Shell Under Pressure: Legal Challenge Could Redefine Climate Governance in the UK

• Shell would go on to enjoy a near-privileged profit of over $20 billion a year while facing public scrutiny in 2025 for profiting over 80% from the fossil fuel business.
• A High Court case initiated by ClientEarth could reshape how UK law interprets corporate climate responsibilities, with Shell’s directors at the centre.

Shell plc is a company headquartered in London with activities in more than 70 countries, engaged in oil exploration, refining, petrochemicals, and developing renewable energies. It is amongst the leading companies in the global energy sector by revenue and size.

As of 2024, Shell reported annual profits exceeding £20 billion, with a significant majority of its income still derived from fossil fuels. The company has set a public target to reach net-zero carbon emissions by 2050 and has invested in a range of energy transition efforts. In this regard, Shell is still a long way away and facing many accusations from environmental groups and investors alike, who say that the pace of decarbonisation is too slow and there is a continued reliance on oil and gas infrastructure.

Legal Action Filed in London

In May 2025, yet another fresh legal challenge was filed in London concerning Shell’s latest attempts to develop new oil and gas projects. The claim lodged at the High Court by environmental law organisation ClientEarth is directly targeting the company and its board of directors. The core of the argument comes with clear merits: Shell’s directors are seen as having breached their legal duties as they continue to invest in fossil fuel exploration instead of assessing climate-related financial risk.

The Basis of the Claim

ClientEarth, a UK-based non-profit with a track record of pursuing environmental litigation in courts across Europe, is asking the court to intervene in what it sees as a systemic failure of governance. At issue is Shell’s stated commitment to net zero by the year 2050 – a pledge that, according to the group, finds itself in conflict with the company’s furtherance of expansion activities in the fossil fuels sector. In 2024, several major projects were initiated in the North Sea by Shell, projects that ClientEarth claims could hardly be reconciled with the international climate targets set out under the Paris Agreement.

Legal Framing and Global Context

This legal claim builds on a growing body of climate litigation worldwide. It also marks a broader shift towards using environmental law more and more to directly hold the corporation, and in particular, its leadership, accountable for how it incorporates climate science into business decisions. In this case, Shell’s board of directors is accused of failing to adjust the company’s strategy in light of widely acknowledged climate risks and of neglecting their duties under the UK’s Companies Act.

Under this law, company directors are required to promote the long-term success of their organisations while also considering the impact of their operations on the environment. ClientEarth argues that Shell’s continued emphasis on oil and gas extraction does the opposite. The group also points to a landmark 2021 court ruling in the Netherlands, which ordered Shell to reduce its global carbon emissions significantly—a ruling Shell is still appealing.

Shell’s Position

Shell, as far as it is concerned, says its energy transition strategy is both legal and commercially necessary. The company says it is investing in renewables and low-carbon options to provide for today’s energy needs. A spokesperson stated that the company is dedicated to its net-zero pathway and will defend this stance in court.

What Happens Next

Whether or not the case shall go for trial is yet to be decided by the High Court. That decision is expected to come later in this year. Should it proceed, the case would itself go down into history as a major precedent within the UK and beyond. It would be the very first occasion a British court looks at the question of whether a board’s handling of climate strategy amounts to a breach of fiduciary responsibility.

Broader Implications

While legal experts are divided on the case’s likelihood of success, many agree that the implications are far-reaching. A ruling against Shell could open the door to similar actions targeting other major corporations. Even if the case does not proceed, its filing alone has sparked renewed discussion about the responsibilities of company directors in the era of climate change.

Financial Background and Market Pressure

Data published in Shell’s 2024 annual report shows that the company earned over £20 billion in profit, with more than 80% of that figure linked to fossil fuel operations. At the same time, over 1,000 institutional investors have signed climate-related disclosure statements urging large energy firms to demonstrate alignment with the Paris climate goals.

Regulatory and Investor Response

Globally, regulatory authorities are also increasing scrutiny. In the UK, the Financial Conduct Authority is updating disclosure requirements to improve transparency on climate-related risks. In parallel, investor pressure continues to mount, particularly from large asset managers and pension funds that are actively shifting their portfolios to favour companies aligned with long-term climate stability.

A New Operating Climate

This combination of investor activism, regulatory tightening, and legal pressure has created a new operating environment for large fossil fuel companies like Shell. While political debates over energy security and net-zero timelines continue, courts are increasingly being asked to weigh in, not on policy, but on law. For the judiciary, the question is whether the actions taken by company leaders are reasonable and lawful, given the scale of the climate crisis and the science that now informs it.

Legal Perspectives on Director Liability

Legal scholars note that cases like this are still relatively new territory. Courts have historically been reluctant to interfere with boardroom decision-making, particularly in areas where technical or commercial complexity is high. But climate change, they argue, is no longer a peripheral risk. It is central to the long-term planning and governance of global companies.

Outlook for Shell and Similar Cases

For Shell, the stakes are high. A court ruling that criticises or penalises its directors could trigger a broader reassessment of governance practices in energy and beyond. The High Court’s eventual decision, whether it accepts or dismisses the case, will be closely watched—not just in the UK, but in legal and investment communities around the world.

Timeline and Next Steps

Shell has until later this summer to file its full response to the claim. The court’s preliminary hearings are expected before the end of the year.

As legal standards shift and expectations rise, corporate climate strategies may increasingly be judged not only by shareholders and the public but also in a court of law.