SHELL PLC Climate change litigation has evolved dramatically with the emergence of significant court judgments from the Federal Court of
These developments occur in an international context of renewed focus on the Paris Agreement, and preparations for the 26th
The key takeaways from the decisions are:
- The Federal Court in
Sharma v Minister for the Environment [2021]FCA 560 (Whitehaven ) agreed with the applicants that, based on the common law of negligence, the Commonwealth Minister for the Environment owes a duty of care to protect young people from the human health impacts of climate change. While the applicants were ultimately unsuccessful in obtaining an injunction againstWhitehaven , the Minister needs to make her decision about the project extension taking into account the Court's findings on climate change, and the duty of care. The stage is also set for further challenges to determinations by decision makers on this basis. This has implications for proponents seeking approvals for high emissions projects and in particular, those linked to fossil fuels. - The decision of
the Netherlands Court in Milieudefensie et al. vRoyal Dutch Shell plc (Shell) points to the willingness of courts to impose positive obligations on major emitters to develop corporate policies that align with adopted international climate change agreements, such as the Paris Agreement. Shell has announced in its public statement of26 May 2021 that it intends to appeal the Court's decision. - A successful appeal against a decision of a regulator in
Australia , such as the Commonwealth Minister for the Environment, on the grounds of a breach of a duty of care, could well pave the way for Australian litigation akin to the decision in Shell. Any such litigation could compel Australian corporations to take active steps to develop corporate policy to reduce emissions (including Scope 1, 2 and 3 emissions).
In Shell, the applicants argued that the aggregate greenhouse gas emissions generated by the company via its business operations and products amount to a breach of the standard of care of persons and corporations to protect the human rights of others, specifically the right to life, as set out in the Dutch Civil Code.
The applicants relied upon
In coming to its decision, the Court posed the following question: is Shell obliged to reduce all Scopes of greenhouse gas emissions via its corporate policy?
The Court made the following key findings:
- The duty of care in the Dutch Civil Code is to be interpreted in the context of the relevant facts and circumstances. In this scenario, the "best available science on dangerous climate change and how to manage it, and the widespread international consensus that human rights offer protection against the impacts of dangerous climate change and that companies must respect human rights";
- The existential threat posed by climate change is serious;
- Enforcing action in alignment with the goals of the Paris Agreement sits within the the function of the Court; and
- Corporate entities have an obligation to limit and address the human rights impacts incurred via their activities, business relationships and supply chain, from the manufacturing to end-user stages.
In applying the above, the Court held that it could compel Shell to bring its corporate policy into alignment with the Paris Agreement. More specifically, the Court determined that Shell must reduce its net greenhouse gas emissions by 45% by the end of 2030, compared to 2019 levels.
This line of reasoning in Shell flows on from the 2019 Urgenda Decision. Here, the
The Court held that the existential threat posed to the current and future citizens of
Similar arguments have been advanced this week in an Australian Federal Court decision regarding the
The applicants in the class action, a group of eight Australian children, claimed that in considering the development, the Minister had breached her duty of care to protect Australian children from the reasonably foreseeable harm resulting from climate change incurred by increased greenhouse gas emissions.
The Court held that:
- The Minister's prospective approval of the development would have a direct impact in increasing greenhouse gas emissions, creating a nexus between the Minister's conduct and the human health risks experienced by children.
- A reasonable person in the Minister's position would foresee that, in granting the approval, Australian children would be exposed to a real risk of harm due to carbon emission induced climate change, being: "mental or physical injury, including ill health or death, as well as damage to property and economic loss".
- There is a duty owed by the Minister to Australian children, to protect them from the human health impacts of climate change which may be incurred by the grant of approvals under the EPBC Act.
The reasoning suggests the Minister may need to have more explicit regard to the future wellbeing of Australians, and the prospective climate impacts of proposals, when determining approvals under the EPBC Act. This will more likely apply to 'big emitter' developments such as fossil fuel developments. This is particularly poignant in light of the recent review of the EPBC Act, for which the Final Report was released in
The key message being that:
"
The finding that a duty of care exists suggests Australian jurisprudence may begin to develop along a similar trajectory to that observed in
On the facts of the
Instead, it was held to be preferable that the grant of any injunctive relief occur only after the Minister had made her decision pursuant to the EPBC Act. However, the Minister has now been left by the Court to make a decision about the project, having been told clearly by the Court that she must take into account the avoidance of personal injury to people, and will know she owes a duty of care to Australian children to protect them from foreseeable harm by her decision.
Likewise, the finding in Shell is not set in stone. While Shell is now subject to a positive and immediately binding obligation to reduce its greenhouse gas emissions, the full implications of this remain unclear as the Court found Shell had not yet violated this obligation, in light of its ongoing efforts to develop its emissions policy. Further, Shell announced in its public statement of
While decisions such as Urgenda and Shell may have opened a window for duty of care arguments to be made in
The distinction between Shell and
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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