Legal actions against Shell company
Recently, Shell’s board is being sued for failing to prepare the multinational oil and gas company to transition away from fossil fuels. Claimant, Environmental law firm ClientEarth, a shareholder of the company, had notified the company’s 13 executive and non-executive directors. It argues that the board’s failure to implement a climate strategy that aligns with the landmark Paris Agreement is a breach of their duties under English law.
The claimant says it has notified Shell and will await the firm’s response before formally filing papers in the High Court of England and Wales for permission to bring the claim. If the claimant wins, Shell’s board is in breach of its legal duties.
ClientEarth claims the Shell board’s mismanagement of climate risk puts its directors in breach of their duties under the U.K. Companies Act. This law stipulates directors are legally required to promote the firm’s success and to exercise reasonable care, skill and diligence.
ClientEarth has called on other shareholders to join the legal action, saying many of Shell’s largest institutional shareholders have expressed concern about the firm’s climate strategy.
I want to know whether this is a legalized sue? Would it be successful? Also, whether a company shareholder can sue the company’s board? Can a shareholder call for others to join the legal action against the company? In such a case with such parties, how would the sue proceed? This sue is against the directors as persons because of lack of adequate control on the company's operations or against the company's board as its representative?
- Corporate and Company