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Hello, thank you for joining us. We are proud to welcome you to our special series, Survival by Degrees, brought to you by Brill, where we talk about the climate crisis and what tackling it really entails. I'm your host, Lee Jungrico. Today we're speaking with Andreas Postley.
He's an attorney, a PhD candidate at the University of Zurich, and a visiting researcher at the University of Copenhagen. His article is, Millio Defense v. Shell, a tipping point in climate change litigation against corporations. Andreas, thank you so much for joining us today.
Yeah, thank you for having me. So first of all, what was this ruling and why was it so unprecedented? Right, yeah, so what was this ruling in the end of May 21 that is recorded in the Netherlands issued a decision ordering Royal Dutch Shell, that is to say the parent company of the Shell Group, the top holding company to reduce the CO2 emissions of the entire Shell Group. Very drastically by 45% compared to 2019 levels until 2030.
So that means that one of the largest oil and gas companies in the world, and probably the largest, or one of the largest in Europe, according to this judgment of first instance, needs to revamp its entire business strategy. And that is particularly important because the order concerns the entire scope of emissions that are attributed to that company, meaning direct and indirect emissions. And that includes emissions in down the entire supply chain and also by end users of fossil fuel products sold by Shell. And why was it unprecedented?
Well, it was the first time worldwide that a court ordered a company to reduce its greenhouse gas emissions. So that is why. And the Shell case really stands out from other lawsuits against private companies because the plaintiff's claim really implies that Shell must adapt its global operations very drastically to bring them into alignment with the global consensus that emissions must be reduced substantially and very swiftly in order for the world to have a fair chance of achieving the Paris Agreement's temperature limiting goals. So that is in a nutshell why.
And as you mentioned, Shell is one of the largest energy companies in the world. So how do the court determine the scope of Shell's responsibility for emissions, not just in the Netherlands, but globally as well? Yes, that is a very important point. You could say, oh, that is a Dutch company, which technically speaking, it is not.
It is a mixed company not only incorporated in the Netherlands, but that is a bit of a legal technicality. But to reply to your question, it's in the first place important to understand what the legal basis for the court was for this judgment. And that was a provision in the Dutch civil code on the which liability, meaning financial liability, may arise where a standard of care described as proper social conduct. So in more in other terms, what society expects you to do.
So whether it's social standard, if you will, is breached, you are liable. And that may be a person, a natural person, or a company, or a state. So a very, very basic provision. And interpreting that standard of care, the court took into account a number of factors.
And these are relevant to understand why the order extends to the group's entire emissions, meaning all over the world. I just want to highlight probably a few of those, but most importantly, the court took into consideration that first of all, Shell's emissions exceed those of entire states. So if you look at how many, how much CO2, all the Shell companies together emit, there will be more than the entire country of the Netherlands. Secondly, Shell is, as mentioned in the beginning, the top holding company of the entire group, with more than 1000 companies worldwide.
And as such, the top holding company has a policy setting position that can determine the strategy of the entire group and also the energy package offered by the group. So they determine, shall we invest in oil or gas or renewables? And therefore, the court said, then you, parent company, have the same responsibility for those emissions, emitted by the whole group worldwide as for your own activities, if you would only look at the legal parent company. What's the significance of the Paris Agreement when it comes to private actors?
You mentioned that Shell's emissions exceed those of entire states. So this becomes a really interesting case then, because it's a private actor that is larger than a state, in a sense. Yes, absolutely. That's probably the key question here.
And it really shows that this judgment brings up very, very basic questions of what we call in our academic circles, global climate governance. So for the last 30 years or so, the narrative was, okay, climate change and issue for the global community, who is the global community, states, nation-states, and in the international law and international law and climate changes part of that international law, who are the actors there? Okay, nation-states, countries, as opposed to corporations. Companies, but as globalization has shown, these companies have become very large and global, so they have become multinational companies, and they have really, their activities cannot really be covered by the international law, and also not by domestic law, because they're just transnational companies.
So that is the problem we don't only have in climate change, but also in other areas. But coming back to the Paris Agreement, the standard reply to your question would be, oh, the Paris Agreement is an agreement between nation-states. Therefore, it doesn't apply to private actors because they are not what we call subjects of international law. However, a few academics, including myself, would highlight that there are a few, there is a big, however, to that standard reply.
And that is mostly, and here it gets a bit technical, but I try to explain it in a way the listeners can understand. I would argue and others argue that the Paris Agreement is at least indirectly relevant to private actors, and the shell case is a perfect example for that. So, but what do I mean indirectly? If you look at domestic laws, so here in this case the civil law code, in the Netherlands, you will find provisions in many countries will find provisions or concepts that are openly framed, meaning that they don't prescribe or prohibit a certain or very specific standard or behavior as is typically law, but they are open to interpretation.
So in this case, this openly framed standard of what society expects you to do. And through this mechanism, the argument goes, these standards can be interpreted in light of international climate change law, or also climate science. So here is where Paris Agreement comes into play, because it sets the global benchmark of limiting global temperature increase at, well below two degrees Celsius or preferably 1.5 degrees Celsius above pre-industrial levels. And you could, the argument is, okay, you take that benchmark from international law, which doesn't apply directly to a company, but you use it to interpret standards of care that are open to interpretation under national law.
And that's precisely what happened in this instance. And it was the first time to my knowledge worldwide that this was successful. So I guess to sort of wrap that up, basically what you're saying is you can use domestic law in an international law space. Is that correct?
