in this comment.

2.     Public Interest Litigation & Climate Rights

In 2019, the Dutch environmental association Milieudefensie (part of the larger network Friends of Earth International) jointly with other six organizations (such as, among them, Greenpeace Netherland) and 17’379 individuals (represented in court by Milieudefensie and lately all dismissed by the court) sued in a class action RDS P.L.C., whose head office is in The Hague, before the District Court. The claimants based their claim on the ground that RDS was, in fact, acting unlawfully since its corporate policy and objectives failed to respect the private law obligation - that applies to everyone in society - to behave according to the due (and unwritten) standards of care, as to avoid causing unjust damages to others. In sum: by having a too soft and too little ambitious internal policy towards the reduction of CO2emissions – so the argument goes – RDS does not meet the required standard of conduct in its activities, as to be assessed in the light of international guidelines and indications (see infra, Part 3).

First of all, in considering the admissibility of the class action, the Court specifically defines the case at stake as a “public interest action”. «Such actions – in the words of the Court (§ 4.2.2.) - seek to protect public interests, which cannot be individualized because they accrue to a much larger group of persons, which is undefined and unspecified». Therefore, the Court continues - «[T]he common interest of preventing dangerous climate change by reducing CO2emissions can be protected in a class action». As international case law shows, individual claims against climate harm are not likely to be considered admissible in judicial processes, since the locus standi requirements (i.e., the conditions claimants need to possess to be heard before a judge) are almost impossible to meet (see, for instance, recently, European Court of Justice, Carvalho and Others v. Parliament and Council, Case T-330/18, known as “The People’s Climate Case”, that refused the admissibility of the case on the ground of “lack of individual concern” of the parties at dispute; seehttps://peoplesclimatecase.caneurope.org/wp-content/uploads/2019/05/european-general-courts-order-_15.05.2019.pdf ; see also  L. Krämer, 2019). In the case at stake, too, the Court dismisses all the individual actions because, in Public Interest Litigation, «citizens, individually, are generally not entitled to institute proceedings due to a lack of interest» (§ 4.2.7.).

On the contrary, environmental associations and organizations are institutionally called to protect interests which are collective and/or diffuse. This applies especially for climate rights. Indeed, they structure is special. For their very own nature, they belong to everyone and to the humankind at the same time. Furthermore, they also affect the interests of future generations. Their reach thus encompasses time and place. However, in the present case, for legal reasons related to the Dutch civil procedure regulations, the Court limits the admissibility of the claim to the specific protection just of Dutch residents (and of the inhabitants of the Wadden region ,i.e., the one that will be most affected by Shell activities, due to the rise of sea levels; see § 4.2.4. and also § 2.3.8.).This limitation well shows the difficulty of adapting the particular features of climate rights to the existing legal institutions, which are in the main conceived for situations that normally occur in the same geographical and temporal context. Conversely, climate damage might reveal itself in distant places or in the long run and this represents one of the main impediment for the capacity of the law to effectively address climate harm. By and large, the subversive nature of climate rights requires a new legal grammar, a new legal vocabulary able to match this new situation (C. V. Giabardo,2021).

 

3.     Tort Law, Standards of Care & Climate Change

As pointed out, Milieudefensie based their legal claim on the tort law provision (pertaining to general private law) that requires everyone to adopt a “due standard of care” in all the activities undertaken. This is, by the way, the same kind of reasoning that underpins the “Urgenda” case, in which the State of The Netherlands has been found to be liable for the harmful effects of climate change as its existing plans for reducing emissions were against the due “duty of care” (ex multis, J. Spier,2020; J. Van Zeben, 2015). There is then little doubt that tort law is, and will be, increasingly used as a tool for establishing climate responsibility, and thus, indirectly, for achieving public objectives and transforming public policies (K. Bouwer, 2018; C.V. Giabardo,2020; D. A. Kysar, 2018; 2011; for early discussion, A. Thorpe, 2008;D. Grossman, 2003).

