Shell successfully appealed a Dutch court’s 2021 ruling requiring the company to reduce its global carbon emissions by 45% by 2030, compared to 2019 levels. The Court of Appeal in The Hague on Tuesday established that while Shell has a “duty of care” to reduce emissions to combat climate change, it cannot be legally required to achieve a specific reduction percentage.
The context of the 2021 ruling
The initial decision by the District Court in The Hague, in response to an appeal filed by the Dutch environmental group Friends of the Earth (Milieudefensie) on behalf of more than 17,000 Dutch citizens, was the first instance in which a company was instructed to align its emissions to climate goals under the Paris Agreement. The court cited Dutch civil liability law (section 6:162 of the Dutch Civil Code) and referred to the “duty of care”, finding that Shell must mitigate climate impacts that pose “serious and irreversible risks” to citizens Dutch. The ruling forced Shell to reduce its own direct emissions (Scope 1 and 2), while imposing a “best efforts” requirement for emissions from its customers and suppliers (Scope 3).
Scope 1, 2 and 3 emissions are categories used to classify sources of greenhouse gas (GHG) emissions from a company’s activities, as defined by the 1998 Greenhouse Gas Protocol. Scope 1 emissions are direct emissions from sources that a company owns or controls. Scope 2 emissions are indirect emissions resulting from the generation of purchased electricity, steam, heating and cooling consumed by the company. Scope 3 emissions are all other indirect emissions that occur in a company’s value chain, outside of its direct control, including emissions from suppliers and resulting from the use and disposal of products by consumers .
The ruling highlighted Shell’s global impact on emissions and noted that protecting citizens from climate harm was a priority that outweighed Shell’s commercial interests.
Appeal against the decisions of the court of appeal
In Tuesday’s ruling, the appeals court upheld Shell’s duty to reduce greenhouse gas emissions, but found insufficient grounds to impose a strict 45% reduction target. The court concluded that recent EU regulations and country-specific climate targets do not impose an exact emissions reduction figure, undermining the argument for an enforceable 45% cut. It ruled that while Shell must continue to work to limit scope 1 and 2 emissions, the company’s continued compliance in these areas means no breach of duty has been demonstrated.
On Scope 3 emissions, the court agreed with Shell’s argument that limiting sales of only fossil fuels would not reduce global emissions, as other suppliers would likely meet any unmet demand. As a result, the court determined that applying Scope 3 reductions exclusively to Shell would not significantly reduce emissions and rejected Milieudefensie’s claims in this area.
The appeal court’s decision has significant implications for future environmental, social and governance (ESG) litigation, particularly regarding corporate climate responsibilities and enforceability.
Response and next steps
Shell CEO Wael Sawan welcomed the ruling, calling it a balanced decision for the Netherlands and the global energy transition. He noted that the company’s commitment to achieving net zero emissions by 2050 remains central to Shell’s strategy.
Friends of the Earth Netherlands expressed disappointment but stressed that the case highlighted companies’ responsibility for climate impacts.
The decision can still be appealed to the Supreme Court of the Netherlands.