Unique lawsuit against company’s directors takes aim at climate risks

U.K.–based environmental non-governmental organization ClientEarth took climate litigation to a new frontier last month when it filed a derivative action in the High Court of England and Wales against Shell plc’s board of directors. ClientEarth alleges that the company’s directors breached their duty under the U.K. Companies Act to adopt and implement a climate strategy consistent with the target of keeping global warming at or below 1.5˚C, as agreed to under the Paris Agreement.

ClientEarth brought the action in its capacity as a (token) shareholder with the support of several large pension funds and asset managers that hold more than 12 million shares in the company. The action seeks to strengthen Shell’s climate transition plans in order to mitigate its climate-related risk. Though Shell has faced other climate-related challenges in recent years — including a greenwashing complaint filed by Greenpeace Canada in 2021 — this is the first lawsuit in the world filed against a company’s directors personally on the basis of a company’s climate strategy.

You can read the complete Osler Update on this action, “Climate litigation comes for directors,” in English and French on osler.com.