Milieudefensie v Royal Dutch Shell: Re-assessing the Private Law Standard for Corporate Climate Policy
This is the second last article in our series of LLB student essays from our ‘Law and Sustainability’ honours course, in the run-up to World Earth Day on 22 April.
To find out more about the Law and Sustainbility course, visit our UofG Course Catalogue.
By Robbie Law
Corporate climate litigation has increased exponentially in recent years, providing a wake-up call to the world’s most polluting corporations. Cases ruling against the ‘Carbon Majors’ have been found to reduce share price by 1.5% and cost an average of $360 million, making litigation an effective method of forcing climate issues onto the corporate agenda. The increase in litigation brings further indirect effects, helping to change key decision making processes, and effectively shaping narratives of climate action.
As procedural hurdles are overcome and private law mechanisms to remedy climate inaction progress to the mainstream, judiciaries should look to the Netherlands to implement an effective climate policy standard to obtain satisfactory remedies for claimants, and positive climate action for the planet.
Milieudefensie v Royal Dutch Shell (2021)
The case held that Shell’s contribution to climate change breached its duty of care to the civilians of the Netherlands. The Court then ordered Shell to reduce its worldwide CO2 emissions by 45% in 2030 compared with 2019 levels. This unprecedented obligation for emission reduction was set after the court’s reference to scientific evidence and international law, specifically the Paris Agreement 2015. The Court’s reasoning followed that Shell’s duty of care should align with the Paris Agreement goals, as while they may be non-binding, they are universally endorsed and supported by scientific evidence.
Legal Reasoning
This approach contrasts the often debilitating principles and practices of private law, where torts are judged against the ‘reasonable man’, and contractual agreements for climate policy are often benchmarked on current and inadequate industry practice. These mechanisms of ‘ascending reasoning’ in the context of climate change legitimise common, yet extremely harmful practices which perpetuate the status quo and industrial inaction.
This ‘apologism’ can be avoided by the ‘descending reasoning’ incorporated in Milieudefensie. Here, standards are instead derived from agreed norms guided by the common interest which are anterior to state or industry practice, such as the universal commitments of the Paris Agreement. The reasoning of Milieudefensie had the unique effect of ‘hardening’ otherwise non-binding international law in relation to corporate conduct. While contested, this effect did not come from an arbitrary decision to make non-binding law binding, but instead by treating the Paris Agreement as a concrete indication of normative consensus.
Considerations for Extending Use of Standard
This threshold for corporate climate mitigation is grounded on established legal reasoning and would be an incredibly effective way of realigning corporate climate policy with the climate targets crucial for the future of our planet. The international implementation of this standard would also be met with few hurdles, as the source of the reasoning comes from overarching international standards, and the approach already aligns with settled jurisprudence in Common Law tort.
"Indeed, in most cases reasonable prudence is in fact common prudence; but strictly it is never its measure... Courts must in the end say what is required; there are precautions so imperative that even their universal disregard will not excuse their omission."
The TJ Hooper (1932) (emphasis added)
This doctrine could not be more applicable to corporate climate policy, where unethical industry practice has systematically failed to take effective precautions to reduce their impact on the climate, in direct conflict with widely accepted scientific evidence.
With reckless climate emissions as undoubtedly one of the most pressing civil wrongs for the international community, a shift in approach to tort and other private law standards are long overdue.
While it is recognised that the Judiciary is not the ideal institution to implement reform on divisive public issues, the standards set by Milieudefensie are viewed as a reaction to the legislature’s failure to regulate. Nevertheless, as a means of last resort this new standard would be extraordinary effective and could be adopted across jurisdictions to best tackle this global, transboundary issue.
Looking Forward
The impact of Milieudefensie cannot be understated, by vastly increasing awareness of corporate climate litigation, and already being sighted by key corporate representatives as a “dark cloud” of liability which is steering corporate climate policy. To further these much-needed effects, Milieudefensie’s high threshold for corporate climate mitigation should be adopted by other jurisdictions and extended to other spheres of private law, such as the interpretation of contracts. This would create a systematic change in the judiciary’s approach to climate issues, by utilising the unique aspects of private law to impose legally binding, sustainable climate commitments on polluting corporations.
A Final Note of Vigilance
Months after Milieudefensie, Royal Dutch Shell relocated to the UK for reasons including an easier way to execute its energy transition strategy. Corporations are constantly adapting to meet their objectives, it is about time the judiciary did the same to enforce sustainable emission reduction policy, and ultimately save our climate.
