Big Oil’s Terrible, Horrible, No Good, Very Bad Day
Date: 2 June 2021
“BIG OIL’S TERRIBLE, HORRIBLE, NO GOOD, VERY BAD DAY”: CLIMATE CHANGE LIABILITIES FOR THE OIL AND GAS AND MINING INDUSTRIES
On 26 May 2021, three things happened which may signal a significant change in direction for those involved in the oil and gas and mining. The first was the appointment of two new directors at ExxonMobil. This might seem not to be significant save for the fact that these two new directors came from a slate prepared by Engine No 1 “a hedge fund that has waged a proxy campaign since December, saying the oil and gas group’s focus on fossil fuels had put it at “existential risk””. Second, a large majority of Chevron’s shareholders voted for a resolution calling for Chevron to reduce substantially its scope 3 emissions or those from the products it produces. Third, the Hague District Court handed down judgment in Milieudefensie v Royal Dutch Shell Plc (“RDS”). RDS in turn followed Urgenda v State of the Netherlands (“Urgenda”). In Urgenda, the Court ordered the Dutch State to reduce its Greenhouse Gas Emissions (“GHG”) by 25% stating that Articles 2 and 8 of the ECHR were in play. In RDS, the point was expanded to order Royal Dutch Shell to reduce its emissions across the board by 45% by 2030. Needless to say, although many companies had already been addressing GHGs, RDS has led to a seismic shock wave amongst those involved in the extraction, production and supply of hydrocarbons in whatever form.
This article by Sean Wilken QC considers what Urgenda and RDS decided, their impact on the oil and gas and mining industries from the perspective of both international arbitration and the law of England and Wales – recognising both that RDS will be appealed and that some but, it is important to note, not all of the reasoning in both cases is based on Dutch law. This article will then go on to consider the difficulties with such environmental class actions before the Courts of England and Wales. The article will conclude with a consideration of the
practical ramifications of Urgenda and RDS.