Introduction. Tort Law Climate Litigation
The recent decision by The Hague Court of Appeal on 12 November 2024 in the case Milieudefensie vs. Shell was eagerly awaited in both legal academia and the oil and gas industry. It overturns the path-breaking initial 2021 judgment, in which the Shell group was ordered to reduce its aggregate annual volume of CO2 emissions by 45% by 2030, relative to 2019 values.
The Court first addressed the facts of the case (Part 3), before turning to the standing of Milieudefensie (Part 6), upholding the determination made by the lower court. However, the main legal point was whether Shell’s failure to further cut emissions constituted a breach of Dutch tort law (Part 7). Specifically, the controversy revolved around the interpretation of Article 6:162(2) of the Dutch Civil Code, which defines “a tortious act” as “an act or omission in violation of a duty imposed by law or of what according to unwritten law has to be regarded as proper social conduct”. The appellate court concludes that while Shell is still bound to reduce its emissions (including the ones falling within Scope 3), the exact amount and extension cannot be established judicially.
This approach to holding companies accountable through tort law is not unique to the Shell case. Similar legal strategies are being used in other climate change litigation initiatives against major polluters, across common law (e.g., Smith v Fonterra, in New Zealand) and civil law (Greenpeace et al. vs. ENI, in Italy, Asmania et al. vs. Holcim, in Switzerland) jurisdictions. States too are being called to court with private law claims. Initially, in the first 2015 climate decision of the Urgenda case, the Dutch government was found to have violated its duty of care to protect its citizens under the same norm recalled here, Art. 6:162 D.C.C. (in the subsequent degrees, though, human rights arguments were prevalent); and the climate case against Italy (“Giudizio Universale”) employed the same legal strategy, referring to the corresponding tort law provision, Art. 2043 of the Italian Civil Code.
Corporate “Social Duty of Care” to Reduce Emissions
The first point worth making clear is that the appeal decision did not retract the crucial reasoning that underpins the first-instance pronouncement, that is, under Dutch tort law principles, corporations do have a special ‘social’ duty of care to reduce emissions, in alignment with international and scientific goals, beyond existing European or domestic laws.
In tort law, the standard of diligence for a given activity (the level of the “duty of care”, in common law vocabulary) is inherently dynamic. It is determined therefore not only by reference to applicable laws and mandatory regulations, but also in relation to those “unwritten” yet recognizable norms of social conduct and best practices, shaped by both subjective and objective circumstances.
Like the first-degree decision, the Court of Appeal confirms that, in corporate climate responsibility, these “unwritten norms” derive from a wide array of sources, such as supra-national human rights provisions (Artt. 2 and 8, ECHR), the UN Guiding Principles on Business and Human Rights, the Paris Agreements, the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, and various soft laws and documents issued by private and public entities (such as the IPCC and the IEA reports, or the scientific community recommendations). This part also argues for an “indirect, horizontal dimension” of human rights, extending their application also to private relationships (C, §7.18 ff.).
The Court of Appeals reiterates that Shell, in order for its actions to be considered lawful, must take into account all this vast body of formal and informal provisions well beyond strict climate legislation, to which it is directly subject (such as, at EU level, among others, the EU ETS and the next ETS 2 Directives, the Corporate Sustainability Reporting Directive, and the recent Corporate Sustainability Due Diligence Directive (CSDDD).
The message conveyed is that corporate compliance with existing legislation is insufficient. «The measures taken by the legislator to reduce CO2 emissions are not exhaustive in and of themselves. Neither the European nor the Dutch legislator has stipulated that companies that comply with existing schemes to combat climate change no longer have obligations to further reduce their CO2 emissions. […] Instead, governments have stressed that companies also have their own duty to reduce their emissions. Thus, obligations arising from existing regulations do not preclude a duty of care based on the social standard of care on the part of individual companies to reduce their CO2 emissions» (§ 7:53).
Supply-Side Corporate Climate Responsibility
For the Court of Appeal, the problem lies in the precise content of this social duty of care – i.e., the percentages of reduction and their concrete application.
