Why Shell’s climate defeat matters

  • Date: 27-May-2021
  • Source: Financial Times
  • Sector:Oil & Gas
  • Country:Gulf
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Why Shell’s climate defeat matters

What is a landmark legal defeat worth? One that apparently upends a company's carefully crafted strategy and blows holes in a whole industry's messaging around where its responsibilities begin and end.

Not much, according to the market. Shell shares barely budged on Wednesday after a Dutch court ordered it to deepen its cuts to emissions to align itself with the Paris target of preventing global temperatures from rising more than 1.5C above pre-industrial levels. The stock fell on Thursday, perhaps as other bad news for Big Oilsank in, but then so did the oil price. 

It would be easy to conclude, as one Rystad Energy analyst did, that the case had "little relevance for the actual business“ (let alone the industry at large). But make no mistake: this decision matters. 

Both the above can be true, in a way. Shell has already said it will appeal, which can take two to three years. The judgment, which specifies that Shell should reduce its emissions by 45 per cent by 2030, is immediately enforceable. But it also says the company is not currently in breach of its obligations.

It may be a low bar but Shell has been at the more enlightened end of the sector