Jha and Gupta, ‘Climate Change, Emissions Liability, and Multinational Corporations: Notes from Friends of the Earth v Royal Dutch Shell

ABSTRACT
The recent decision of the Hague District Court in Friends of the Earth et al v Royal Dutch Shell (‘Friends of the Earth’) marks the first instance where a duty was cast on a corporation to reduce its carbon emissions. This decision is thus significant in the efforts to create a regime of corporate emissions liability. Little attention, however, has been spent on how this decision treats legal entities. We believe that by holding Royal Dutch Shell responsible for Shell subsidiaries’ carbon emissions (and the manner in which this responsibility was imposed) the Court radically reconceptualised limited liability. A new enterprise liability regime was inaugurated, with a central focus on the legal entity which exercises decisive influence in creating climate change mitigation measures for the entire corporate group. This new regime assigns responsibility with the agent responsible for creating the emissions policies. It also substantially reduces the incentives of parent corporations to externalise costs. We believe, Friends of the Earth also fits well with the historical Indian position vis-à-vis liability for environmental torts. In all, this emissions liability model should be generally adopted.

Jha, Akshat and Gupta, Pankhuri, Climate Change, Emissions Liability, and Multinational Corporations: Notes from Friends of the Earth v Royal Dutch Shell (May 10, 2022).

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