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ClientEarth's application for permission to bring a derivative claim on behalf of Shell plc ("Shell") against Shell's board of directors for alleged failure to manage and address climate change risks has been dismissed by the High Court of England and Wales.

The "ground-breaking" derivative claim issued by ClientEarth was the first of its kind, seeking to hold directors of a company personally liable for allegedly failing to adequately address the "material and foreseeable risk" of climate change on their business. 

ClientEarth's claim may have fallen at the first procedural hurdle but the heat is still very much ‎‎on businesses and their directors to ensure that they adequately manage the risks and impact of ‎‎climate change on their business. The claim serves as a useful reminder of the growing public and ‎investor scrutiny placed on businesses to mitigate environmental risks and reduce emissions. ClientEarth has been granted a hearing at which the Court will be asked to reconsider this decision ‎so this is very much a matter of watch this space.

Alex Sharples‎, Senior Associate and Annie Joseph, Associate in our Commercial Litigation team ‎‎explore the implications of this decision in detail here.