London CIV (LCIV) has backed environmental law firm ClientEarth in its lawsuit against the board of directors of Shell for failing to manage the long-term risks posed to the company by climate change.
ClientEarth, in its capacity as a shareholder, filed the lawsuit on 9 February. The lawsuit alleges that Shell’s directors have breached legal duties under the UK Companies Act by failing to implement an energy transition strategy that aligns with the Paris Agreement.
In a letter to ClientEarth, Jacqueline Jackson, LCIV’s head of responsible investment, wrote: “We are writing both to express our support for your anticipated shareholder claim and to set out our shared concerns with Shell’s energy transition strategy in light of the board’s responsibility of managing climate change risk.”
Jackson detailed that 32 of LCIV’s client funds hold 484,260 common stock shares in Shell, with a market value of almost £11.4m. She highlighted that the Local Government Pension Scheme pool has a “fiduciary duty to its 672,000 beneficiaries to understand climate risk, maximise associated opportunities and reduce its carbon footprint”.
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“As at 31st December 2022, Shell contributed 2.31% to the total carbon footprint of LCIV funds, across Scopes 1, 2 and 3, with an absolute footprint of 102,422 tCO2e and in a high 2030 carbon price scenario, we calculate that the company’s profit margin would be reduced by 2.59%.
“Thus, it presents a significant portion of our own footprint and is a primary hotspot of risk and exposure within our portfolio,” Jackson added.
LCIV stated that it has previously written to Shell regarding the impact of its investments on the environment and its management of climate risks. However, the oil and gas giant chose not to respond to the letters and has continued to “overinvest in fossil fuels”.
Alongside LCIV, UK pension fund Nest, Swedish national pension fund AP3 and AP Pension in Denmark have expressed support for ClientEarth’s case.
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