Directors’ duties and climate change: implications of the High Court’s decision in ClientEarth v Shell

In July 2023, the English High Court upheld its dismissal in May 2023 of a novel legal challenge to the implementation of Shell plc’s climate strategy. The claim took the form of a derivative action by ClientEarth, which is a non-profit environmental law organisation and minority shareholder in Shell. In summary, ClientEarth alleged that Shell’s directors had breached their statutory duties to the company by failing to set a realistic pathway for its energy transition strategy to net zero, and for failing to comply with a Dutch court order requiring Shell to reduce emissions. The court refused permission to continue the derivative action and dismissed the claim on the basis that ClientEarth did not establish a “prima facie” case against the directors.

In this article, first published in the Corporate Finance and Capital Markets Law Review, Adam Rizzo and Rebecca Dipple look at the trends in climate change litigation, the law on derivative actions in England and explore the implications of the High Court’s decision in ClientEarth v Shell & ors.