British Energy Company Shell has been hit with a new lawsuit today by a group of investors against its Board of Directors for failing to manage the material and foreseeable risks posed to the company by climate change, ClientEarth, a nonprofit climate advocacy group said today.
The group of investors includes, among others, UK pension funds Nest and London CIV, Swedish national pension fund AP3, French asset manager Sanso IS, Degroof Petercam Asset Management (DPAM) in Belgium, as well as Danske Bank Asset Management and pension funds Danica Pension and AP Pension in Denmark.
The lawsuit alleges Shell’s 11 directors have breached their legal duties under the Companies Act by failing to adopt and implement an energy transition strategy that aligns with the Paris Agreement.
According to a statement, ClientEarth’s claim filed in the High Court of England and Wales has received the unprecedented support of a group of institutional investors collectively holding more than 12 million shares in the company, and more than half a trillion US dollars (£450 billion) in total assets under management (AUM).
ClientEarth Senior Lawyer Paul Benson said in a statement that “Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term.
“The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the Board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success – despite the Board’s legal duty to manage those risks.
“Long term, it is in the best interests of the company, its employees and its shareholders – as well as the planet – for Shell to reduce its emissions harder and faster than the Board is currently planning.”
Shell, which reported recorded annual profits last week, denies the allegation.
In a statement to media outlets, Shell pointed out that the claimant shareholders represent less than 0.2% of Shell’s shareholder base. “We do not accept ClientEarth’s allegations. Our directors have complied with their legal duties and have, at all times, acted in the best interests of the company,” a Shell spokesperson said in the statement.
“We believe our climate targets are aligned with the more ambitious goal of the Paris Agreement: to limit the increase in the global average temperature to 1.5°C above pre-industrial levels. Our shareholders strongly support the progress we are making on our energy transition strategy, with 80% voting in favour of this strategy at our last AGM,” Shell said.
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