Dutch Court of Appeal denies injunction entailing that Shell must reduce its CO2 emissions in line with the Paris Agreement

Introduction

On 12 November 2024, the Court of Appeal in The Hague (the Court) rendered its final judgment (the Judgment) in the high-profile climate litigation case initiated by Milieudefensie and other NGOs (the NGOs) against Royal Dutch Shell plc (Shell).¹ The Court ruled in favour of Shell, and denied the NGOs’ claim for an injunction entailing that Shell must reduce its overall CO2 emissions, and thus including its scope 3 emissions, by at least 45% from 2019 levels, by the end of 2030 (the 45% Reduction Target). Accordingly, the Court annulled the ground-breaking judgment rendered by the district court of The Hague on May 26 2021.²

Brief summary

The main question that the Court had to answer is whether, based on Dutch tort law, Shell has an unwritten duty of care to reduce its overall CO2 emissions in line with the 45% Reduction Target, and if there is an impending breach of this duty. In short, the Court deemed that this is not the case and, therefore, denied the NGOs’ claim. The Court did, however, observe that oil and gas companies (such as Shell) have a duty of care to combat dangerous climate change.

General remarks

In its judgment, the Court made various noteworthy general remarks:

1. The Court stated that “the climate problem is the greatest issue of our time”³, and that “there can be no doubt that protection from dangerous climate change is a human right”.⁴
2. The Court noted that, whilst human rights treaties (such as the ECHR) do not directly apply to non-State actors like Shell, human rights can be used to interpret the unwritten duty of care under tort law.⁵ In this respect, the Court inter alia referred to international soft law frameworks stating that business should respect human rights, including the UN Guiding Principles and the OECD Guidelines (which are both endorsed by Shell).⁶ Accordingly, the Court noted that companies may also have a duty of care to combat dangerous climate change.⁷
3. The Court also noted that this duty of care would apply in addition to – and could go beyond – what is required under (new) EU legislation regarding sustainability and climate change, such as the Emission Trading System Directives, the Corporate Sustainability Reporting Directive and the recently adopted Corporate Sustainability Due Diligence Directive (CSDDD).⁸
4. In addition, the Court stated “Especially companies whose products have contributed to the creation of the climate problem and have it in their power to contribute to combating it are obliged to do so vis-à-vis other inhabitants of the earth, even when (public law) rules do not necessarily compel them to do so”.⁹
5. Moreover, the Court noted that “It is reasonable to expect oil and gas companies to take into account the negative consequences of a further expansion of the supply of fossil fuels for the energy transition also when investing in the production of fossil fuels”¹⁰. The Court added that Shell’s planned investments into new oil and gas fields “may be at odds with this”.¹¹ However, the Court did not provide any ruling on this issue, as the NGOs’ claim did not pertain to this.¹²

Scope 1 and Scope 2 emissions

In relation to scope 1 emissions (emissions from Shell) and scope 2 emissions (emissions from its suppliers), the Court found that the NGOs’ claim must be denied because there was no imminent threat that Shell would not act in accordance with the 45% Reduction Target.¹³ According to the Court, Shell committed itself to – and has been taking important steps towards – reaching its reduction target (50% reduction in 2030, compared to 2016), which goes beyond the 45% Reduction Target in this regard.¹⁴

Scope 3 emissions

In respect of scope 3 emissions (emissions from end users of Shell’s products), the Court held that the 45% Reduction Target cannot be imposed on Shell. This target is based on the Paris Agreement and scientific reports from the Intergovernmental Panel on Climate Change, which stipulate the goal on States to reduce average global emission by 45% in 2030 compared to 2010. However, according to the Court, this target is too general to be applied to a specific company or sector.¹⁵ In this respect, the Court noted that an increase in Shell’s scope 3 emissions may actually result in a reduction of the average global emissions.¹⁶ For example, this would be the case if Shell were to supply non-coal based energy to a company that previously solely used coal in order to extract energy.¹⁷ The Court also noted that it cannot impose a different (sectoral) reduction target on Shell, as there currently is insufficient scientific consensus on what this target should be.¹⁸

Moreover, the Court held that the requested injunction would be ineffective. Since Shell may comply with the injunction by no longer selling oil and gas, this would just result in competitors taking Shell’s place, without any reduction in emissions. In addition, the Court deemed that a potential ‘signalling effect’ of a reduction order on other companies, is too speculative and too far removed from Shell’s alleged unlawful conduct.¹⁹ In view of this, the Court found that the NGOs had insufficient interest in their claim.  

Commentary

The Judgment is, in principle, favourable to fossil energy companies, as the ruling found that the Dutch courts could not impose a specific reduction target on companies in relation to Scope 3 emissions. However:

1. the Judgment leaves open the possibility for claimants to establish that companies are acting unlawfully by not meeting certain specific reduction targets, if sufficient scientific consensus is reached on what such a target should be and that such target would be effective; and
2. the Court’s general remarks discussed above, are sufficiently broad to be applied to companies beyond Shell, particularly those in high emitting industries. 

Consequently, whilst the NGOs’ claim has failed, the door is not closed to further climate litigation cases. 

In relation to Shell’s Scope 1 and Scope 2 emissions, the Court refused the NGOs’ injunction on this matter simply because Shell has already done what the NGOs demanded. The Court’s reasoning that the average global emission targets of the Paris Agreement are too general to be applied to a specific company, could not only be made in relation to Scope 3 emissions but arguably also in respect of Scope 1 and Scope 2 emissions of an individual company. However, the Court did not include such reasoning for Scope 1 and Scope 2 emissions.

We anticipate that environmental litigation in the Netherlands will likely increase in the future, in view of recently adopted EU legislation and the CSDDD in particular. Once the CSDDD is transposed into national legislation (which must be done by 26 July 2026), large companies will have specific statutory obligations in relation to human rights and environmental impacts. This includes the obligation to adopt and put into effect an adequate climate plan in line with the Paris Agreement and the EU Climate law (art. 22 CSDDD). It is anticipated that CSDDD may give rise to legal claims in the civil courts, as the directive requires Member States to ensure that companies can be sued for damage caused by a company’s failure to comply with the legislation.  

In addition, compliance with such legislation on climate and sustainability, does not mean that oil and gas companies will not be confronted with ESG related claims based on other legal grounds. This also follows from the Judgment, in which the Court emphasized that such legislation does not provide an exhaustive list of norms to take into account, and that the unwritten duty of care under Dutch tort law could go beyond what is required under these rules.

In view of the above, it would be prudent for companies to take into account the (increased) risk of environmental and climate change claims in the Netherlands, when determining and implementing its environmental and climate change policies. 

It should also be noted that the NGOs may still lodge an appeal against the Judgment before the Dutch Supreme Court. It should be noted that, in such proceedings, the Dutch Supreme Court would assume the facts as determined in the Judgment and could only assess whether the Court applied the law correctly and sufficiently substantiated its reasoning.