ClientEarth asks judge to revisit claim against Shell directors

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Climate campaigners ClientEarth have been granted a hearing at the High Court to request that the judge reconsider his dismissal of a lawsuit against Shell’s board of directors.

ClientEarth, as a shareholder, alleges that Shell’s directors are in breach of their legal duties under the UK Companies Act to manage risks to the company that could harm its future success, saying the climate crisis presents the biggest risk of all. 
On 12 May, the High Court did not permit the case to proceed, but ClientEarth has now been given permission to ask Mr Justice Trower to reconsider his decision.  
Justice Trower said in his judgment that Shell’s climate strategy was not proven to not be in the interests of its shareholders as a whole and that “the law respects the autonomy of the decision making of the Directors on commercial issues and their judgments as to how best to achieve results which are in the best interests of their members as a whole". 
ClientEarth’s case “completely ignores the fact that the management of a business of the size and complexity of that of Shell will require the Directors to take into account a range of competing considerations, the proper balancing of which is classic management decision with which the court is ill-equipped to interfere”, he added. 
Paul Benson, ClientEarth senior lawyer, said: “This claim is about Shell’s board adopting a strategy that is fit to manage the serious and significant climate risks facing the company – in line with its legal duties. We respectfully disagree with the terms of the court’s decision, and in light of the importance of the issues raised by this case will ask the court to reconsider.” 
The claim has the support of UK pension funds Nest and the London CIV, as well as Sweden’s AP3, Denmark’s AP Pension, Akademikerpension and Danica Pension, and asset managers Danske Bank Asset Management, Sanso IS and DPAM. LGPS Central has offered to provide evidence. 
Shell’s board has set a target for the company to be a net zero business by 2050 and reduce absolute scope 1 and 2 emissions by 50% by 2030 compared with 2016 levels. By 2030, it also aims to reduce the net carbon intensity of the energy products it sells by 20%, which includes scopes 1, 2 and 3.  
Investors have criticised that the firm has not set absolute scope 3 emissions targets in the short and medium term and have said the company’s investment in renewable energy is insufficient. 
A Shell spokesperson said: “We firmly believe our directors have always complied with their duties and acted in the company’s best interests... This claim is utterly misconceived and a clear misuse of the English courts. We remain confident that permission to bring the claim should not be granted and that the court will stand by its ruling.”  
Shell stressed the low percentage of shares held by those supporting the claim, a point the judge also made.  
LGPS Central’s director of responsible investment and engagement, Patrick O’Hara, previously spoke about the difficulty that algorithmic trading, auto-voting and climate apathy pose to shareholders seeking long-term outcomes for their beneficiaries. 
Another local government pension pool, Brunel Pension Partnership, is currently convening asset owners and managers to discuss whether proxy voting reflects the long-term interests of pension fund investors and their beneficiaries. 
Does this judgment mean litigation can no longer be seen as an escalation tool for investors? 

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