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The Dutch Decision on Shell’s Carbon Emissions – Should U.S. Companies Be Worried?

THE NATIONAL LAW REVIEW

The Dutch Decision on Shell’s Carbon Emissions – Should U.S. Companies Be Worried?

On May 26, 2021, a Dutch court ordered Royal Dutch Shell Plc (“Shell”) to cut its greenhouse gas emissions by 45% (from 2019 levels) by 2030. Shell had previously pledged to reduce its emissions by 20% (from 2016 levels) by 2030 and to reach net-zero emissions by 2050. The Dutch court held that this commitment was insufficient based on the “very serious threat” that Shell’s carbon emissions pose to Dutch residents.

Impact on U.S. Companies Subject to Actions in U.S. Courts

The Dutch court held that Shell’s greenhouse gas reduction plan failed to meet its obligations under Dutch and international law. In its reasoning, the court explained that:

[Shell] has an obligation, ensuing from the unwritten standard of care pursuant to … Dutch Civil Code to contribute to the prevention of dangerous climate change through the corporate policy it determines for the Shell group. For the interpretation of the unwritten standard of care, use can be made of … human rights, specifically the right to life and the right to respect for private and family life, as well as soft law endorsed by [Shell], such as the UN Guiding Principles on Business and Human Rights, the UN Global Compact and the [Organisation for Economic Co-Operation and Development] Guidelines for Multinational Enterprises…. [Shell] violates this obligation or is at risk of violating this obligation with a hazardous and disastrous corporate policy for the Shell group, which in no way is consistent with the global climate target to prevent a dangerous climate change for the protection of mankind, the human environment and nature.

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