Derivative action by token activist shareholders

In March 2022, the environmental lawyers, ClientEarth notified of a potential claim against the directors of Shell. This month, it has been announced that ClientEarth have filed a derivative claim in the UK High Court against the directors of Shell. 

The case is significant on a number of levels, including a reminder of the power of shareholders to take action even when they only represent a token amount of the shareholders, the potential focus of responsibility on the directors themselves, and the idea that directors should manage the climate risk of companies. 

ClientEarth alleges that Shell is in breach of its duties to manage the climate risk facing the company. The foundation ClientEarth are using is that the directors have not been fulfilling the duty to promote the success of the company for the benefit of its members under section 172 of the Companies Act 2006(CA), and the obligation of the directors under section174 to exercise reasonable care, skill, and diligence in discharging their duties.

This is a derivative action under the UK Company law, where permission to issue the claim is not required, but permission from the UK High Court is required for the case to progress. The next important stage is whether that permission will be granted.

Environmental lawyers ClientEarth have filed the lawsuit against the 11 directors at the high court in England. It is the first case in the world seeking to hold corporate directors liable for failing to properly prepare their company for the net zero transition, ClientEarth said

https://www.theguardian.com/environment/2023/feb/09/shell-directors-personally-sued-over-flawed-climate-strategy