Could You Be Held Personally Liable For A Subpar Net Zero Strategy?

The directors of energy giant Shell are facing potential legal action from shareholders who allege the company's board of directors breached their legal duties by failing to articulate a credible net zero plan. Although setting net zero emissions targets to 2050 is a key commitment under the Paris Agreement, this marks the first time in history shareholders have sought to hold directors personally liable for a company's alleged failure to set meaningful emissions targets.

On March 15, 2022, ClientEarth - a group of environmental lawyers who hold shares of Shell - announced it was seeking to initiate legal action against Shell's board of directors (13 executive and non-executive directors) in the High Court of England and Wales over the company's alleged mismanagement of its climate-related obligations. ClientEarth argued Shell's "wait-and-see" approach to the climate transition would come at the expense of the company's shareholders and employees. Shell has