As is well known, emissions are categorized into three spheres: Scope 1 (direct emissions the company releases), Scope 2 (indirect emissions, resulting from purchased energy), and Scope 3, which encompasses all other emissions third parties generate, up and down all the value chain, end-users included. The decision focuses at length on the latter category (Part H), acknowledging that Shell is on the right reduction path as to the first two scopes.
In relation to Scope 3 emissions, one argumentative passage seems to me particularly worth mentioning.
Shell argues that it would be unfair to impose liability for emissions that are asked for, and bought, by third parties, i.e., the final users of Shell’s products (Scope 3 emissions on the supply side, § 7:98 ff.; for the demand side, § 7:100 ff.). Companies – Shel maintains – cannot be held liable for merely providing the market goods that the market participants themselves need. In this view, the law should primarily address the demand side of the market, i.e., consumers’ choices. This objection is indeed interesting and raises the broader question of the extent of the responsibility of corporations as agents of systemic transformation, beyond traditional market dynamics. The fact is that major polluters (and not just them: also banks and financial institutions, which are increasingly targeted in climate litigation), by virtue of their economic power and massive scale, occupy a key position in the fight against climate change. As noted by commentators, the Court of Appeal recognizes that the transition to a net-zero economy requires efforts on both sides, not only disincentivizing and reducing demand from consumers, but also limiting supply by producers. And these limiting efforts should come not only by legislatures (e.g., by prohibiting new licenses or implementing specific tax regimes), but also from the key market operators themselves, who are expected to gradually and “voluntary” cease new exploration and investment projects, in adherence to the social standard of care. Shell’s objection is therefore dismissed by the Court, which insists on companies’ own individual responsibility and legal duty to reduce Scope 3 emissions, regardless of market demands or economic considerations.
Interestingly, the Court also pointed out that Shell has «tools» at its disposal that «have been developed that can help Shell influence its customers’ choices. Examples include ISO’s Net Zero Guidelines and the 1.5° C Business Playbook», even if it admits that companies might have a «somewhat limited power» in this regard (§ 7:99).
Differentiated Climate Responsibilities
As to the initial ruling that condemned Shell to cut its net emission by 45 per cent compared to 2019, the Court observes that this figure is found in the IPCC reports, which refer to the global average reduction, in order to have a 50 per cent probability of keeping temperature rise to 1.5 degrees. Milieudefensie’s reasoning was that «since there are no agreements on how the reduction commitment is to be divided among companies […] the obvious approach is to apply the percentage of 45 to all companies» (§ 7:72).
Unlike the lower court, the Court of Appeal disagrees with this argument and rejects a straightforward application of the 45 per cent reduction. It notes that these percentages are not meant to be equally and uniformly imposed on specific world regions, economic sectors, or companies. In the Court’s reasoning, also different sources of emissions should be burdened with different standards of reduction. The example provided by the Court is the following: since Shell operates in the oil and gas sector, a cut in Shell’s gas emissions might cause an equal increase in another company’s coal ones (which are more carbon-intensive), which would be a worse result for the planet. So, it is reasonable – and efficient – to set higher reduction targets for activities with higher levels of pollution and lower them for the others (§ 7:74). The conclusion is that «the court cannot determine what specific reduction obligation applies to Shell» (§ 7:73).
Conclusions
The argument for embracing a comprehensive perspective on climate policies should be taken seriously. The risk of achieving progress for one entity – a company or a state – while at the same time, as an unintentional byproduct, increasing emissions elsewhere, given the interconnected economic structure of production, ultimately worsening the global situation, is a concern that merits careful attention and a realistic approach. While it is undeniable that every player must do their own part, however small, without shifting blame onto others – as the Court of Appeal in this opinion correctly emphasizes -, the transition to a net-zero future requires coordinated action from all stakeholders.
More broadly, this “self-restrained” ruling invites a deeper, critical reflection on the institutional suitability of legal fora to make broad climate decisions – beyond strategic achievements (such as attracting social attention and fostering political action). Legal judgments by their very nature are constrained by their focus on specific cases and on narrowly defined disputes between parties. These are inherent characteristics, rather than flaws, of judicial processes. These institutional limitations highlight the challenges of addressing transnational issues like climate change within the framework of litigation, which lacks, as such, more inclusive views associated with political actions or alternative decision-making venues.
