1 of 2 | The law firm ClientEarth is suing Shell, saying its corporate strategy poses a risk to the environment and the company's long-term financial viability. File photo by Terry Schmitt | License Photo
Feb. 9 (UPI) -- Environmental law firm ClientEarth on Thursday charged Shell, a company in which it owns shares, with failing to uphold corporate obligations to address climate change.
"Shell is seriously exposed to the risks of climate change, yet its climate plan is fundamentally flawed," Paul Benson, a senior lawyer at ClimateEarth, said in a statement.
"In failing to properly prepare the company for the net-zero transition, Shell's board is increasing the company's vulnerability to climate risk, putting its long-term value of in jeopardy."
Filed in the high court of England and Wales, the lawsuit charges the board with violating their own laws by failing to follow through on an energy strategy that would meet the benchmarks outlined in the Paris climate deal.
The board, the law firm alleges, is "legally required" to manage future risks. Shell needs to move away from fossil fuels to ensure a smooth energy transition, but the corporate plan as it stands is "simply unreasonable."
Shell reported adjusted net earnings for the fourth quarter of $9.8 billion. Most of the growth came from its natural gas sector, which accounted for roughly 60% of total revenue during the period.
Adjusted net earnings from its renewables segment was $300 million, 25% less than during the third quarter.
Natural gas was in high demand for much of last year, particularly as the European economy looked to break the grip that Russia had over its energy sector. Former Soviet republics such as Poland had relied on Russia for almost all of their gas before the war began in February 2022.
The company in its quarterly report highlighted a bid to help develop wind facility off the coast of the Netherlands that will have a peak capacity of 760 megawatts, enough to meet the energy demand of at least 70,000 average households.
While highlighting corporate profits and shareholder returns, Shell CEO Wael Sawan said the company was a responsible producer.
"We believe that Shell is well positioned to be the trusted partner through the energy transition," he said.
ClientEarth, meanwhile, enjoys backing from a handful of international investors, including firms managing British and Swedish pension funds. Neglecting climate risks means the company's long-term financial viability is at risk, the law firm claimed.
Shell said in comments to CNBC, which reported the lawsuit may be the first of its kind, said the charges lack merit.
"ClientEarth's attempt, by means of a derivative claim, to overturn the board's policy as approved by our shareholders has no merit," a spokesperson was quoted as saying. "We will oppose their application to obtain the court's permission to pursue this claim,"