Shell Stock In Focus After Landmark Climate Ruling, Retail’s Upbeat

Oil and gas major Shell’s ($SHEL) ADR shares were down over 2% on Tuesday morning after a landmark court ruling in Hague overturned a previous verdict requiring the oil giant to cut harmful emissions contributing to global warming. Retail investors on Stocktwits took a more favorable view of the decision.

On Tuesday, the Hague Court of Appeal reaffirmed Shell’s responsibility towards addressing climate change, but ruled the company couldn’t be directed to cut specific emissions, according to several news reports.

The decision is seen as a setback for climate action, particularly Shell’s and other oil majors’ role in cutting carbon emissions. Shell had to cut emissions by 45% by 2030 from 2019 levels, as mandated by the earlier ruling dating back to 2021. That ruling, which the company appealed against, included all CO2 emissions from Shell’s own production as well as any third party products.

“We are pleased with the court’s decision, which we believe is the right one for the global energy transition, the Netherlands and our company,” Shell CEO Wael Sawan was quoted as saying by Reuters.

Retail sentiment on the stock turned ‘bullish’ (67/100) from ‘bearish’ (43/100) a day ago. Message volumes were in the normal range.

The landmark ruling comes at a time when the COP29 UN climate summit has just commenced in Baku, Azerbaijan. COP29’s opening day proceedings were also reportedly held up by a dispute over the role fossil fuels would have on the summit’s agenda.

The Director of the Dutch arm of environmental group Friends of the Earth, Donald Pols, was quoted as saying, "This hurts…At the same time, this case has shown that large polluters are not above the law." Friends of The Earth originally challenged the oil major, approaching the courts to make the oil company take strong steps towards preventing global warming.

Meanwhile, Shell is said to be investing $10 to $15 billion between 2023 and 2025 in low-carbon energy projects, according to the Reuters report, which noted the company’s decision to cut back on its renewable efforts because of the time it takes to generate profit.

In Shell’s favor were court observations agreeing with the company’s argument that “an absolute order” to reduce its Scope 3 emissions could have an adverse effect, turning customers to the more polluting coal.

Shell stock is up 3% year-to-date.

For updates and corrections, email newsroom@stocktwits.com.

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