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In Brief: UK lawsuit against Shell directors dismissed; EU gives final approval to anti-deforestation rules

The latest news in ESG policy and regulation.

The lawsuit against Shell board directors by non-profit ClientEarth has been dismissed by a judge in the High Court of England and Wales. The plaintiffs argued that the oil major’s 11 directors had breached their legal duties under the UK Companies Act, by failing to implement a transition strategy aligned with the Paris Agreement. Lawyers for ClientEarth, whose claim was backed by investors holding more than 12mn shares in Shell, can now request an oral hearing to ask the court to reconsider its stance.

A former Volkswagen executive has pleaded guilty to fraud by omission and false certification related to the carmaker’s notorious “Dieselgate” scandal, which emerged in 2015 after US regulators uncovered that the company had installed software on cars that could manipulate emissions. Volkswagen has reportedly spent more than €32bn in legal fees and fines related to the scandal. Rupert Stadler, the former Volkswagen executive and board member, and the boss of its Audi brand, is expected to be sentenced in June in the district court of Munich.

The Institutional Investors Group on Climate Change has published net zero guidance for private equity firms. Its “net zero investment framework” aims to improve target setting, engagement and reporting efforts between limited partners, general partners and the companies private equity businesses invest in, with the ultimate goal of decarbonising investment portfolios.

The European Council has given its final approval for an anti-deforestation regulation, which will tackle the imports and exports across the bloc of commodity products linked to forest degradation. Commodities within the scope of the new rules are palm oil, cattle, wood, coffee, cocoa, rubber and soy, as well as derived products such as chocolate, furniture and printed paper. The new regulation will introduce due diligence requirements, potential penalties and a benchmarking system, which will result in operators and countries being assigned different risk categories upon which controls and inspections will be conducted. In April, the European parliament approved the new law, which will now be published in the EU’s official journal and enter into force 20 days after publication.

The UK government has put forward proposals to reward communities in England that back onshore wind farms. The benefits could include stakes in a turbine, energy bill discounts or funding for new community facilities, such as sports and recreation centres, and electric car charging points. In its announcement, the government stressed that the expansion of onshore wind will “continue to be decided at a local level” and that any reward schemes would be agreed between developers and communities on a case-by-case basis. The government is consulting on the matter until July 7. Meanwhile, according to research by Imperial College London, UK wind power surpassed gas for the first time as the main source of electricity between January and March this year.

The Italian central bank has published a research paper, assessing the risks and economic impacts of flooding across the peninsula. The release of the paper coincides with certain areas in the country’s Emilia Romagna region experiencing severe flooding this week, which led to casualties. Although the analysis acknowledges that estimates are dependent on available data, the authors of the report calculated that in 2020 nearly €1tn, or 25 per cent of the country’s total housing stock, was exposed to flood risks — with annual losses predicted at €3bn.

The Nigeria Sovereign Investment Authority and the country’s National Council on Climate Change have signed a memorandum of understanding to tackle domestic climate risks and opportunities. The agreement would see the two parties collaborate on the future development of Nigeria’s climate change framework and carbon emissions trading scheme, as well as the management of a potential climate change fund and national carbon registry.

The Canadian government has launched a consultation on the country’s 2030 biodiversity strategy. Responses will be collected until July 14 2023, with a final draft set to be finalised by the end of the year. The country hosted the COP15 meeting in Montreal at the end of last year, where countries pledged to protect 30 per cent of the world’s land and oceans by 2030.

A service from the Financial Times