I was reminded in a conversation over the weekend that on February 9, 2023, ClientEarth filed a lawsuit against Shell's directors, seeking to hold them personally responsible for an allegedly unrealistic net-zero plan. The group has the support of institutional investors holding more than 12 million shares in Shell.
The lawsuit claims that Shell's directors violated their duties under the UK's Companies Act by failing to create an energy transition strategy that aligns with the Paris Agreement. ClientEarth alleges that Shell's net-zero plan lacks short- and medium-term targets to reduce Scope 3 emissions, which account for over 90% of Shell's emissions, and claims Shell will cut its emissions by only 5% by 2030, despite being ordered by a Dutch court in 2021 to reduce emissions by 45%. The lawsuit seeks to have Shell's directors implement a climate strategy that complies with the Companies Act and the Dutch court order.
Yes people it is happening, members of the C-Suite can no longer sit by and claim deniability. Corporate officers also face the risk of personal liability for ESG oversights, as a recent landmark ruling in the US held that they have a duty of oversight. In conjunction with this trend, institutional investors are voting against the re-election of boards that don't address ESG issues. The world's largest sovereign wealth fund, Norges Bank Investment Management, plans to vote against at least 80 boards of directors this year for their failure to set or achieve environmental and social targets.
The crackdown on greenwashing is also expanding, with regulators and activists targeting companies for making "overly promotional" ESG disclosures. As the risk of personal liability for directors and officers increases, it is becoming clear that ESG is not a promotional exercise, despite many companies treating it as such.
Does your organization truly understand ESG, are you just focusing on the G or the E? Has the middle child of S been ignored. If you're interested in discussing the broader trend towards increased accountability for ESG issues, I'd love to hear from you. Let's have a conversation and explore what this means for the future of business and sustainability.
ABOUT THE AUTHOR - THERESE BAPTISTE
In today's rapidly changing world, it is more important than ever to prioritize the principles of environmental, social, and governance (ESG) in our business and investment decisions. As an ESG consultant, I am particularly focused on the social aspect of ESG, which includes promoting diversity, equity, and inclusiveness in all aspects of business and investing.
By incorporating ESG values into our practices, we can create a more sustainable future for all, where everyone has an equal opportunity to succeed and thrive. This is not only a moral obligation, but also a smart business decision, as companies that prioritize ESG values are often more successful in the long-term and enjoy higher levels of trust from their stakeholders.
So, I urge you to take a stand and make a commitment to incorporating ESG values, particularly social inclusion, into your business and investment practices. Together, we can create a better future for all.
Contact me at tb@theresebaptiste.com -Let me help ensure that your organization is ready for our future!
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