Let us take a small step back. It is worth recalling here that many continental Civil Codes contains similar rules that generally read as follows: «he who commits a tort must compensate (or repair) the damage caused», whereas by “tort” it is normally meant a negligent (or, a fortiori, intentional) act or omission. How “negligence” should be assessed has been object of intense debates among private law theorists both in the common and in the civil law traditions. This problem, of course, cannot be investigated herein its complexity. Suffice simply to note that, usually, a negligent act is not only the one that fails to respect the general duties established by the law or by regulations, but also the one that is not deemed “reasonable” (by a court), considering all the specific circumstances of the case. The “reasonableness” of an act is always to be assessed in the light of “unwritten standards of care”.  This means –as the Court points out, § 4.4.1 - «that acting in conflict with what is generally accepted according to unwritten law is unlawful». It follows that «when determining the Shell group’s corporate policy, RDS must observe the due care exercised in society. The interpretation of the unwritten standard of care calls for an assessment of all circumstances of the case in question».

Now, it is evident that the assessment of the “reasonableness” of a certain behaviour and the content of the “unwritten standards” cannot be entirely discretionary. Some external guiding principles and directives are needed to interpret them and give them content. In our case, the Court relies on the existing scientific literature and climate science (§ 2.3.3, and in particular on the assessments of the Intergovernmental Panel on Climate Change (IPCC, § 2.3.5.), of the Royal Netherlands Meteorological Institute (KNMI, § 2.3.7.) and of the UN Environmental Protections reports), on international agreements, conferences and Conventions(§ 2.4., such as the UN Climate Conference (1992),the Paris Agreement (2016), the COP25 Conference (2019) and the following Climate Ambition Alliance, the World Energy Outlook of the International Energy Agency (2019 and 2020), the ECHR and the EU targets), and lastly on supranational guidelines and acts of soft law (such as the UN Guiding Principles on Business and Human Right, the UN Global Compact and the OECD Guidelines for Multinational Enterprises, see§ 4.4.11.).

Specifically, the reference to the Paris Agreement objectives and to human rights merits to be underlined. As to the first, it emerges clearly that also non-state actors must “do their part” in the efforts to meet the goals of maintaining global temperature “well below 2°C” («countries cannot take on this task on their own», says the Court, § 2.4.8.; § 4.4.26).Although non-binding for enterprises, the Agreement acts as a strong indication as to the standards of conduct to pursue. As to human rights (which are assuming a preponderant role in climate change discourses; see J. Peel,2018), the Court explicitly links the protection against the danger of global heat to the right to life and right to private and family life, as enshrined in the principal conventions (§ 4.4.9).

To sum up: all this rich body of scientific evidence, international and supranational documents, indications, reports, directives and the like, represents for the Court the guide to evaluate and give content to the highly-vague notion of “unwritten standards” of behavior. At the end of it reasoning, the Court concludes that, to be in line with the due level of care existing in society, «in its formulation of the Shell group’s corporate policy, RDS should take as a guideline that the Shell group’s CO2 emissions (…) in 2030must be net 45% lower relative to 2019 levels», whereas by “net” it is meant the Shell group’s entire energy portfolio (§ 4.4.33; § 4.4.38).

4.     Conclusions. Climate Change Litigation Against Private Corporations

Climate change litigation against private corporations is not new. After a period of enthusiasm for climate litigation against States in order to force them to strengthen their climate objectives, on the wave of the Urgenda ruling, now the target of climate activists and associations around the world seems to have shifted to corporate activities and practices. Scientific studies have indeed shown that a hundred of enterprises in the planet (so-called “Carbon Majors”) are responsible alone for an impressively huge percentage of the total amount of emissions in the atmosphere (Shell itself is among the firsts). E.g., the case Luciano Lliuya v. RWE, in which a Peruvian farmer sued one of the biggest electricity producers in the world for its contribution in the melting of the glacier of Huaraz, now pending in second instance in Germany, has achieved global resonance (see https://climate-laws.org/geographies/germany/litigation_cases/luciano-lliuya-v-rwe, Grantham Research Institute on Climate Change& the Environment) and so is doing the case recently brought against the French oil and gas multinational “Total” by the non-governmental organization Notre Affaire à Tous (the judicial process is currently pending in the court of first instance of Nanterre; see http://climatecasechart.com/climate-change-litigation/non-us-case/notre-affaire-a-tous-and-others-v-total/). This case possesses strong similarities with the Shell decision.

