12 November 2024
If you are covering the judgement in regards to Shell, please see the following comment from Maurizio Carulli, energy and materials analyst at Quilter Cheviot:
"Today’s judgement is a significant one for Shell, ruling that it doesn’t have to decrease its emissions by 45% by 2030. This court case had the potential to weigh on the share price and could have opened it and others in the sector up to more legal challenges.
"Ultimately, Shell currently has a voluntary target to reduce absolute Scope 1 and 2 emissions by 50% by 2030 (i.e. more than the original 45% request of the Hague court), but Scope 3 emissions by only 15-20% by 2030 (i.e. less than half the original 45% request by the Hague court), and only as an ambition, not a target. Reducing Scope 3 by large amounts and within a short timeframe, could only be achieved either selling assets (i.e. transferring the “ownership” of the emissions to someone else with no beneficial impact on the climate), or giving up market share in the marketing business in favour of its competitors (again with no beneficial impact on the climate), or shutting down long-term producing assets before the end of their economic life, at a significant detriment to the shareholders. It is a positive case for investors in Shell that these now are not being legally mandated– pending a potential appeal to the Dutch Supreme Court.
"The court though, upheld the principle that Shell has an obligation toward citizens to limit its CO2 emissions, and that citizens have a right to protection from dangerous climate change vis-à-vis Shell, while denying that this can be determined by a mandatory and quantified percentage reduction. So, this means that Shell still needs to continue in its efforts to reduce CO2 emissions.
"Having moved its headquarters out of the Netherlands and having there only a small portion of its assets, it is not entirely clear how any future judgements from these courts could be fully enforced, but ultimately it could have had huge ramifications across the investment landscape. Shell will be breathing a sigh of relief at today’s judgement."
