Energy giant Shell is being sued by a group of activist investors who want the company to make a faster transition away from fossil fuels and toward green energy, according to a new report in Reuters.
The group, called ClientEarth, is taking Shell’s board of directors to court, claiming they are endangering the company’s future by not making the transition from fossil fuels to green energy immediately. They also argue the company has a duty to shift toward green energy due to the damage done by fossil fuels and the need to fight the “climate crisis.”
In a statement about the lawsuit, the group writes, “Shell’s Board is legally required to manage risks to the company that could harm its future success, and the climate crisis presents the biggest risk of them all. Ensuring the company stays competitive in the energy markets of the future, as countries and customers worldwide choose cheaper, cleaner energy, means Shell needs to move away from fossil fuels towards an alternative business model… we’re arguing that the plan Shell’s Board currently has for making that shift is simply unreasonable.”
In its most recent earnings report, Shell reported record profits of $40 billion following the run-up in energy prices due to the onset of Russia’s military action in Ukraine.
For its part, Shell has rejected the arguments made by the group in its lawsuit, saying it is meeting its climate goals, and it is in full compliance with all laws, and acting fully in the interest of shareholders.
A company spokesperson said, “ClientEarth’s attempt… to overturn the board’s policy as approved by our shareholders has no merit.”
As part of its climate plan, Shell plans to cut back its carbon emissions from 2016 levels by 20% by 2030, 45% by 2035, and 100% by 2050.
In its lawsuit however the group alleges that Shell is not reducing its emissions, and that “threatens efforts to protect the planet, further increasing the risk to the company.”
The group concludes in its statement, “The future consequences of Shell’s flawed climate plans could cause the company’s value to plummet, costing jobs and running the risk of shareholders and investors losing significant amounts of money, including people’s pension funds.”
According to Reuters, “London CIV and Nest, Swedish pension fund AP3, French asset manager Sanso IS, Degroof Petercam Asset Management in Belgium and Denmark’s Danske Bank Asset Management and Danica Pension and AP Pension,” have submitted letters in support of the claims against Shell.
The group owns roughly 12 million shares of Shell out of about 7 billion.
