Shell has successfully appealed a 2021 ruling by a Dutch court that required the company to cut its global carbon emissions by 45% by 2030, from 2019 levels. The Hague Court of Appeal ruled on Tuesday that, while Shell does have a “duty of care” to reduce emissions to combat climate change, it could not be legally bound to achieve a specific reduction percentage.
Background on the 2021 ruling
The initial decision by The Hague district court, responding to a claim brought by environmental group Friends of the Earth Netherlands (Milieudefensie) on behalf of over 17,000 Dutch citizens, was the first instance in which a company was mandated to align its emissions with climate goals under the Paris Agreement. The court cited Dutch tort law (section 6:162 of the Dutch Civil Code) and referred to “duty of care”, finding that Shell must mitigate climate impacts that posed “serious and irreversible risks” to Dutch citizens. The ruling obligated Shell to reduce its direct (Scope 1 and 2) emissions, 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 the sources of greenhouse gas (GHG) emissions from a company’s activities, 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 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 its direct control, including emissions from suppliers and from the use and disposal of products by consumers.
The judgment emphasised Shell’s global emissions impact and noted that protecting citizens from climate harm was a priority that outweighed Shell’s commercial interests.
Appeals court findings
In Tuesday’s ruling, the appeals court confirmed Shell’s duty to reduce greenhouse gas emissions but found insufficient grounds to enforce a strict 45% reduction target. The court concluded that recent EU regulations and country-specific climate targets do not mandate an exact emissions reduction figure, undermining the argument for an enforceable 45% cut. It ruled that while Shell must continue working to limit Scope 1 and 2 emissions, the company’s ongoing compliance in these areas meant that no breach of duty had been demonstrated.
On Scope 3 emissions, the court agreed with Shell’s argument that restricting its sales of fossil fuels alone would not reduce global emissions, as other suppliers would likely fulfil any unmet demand. As a result, the court ruled that enforcing Scope 3 reductions solely on Shell would not meaningfully reduce emissions and dismissed Milieudefensie’s claims in this area.
The appeals 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’s 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 achieve net-zero emissions by 2050 remains central to Shell’s strategy.
Friends of the Earth Netherlands expressed disappointment but emphasised that the case has highlighted corporate accountability for climate impacts.
The decision may still be appealed to the Netherlands' Supreme Court.
