Court Orders Shell To Set Stricter Climate Targets — Other Companies Should Follow

Targets Must Include Scope 3 Emissions

On May 26, 2021, the Dutch District Court in The Hague (Rechtbank Den Haag) issued a landmark ruling in support of fighting the climate crisis. Upon review, the Court deemed Royal Dutch Shell’s current targets inadequate. They stipulated that the global fossil fuel giant’s greenhouse gas emissions must be reduced at much larger scale — including scope 3 — use of product emissions (cf. definition in 2.5.4 of the ruling).

This is huge. And it feels like the importance of this detail is still underreported.

Current Climate Change Trajectory

According to the latest science, we are on the terrifying trajectory of the UN IPCC’s worst-case scenario RCP8.5, with levels of warming, sea level rise and destruction that are hard to impossible to process.

Dr. Thomas Ronge illustrated this recently in a graph widely shared on Twitter, incl. data sources from 2019 and 2020, that maps projected sea level rise with actual observed patterns.

In July 2021 alone, we witnessed so many extreme weather events across continents, incl. floods, heatwaves, droughts, wildfires that the effects of the climate crisis are indeed very real and felt today.

How Do We Change Trajectories?

As Greta Thunberg says: “#MindTheGap between words and action.”

The GHG Protocol is the most widespread corporate standard for calculating emissions. This standard covers 3 scopes, all of which together form an entity’s footprint. This includes emissions related to the “use of product”. In other words, the emissions that a company’s product accrues when it is being used by consumers. Or, looking at Shell, the more Shell-pumped oil and gas is sold to fuel vehicles or power heating, the more Shell profits. Therefore, Shell must assume responsibility for that and ensure these emissions are mitigated.

While the number of countries with mandatory GHG reporting is increasing, the vast majority of these only requires reporting against scopes 1 & 2; scope 3 largely remains voluntary.

This is a dangerous shortfall.

As I argued in previous blogposts, scope 3 emissions will likely be the lion’s share of a company’s impact. In Mozilla’s case, for instance, 98% of its overall emissions were attributed to the use of its product.

If scope 3 emissions aren’t being accounted for, they won’t get mitigated.

What’s Next?

Even if scope 3 emissions are included in a company’s environmental report, it is critical that responsibility cannot be deferred to someone — anyone — else. Otherwise, we will miss the necessary reduction targets.

This also means that corporate climate targets cannot just be a balance sheet accounting measure. Paying for offsets does not reduce your material impact. We need actual change, with real reductions.

Is it difficult? Yes.

Impossible? Hardly more so than facing and dealing with continuous extreme weather events as we have seen in just one month.

Going back to the Dutch court ruling, I can only repeat: It is groundbreaking. And we can only hope to see more companies undergoing similar scrutiny, forced to adhere to more ambitious targets spanning all 3 scopes of emissions reduction — be it by court order, or, ideally, stricter regulation.

I’ll note that Shell is unashamedly appealing the decision. They are on the wrong side of history.