Mitigating litigation risks through an emission reduction plan

In 2021 the Hague District Court handed down a decision that rocked multinational companies in the Netherlands. The court ordered Royal Dutch Shell to reduce its CO₂ emissions by 45% by 2030, compared to 2019 levels. It was one of the first major climate change litigation rulings against a corporation.

Following the ruling, a large US multinational in the chemical sector asked us to assess how the judgment might affect their business.

The risk gets real

Though the judgment only applied to Shell and it could still be annulled on appeal, the legal obligations are part of the Paris Agreement. And the obligations are far-reaching.

Our client had to think about what they’d do if they were taken to court. And this was becoming a real possibility ­– the NGO that brought the Shell proceedings had now threatened to start similar proceedings against our client.

Thorough analysis to answer a simple question

We started with a simple question: would a Dutch court order our client to reduce greenhouse gas emissions like in the Shell judgment?

First, we analysed the strengths and weaknesses in the court’s judgment against Shell. Then we identified the differences between the Shell judgment and our client’s position. Thinking about how NGOs would view the climate action taken in our client’s sector, we did a thorough sectoral analysis. Then we came up with potential lines of defence. This helped our client’s internal stakeholders agree on the strongest arguments.

We’re not a fan of lengthy memorandums. So we decided to take a new approach in how we presented our analysis. The interactive format we came up with allowed everyone at the client's business – from high-level executives to legal counsel – to get a clear view of the details.

Being proactive reduces risk

Our analysis showed how the Shell judgment would play out in our client’s sector. The board could then properly assess the legal risks and develop a solid mitigation strategy.

Not long after we presented our analysis, the client came up with a new global emission reduction plan that closely followed our advice. Their plan has substantially reduced the risk of them facing litigation in Dutch courts.

More information about how we can help you transition to a more sustainable future can be found here.