More generally, all these developments call for a reflection about the role judges are taking on in the global climate change regime. In the absence of strong commitments and serious action in tackling climate change by political powers, people resort to the judicial branch to seek not only legal remedies, but social and policies transformations. What we see globally is thus the rise of a “judicial governance” of climate change (Giabardo, 2021).In this context, judicial function is mutating; climate change litigation aims not only to solve conflicts by interpreting and applying the law, but, more intensely, to proactively boost social change, either in governments and public bodies (as Urgenda, and many other cases, show) and in private corporations. That is, by the way, precisely the strategy of climate activists when bringing climate-related issues to court: i.e., to sensibilize public opinion and raise broad social awareness, even though the case might not be successful in the end (G. Ganguly, J. Setzer, V. Heyvaert, 2018).

All this should be considered very carefully. One of strongest objections in the Urgenda case, was, in fact, that the court, in condemning the State, was overcoming its legitimate boundaries set in a ruled-by-law jurisdiction, and a similar complaint is made in the affair at stake (see§ 4.1.3.). There is no doubt that the Shell decision will impact massively on RDS ’business structure, on its investment choices, financial outlook, stakeholders’ interests, future growth perspectives, and will cause an almost complete overturning of its priorities and a reconsideration of the entire core business, with a cascade effect on the whole fossil fuel energy market and on free competition(§ 4.4.53). Are courts the best institutions to take these kinds of decisions, with such pervasive social effects? Are they the most appropriate subjects to guide the climate transition? Although these questions remain open, there is little doubt that, until political power is unwilling (or unable) to take the lead, judges and courts will be the main actors in the global climate change governance.

References

Bouwer, K.,The Unsexy Future of Climate Change Litigation, in 30, Journal of Environmental Law, 2018, 483–506, https://doi.org/10.1093/jel/eqy017

Ganguly, G.; Setzer, J.; Heyvaert V., If at First You Don’t Succeed: Suing Corporations for Climate Change, in 38, Oxford Journal of Legal Studies,2018, 841–868, https://doi.org/10.1093/ojls/gqy029

Giabardo, C.V.,Climate Change Litigation and Tort Law. Regulation Through Litigation?, in Rivista Diritto e Processo (University of Perugia Law School), 2020(2019), 361-382, freely available at http://www.rivistadirittoeprocesso.eu/upload/Articoli/13-GIABARDO.pdf

Giabardo, C.V., Climate Change Litigation, State Responsibility and the Role of Courts in the Global Regime: Towards a “Judicial Governance” of Climate Change?, in B.Pozzo - V. Jacometti (eds.), Environmental Loss and Damage in a Comparative Law Perspective, Cambridge: Intersentia, 2021, 393 - 403.

Grossman, D. A., Warming up to a Not-So-Radical Idea: Tort-Based Climate Change Litigation, in 28, Columbia Journal of Environmental Law, 2003, 1.

Krämer, L., Climate Change, Human Rights and Access to Justice, in 16, Journal for European Environmental & Planning Law, 21–34, https://doi.org/10.1163/18760104-01601003

Kysar, D. A.,What Climate Change Can Do About Tort Law, in 41 Environmental Law,2011, 1-71, freely available at https://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=4847&context=fss_papers

Kysar, D. A.,The Public Life of Private Law: Tort Law as a Risk Regulation Mechanism, in 9, European Journal of Risk Regulation (Special Issue on Judge-MadeRisk Regulation and Tort Law), 2018 , 48 – 65, https://doi.org/10.1017/err.2017.79

Peel, J.,A Rights Turn in Climate Change Litigation?, in 7, Transnational Environmental Law, 2018, 37 – 67, https://doi.org/10.1017/S2047102517000292

Spier, J. ‘The “Strongest” Climate Ruling Yet’: The Dutch Supreme Court’s Urgenda Judgment, in 67, Netherland International Law Review, 2020, 319–391,https://doi.org/10.1007/s40802-020-00172-5

Thorpe, A., Tort-Based Climate Change Litigation and the Political Question Doctrine, in 24, Journal of Land Use & Environmental Law, 2008, 79-105.

van Zeben, J., Establishing a Governmental Duty of Care for Climate Change Mitigation: Will Urgenda Turn the Tide?, in 4, Transnational Environmental Law, 2015, 339 – 357, https://doi.org/10.1017/S2047102515000199

 

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