The FT and other newspapers have reported the threat of a legal action against big oil company Shell (SHEL) and specifically against its directors individually for failing to prepare for the risk of climate change. The threat is based on a possible breach of company law by not acting in the best interests of the company and not taking into account the foreseeable risks from climate change. Wikipedia reports that this is a “derivative” action where shareholders are invoking the company to pursue actions against the directors.
The legal action is being promoted by ClientEarth, an environmental campaign organisation and is allegedly supported by a few institutions. Shell lost a similar case in the Netherlands but it is appealing that decision.
Comment: As a shareholder in Shell, I suggest this is an unwise attempt to get the courts involved in overruling the decisions of the directors. The directors are appointed to manage the affairs of the company in the interest of all stakeholders and they will be put in an impossible position if all their decisions might come under scrutiny in the courts. Judges are not qualified to decide on the merits of the business decisions of company directors.
In summary, this is a misconceived legal action and I hope the application for a hearing is rejected. Companies such as Shell and BP have already taken major steps to reduce their carbon emissions and to stay within the law of the land.
They not only provide oil and petrol which are essential for the next few years, but also provide a range of essential chemicals, plastics and fertilizers which cannot be otherwise created.
The Government is aiming for “NetZero” carbon emissions when they have not calculated the full cost or practicality of achieving it. It’s driven by sentiment not economics and belief in a false reality. The ClientEarth organisation is clearly being run and funded by extremists who have no understanding of the underlying issues.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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