Shell (SHEL) Wins a High Court Battle Against ClientEarth
Shell plc’s (SHEL) management was accused of improperly managing climate risks by an activist investor group — ClientEarth. Although the London High Court recently dismissed ClientEarth's lawsuit, the activist investor group revealed its intention to appeal against the dismissal, per media reports.
In February, the High Court of England and Wales received a complaint from ClientEarth, an environmental law NGO and small Shell shareholder with 27 shares, that SHEL’s management was failing to mitigate the material and foreseeable risks posed by the climate change. ClientEarth claimed that Shell’s goal of achieving net zero carbon emissions by 2050 cannot be met with its existing climate transition plan.
The lawsuit was initially rejected in May by Judge William Trower, who again refused permission to bring the case in a written ruling earlier this week. Trower stated that ClientEarth's case ignored that managing large businesses requires directors to consider a range of competing considerations, wherein courts should not interfere.
A spokesperson for Shell said that the rejection was the right outcome and the court has reaffirmed its decision regarding this claim being fundamentally flawed.
According to ClientEarth senior lawyer Paul Benson, the charity was upset with the outcome and intended to file an appeal. Benson stated that Shell's flawed climate strategy breaches English company law since it is at odds with the Paris Agreement. He added that SHEL’s failure to take decisive action to position the business for the rapidly advancing energy transition puts its commercial viability at risk.
Even though there were hiccups and skepticism about the energy major’s climate transition, management gained overwhelming support at its annual shareholders meeting in May. Later, Shell announced a change of course, saying it will maintain oil output until 2030 rather than progressively cutting it.
Zacks Rank & Key Picks
Shell is a group of U.S. and Europe-based big energy multinationals with operations across the world. Currently, the company carries a Zack Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Evolution Petroleum Corporation EPM, NGL Energy Partners LP NGL and Murphy USA MUSA. While Evolution Petroleum sports a Zacks Rank #1 (Strong Buy), both NGL Energy Partners and Murphy USA carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is an independent energy company. It was formed to acquire and develop oil and gas fields and apply both conventional and specialized technology to accelerate production, particularly in low-permeability reservoirs. EPM has witnessed an upward earnings estimate revision for 2024 in the past 30 days.
NGL Energy Partners, headquartered in Tulsa, OK, is a limited partnership operating a vertically-integrated propane business with three operating segments — retail propane, wholesale supply and marketing, and midstream. NGL has witnessed an upward earnings estimate revision for 2024 in the past 60 days.
Murphy USA operates stations close to Walmart supercenters and sells low-cost, high-volume fuel. This helps the company to get a lot more business than its competitors. Another significant competitive advantage for the firm is its access to product distribution centers and pipelines, which helps control costs in the intensely competitive retail sector. Over the past seven days, MUSA has witnessed an upward earnings estimate revision for 2024.
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Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
