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.”