Climate risk expert: “Shell’s lawsuit is the first of many as the climate battle turns legal”

Shell’s lawsuit is the first of many as the climate battle turns legal

Sonny Masero, chief strategy officer of sustainability services company Evora Global, said the recent legal action brought against Shell is a sign of things to come.

“The case brought against Shell certainly won’t be the last and we can expect a lot more climate related litigation in the future. It will become a major risk, both for companies and also their directors. In this case, it is the directors of Shell who are being held individually liable and that’s a change in tactics from campaigners.

“Company directors have to be aware now that not acting quickly enough on climate change will have major consequences. It could mean reputational damage, financial costs, legal liability and personal liabilities.

“The energy sector is the first to be targeted, but other sectors with high emissions could follow and that includes farming, industrial manufacturing, transport and real estate.”

Climate related legislation on the rise

Masero also points to research from the London School of Economics (LSE) Grantham Centre which shows a sharp rise in the number of climate related cases being brought since 2015.

“Research from the LSE shows that the number of climate related litigation cases has doubled since 2015 and a quarter of those were filed between 2020 and 2022.”

New rules to stop greenwashing

Masero also adds that in 2015, the then Governor of the Bank of England, Mark Carney, gave a speech called ‘Breaking the Tragedy of the Horizon’ and he described three categories of climate risk: physical; liability; and transition.

“Since then, the most attention has been given to physical and transition risks,” said Masero, “however, businesses cannot afford to ignore the prospect of legal cases.

“This year, in a number of major markets, we will see new financial rules which will make climate risk disclosure more visible to investors. The rules will also increase level of supervisory examination a large company must accept to ensure it is living up to its public commitments. Ultimately, these rules are designed to stop greenwashing.”

About Evora Global

Evora Global works with clients to improve their sustainability and reduce their climate risk. Its clients include many of the biggest names in global real estate, including Hines and M&G. The company has developed its own software, SIERA, which enables its clients to make investment decisions regarding climate change and sustainability. Founded in 2011 by Chris Bennett, Ed Gabbitas and Paul Sutcliffe, the company now has over 200 staff.

Evora’s recent survey of major real estate investors, described as the Insights into Real Estate Investment Sustainability (IRIS), found reputational risk to be the number one environmental, social and governance (ESG) and climate risk perceived by investors.