Energy Transition – Resilient LLP (formerly DeMarco Allan LLP)

The United States and China announced renewed commitment to enhance cooperation to address the climate crisis in the Sunnylands Statement released on November 14, 2023 (the Statement). Both countries indicated their commitment to the effective implementation of the UNFCCC and the Paris Agreement, including the Glasgow Climate Pact and the Sharm el-Sheikh Implementation Plan, and to further the effective and sustained implementation of the U.S.-China Joint Statement Addressing the Climate Crisis and the U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s. This bulletin provides key details of the new and renewed commitments in the Statement. COP 28. The countries indicated that the consensus Global Stocktake decision expected to come out of COP 28 should, among other things: reflect that substantially more ambition and implementation on action and support will be needed to achieve the Paris Agreement’s goals; send signals with respect to the energy transition (renewable energy, coal/oil/gas), carbon sinks including forests, non-CO2 greenhouse gases (GHGs) including methane, and low-carbon technologies; encourage economy-wide 2035 Nationally Determined Contributions (NDCs) covering all GHGs; note the expectation of developed countries that the $100B climate finance goal will be met in 2023; welcome the recommendations of the Transitional Committee with respect to establishing funding arrangements to address loss and damage, including the establishment of a fund; and emphasize the important role of international cooperation. 2035 NDCs. The U.S. and China both affirmed that their 2035 NDCs under the Paris Agreement will be economy-wide, include all GHGs, and reflect emission reductions aligned with the Paris Agreement temperature goals. Energy Transition. The Statement provides important commitments related to the energy transition, including: support for the G20 Leaders Declaration to pursue efforts to triple renewable energy capacity globally by 2030 and sufficiently accelerate renewable energy deployment through 2030 from 2020 levels to accelerate the…

The UK’s High Court (the Court) has denied the world’s first climate-related derivative action against a board of directors to hold them personally accountable over their alleged failure to properly prepare for the energy transition. Background. On February 9, 2023, environmental law organization ClientEarth filed a derivative action, brought by shareholders on behalf of the company, seeking permission to bring a claim against Shell’s board of directors (the Board), alleging breaches of legal duties under the UK’s Companies Act 2006 (the Act). ClientEarth alleged that the Board was mismanaging material and foreseeable climate risks in breach of the Act and had failed to adopt and implement an energy transition strategy that aligns with the Paris Agreement. Specifically, ClientEarth alleged that the Board breached its duties under: s. 172 of the Act, which requires directors to act in a way that they consider will best promote the success of the company for the benefit of its members as a whole; and s. 174 of the Act, which requires directors to exercise reasonable care, skill and diligence in the discharge of their duties. ClientEarth had requested that the Board be required to adopt a strategy to manage climate risk in line with its duties under the Act, and in compliance with the 2021 Dutch Court judgment requiring Shell to reduce CO2 emissions of the Shell group by net 45% in 2030, compared to 2019 levels, through the Shell group’s corporate policy (see our earlier bulletin here). Judgment. Mr Justice Trower of the UK High Court denied permission to ClientEarth to bring its climate-related derivative action against the Board in the UK. In dismissing the lawsuit, the judge determined that ClientEarth’s action sought to “impose specific obligations on the directors as to how the management of Shell’s business and affairs should be conducted, notwithstanding the well-established principle that it is for directors…