The Court of Appeal has refused permission to appeal a decision of the High Court earlier this year.
In a recent article, we highlighted several attempts in the UK courts to use existing company legislation to hold companies to account in respect of their stance on climate change.
ClientEarth's position was that Shell's directors had breached their statutory duties to promote the success of the company for the benefit of its members and to exercise reasonable care, skill and diligence under sections 172 and 174 of the Companies Act 2006 respectively, as a result of the directors' alleged failure to put in place a sufficient strategy to allow Shell to meet its climate change objectives. Under section 261 of the Companies Act 2006, a member of a company who brings a derivative claim must apply to the court for permission to continue the claim and must show a prima facie case, otherwise the court must dismiss the application. Further, section 263(2) of the Companies Act 2006 provides that permission to proceed with a claim must be refused if a person with a duty to promote the success of the company would not seek to continue it. ClientEarth has now exhausted its options to proceed with its derivative claim against the directors of Shell Plc.
ClientEarth confirmed in its statement that it was “undeterred” and that “directors should not be breathing a sigh of relief. The High Court confirmed that corporate directors have a duty to manage climate risk, which is significant in itself. While this claim did not pass procedural hurdles, the legal risk facing boards is still very real”.
Watch this space for further attempts to hold companies to account…
We are undeterred by this decision, and will keep fighting for accountability from people in the driving seat of companies steering further into climate catastrophe.