It appears that the regulatory tide is turning against climate targets just as the world enters a critical window for action.
Erosion of environmental protections
We’ve just seen the election of a US president who promises to cut regulations across the board when his new administration takes office, not least of which will be environmental protections.
And this week, the Dutch appeals court in The Hague overturned a landmark 2021 ruling requiring oil giant Shell (LON:RDSa) to reduce its carbon emissions by 45% by 2030.
Shell’s win highlights the challenges of enforcing climate targets on corporations through the courts and raises broader questions about which institutions will be prepared to intervene in global climate policy as the world heats up.
It’s a huge setback for climate advocates who had increasingly turned to legal channels to push for corporate responsibility on emissions, at a time when governments might be less inclined to act.
Governments not judiciary to set targets
While the court acknowledged Shell’s duty to mitigate emissions, it dismissed the prior order for a specific reduction target, suggesting such mandates should be set by governments rather than the judiciary.
The ruling arrives as climate action takes centre stage at the COP29 summit in Baku, Azerbaijan, where global leaders are discussing fossil fuel transition strategies.
The case, initially brought forward by Friends of the Earth Netherlands, had ordered Shell to reduce not only its direct emissions but also those caused by customers using its products, an approach the appeals court deemed problematic.
Presiding judge Carla Joustra noted that a broad reduction goal for Shell alone could inadvertently lead customers to switch to other, potentially more polluting, energy sources like coal.
Lack of scientific consensus
In a written statement, the court pointed to the lack of a scientific consensus on a specific emissions reduction target for individual companies, reinforcing the need for consistent regulatory standards set at the state level.
Shell, which moved its headquarters from The Hague to London in 2022, praised the decision, with CEO Wael Sawan reaffirming the company’s commitment to achieving net-zero emissions by 2050.
Despite the setback, Friends of the Earth Netherlands has pledged to continue its campaign against major polluters.
Donald Pols, the organisation’s director, said that while the ruling was disappointing, the case had already pushed the conversation forward on corporate climate responsibility.
The group has yet to announce if it will appeal the ruling to the Netherlands' Supreme Court.
Following the ruling, Shell’s shares dipped slightly in Amsterdam, a symptom of market caution as climate-related legal pressures on the fossil fuel industry continue to evolve.