Yeah, or the other way around. I mean, the reality still is today that at the end of the day, we don't really have international courts where you can bring companies or you can sue companies. So you'd have to go to a national court, essentially. And there the question is, how do you, which sources of law do you use?
And then you would find that international law is not directly applicable, but maybe as I tried to explain before, it can be used as a means to interpret domestic law. So it's probably a bit complicated mechanism to understand, but you kind of take international law and try to translate it to domestic laws because of how the court systems work. You have to do that, whereas you cannot take domestic laws and kind of implement it at an international level. So that's really fascinating.
I know that this is a fairly recent case. Has you been applied to other cases outside the world of climate change? You know, basically, as you said, using this domestic law and applying it to international courts, essentially. Yeah, one case that you were asking for cases outside of climate change law.
Not very familiar, but there is another case in climate change law also in the Netherlands, but against a state against the state of Netherlands, which was the Urchindar case. And there a few years earlier, the state of the Netherlands was ordered by the Dutch courts to reduce its emissions in line with international climate change law. Applying exactly the same mechanism as in this shell case. The shell case being different because it's against a company, not against a state.
But if you look at the world, you would for sure find many examples where domestic courts would use international norms as a means to interpret a standard under domestic law that could maybe be in the cyber area as well, where you have a similar problem of a global problem, in this case, Internet. But you're not able to use those laws directly for companies that are still technically speaking, companies established under the law of a specific country. So this concept is not at all climate change specific, but it's applicable to many other areas of law. Yeah, my thought was this could be a really big deal for companies like Facebook, for example, when you talk about companies that operate like nations or have more power than entire nations, it would seem like tech is kind of the new frontier for that.
Yes, absolutely. A bit of a thought on that. I mean, the Dutch courts have now repeatedly shown that they are open to ruling unprecedented decisions. It is not sure or experience shows that for instance in the US, this case would be much, much harder to win.
And also we should always bear in mind that this is just a quarter first instance ruling, which Shell has already appealed. So we'll have to see what the implications are. But of course it's very interesting to see what will happen. So speaking of those implications, what I find really fascinating when we're talking about climate change policy and talking about international law, the Paris Agreement is how enforceable are these laws or are these court cases.
So what reductions was Shell supposed to make as a result of this case and how enforceable are they? Yes, that's obviously a very important question as a lawyer, winning a case is one thing hard enough, one thing, but don't celebrate too early. You need to also enforce the court order and it's just as important otherwise it's of no use. And so in this case, as mentioned, Shell was ordered to reduce its CO2 emissions by 45% on 2030.
And notably it did not, the order did not include other important greenhouse gases in particular methane, probably because methane is not reported by companies that maybe sound like a detail, but methane is a very important greenhouse gas, just gets much less present and CO2, but it's important to mention that in this context. So what reductions was Shell supposed to make? As I said, the order encompasses all scopes, one, two, three emissions, meaning all direct and indirect emissions, but the court did not prescribe how the company must do that. They just set the goal, but it's up to Shell how to meet that obligation, noting that it's the whole matter is on appeal.
But in principle, the court also said that its orders provisionally enforceable, meaning that Shell has to implement it immediately. But one exception is that the court made a distinction in relation to the so-called scope three, meaning indirect emissions, which are about 85% of what we're talking about here. So indirect emissions, emission scope three emissions, or 85% of the entire group's emissions, and here we're speaking about, for instance, what's happening down the value chain and what emissions occur through the use of the products. So if you drive a car, you may use Shell products, you're emitting CO2, and that will be included.
But the court said in relation to these scope three emissions, there's only a best effort obligation, and that's a very, very important point. Again, it may sound like a technicality, but it means that in relation to these 85% or whatever it may be in the future, it is not a direct obligation, but Shell just has to do kind of its best efforts and taking necessary steps to remove or prevent the risks coming from these emissions that occurred in the value chain. Why is that? You may wonder, rightfully, why is that distinction?
The court acknowledged that Shell may, to some extent, have limited flexibility because it has contractual obligations and long-term concessions, as you may imagine oil and gas exploration projects are a very long term. So there may already be projects, or for sure there are projects we were, but investment has already been made, and you cannot just turn it off. I mean, you can, but you run into liability. And to kind of have regard to that, for big part of the emissions, we don't have a so-called obligation of result.
But Shell just has to do its best to get there, which is in my experience very unprecedented and not very clear. Though, yeah, we'll have to see how it will be enforceable. So they have to implement this immediately, as you said, but then the whole matter is on appeal as well. So do they have to start implementing that in the meantime, even though they're appealing it?
Yes, theoretically. So I'm not to Dutch qualified attorneys, I'm just speaking out of experience from my background, but in theory, yes. And then the question really got to enforceability and considering that the court didn't impose a specific enforcement mechanism. As we know from in the US, we know in, at least in criminal cases, you may have a specific, very specific enforcement mechanism, where you have something like a monitor that observes whether you're actually doing what the court told you to do.
This apparently we don't have in Dutch law. So what it probably means that the plaintiffs need to observe what's going on and then resort to the courts again once, and if they come to the conclusion that Shell fails to comply with the order. Well, really fascinating conversation here, Andreas. Thank you so much again for speaking with us today.
Yeah, thank you for having me. It was great. Andreas, mostly his article is milieu defenci versus Shell, a tipping point in climate change litigation against corporations. You are listening to the Humanities Matter podcast.
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