Last month, in an extraordinary decision, a Dutch court ruled that Royal Dutch Shell must dramatically reduce its carbon emissions in a landmark climate decision. The company must slash its CO2 emissions by 45% by 2030 from 2019 levels.
According to Jon Duncan, Head of Responsible Investing at Old Mutual, this case signals a radical shift in European attitude towards the shared risk posed by global climate change. “ Climate change risks are accelerating a host of social challenges, locally and abroad. Companies, even industries, will face an increasing threat of diminished social licence unless they proactively manage their environmental, social and governance (ESG) risks,” says Duncan.
“In this context, we will see greater mobilisation of civil society against the companies and industries considered to be the worst offenders (those that don’t display a visible and tangible commitment to reducing their footprint), particularly from a fossil fuel production and carbon emissions perspective, as seen with Royal Dutch Shell.”
Duncan says the ruling — the first of its kind following the Paris Climate Agreement — highlights the seriousness with which businesses should commit to decarbonisation. “More and more, investors are becoming acutely aware of transition risk , which is why we are seeing an increasing appetite to climate aware funds ” says Duncan.
