In “Big Green Charity”i I bemoaned the extraordinarily broad definition of charitable purposes in the UK, as it is now set out in the Charities Act 2011. I also complained about the links between “green” charities and arms of the state; the extent to which the previous concept of private charity is being replaced by charitable behemoths funded by the state; and I took a look at the way some “green” charities (I concentrated on Climate Outreach and Climate Group) are taking full advantage of charitable tax breaks and state funding to pursue their objectives.
There seems to be no end to this sort of thing, and recent media headlines have drawn my attention to yet another “green” charity, namely ClientEarth.
ClientEarth is an environmental law charity, a company limited by guarantee, registered in England and Wales, company number 02863827, registered charity number 1053988, registered office 10 Queen Street Place, London EC4R 1BE, a registered international non-profit organisation in Belgium, ClientEarth AISBL, enterprise number 0714.925.038, a registered company in Germany, ClientEarth GmbH, HRB 202487 B, a registered foundation in Poland, Fundacja ClientEarth Poland, KRS 0000364218, NIP 701025 4208, a registered 501(c)(3) organisation in the US, ClientEarth US, EIN 81-0722756, a registered subsidiary in China, ClientEarth Beijing Representative Office, Registration No. G1110000MA0095H836.ii
Shell directors sued for ‘failing to prepare company for net zero’
So said the headline to the articleiii in the Guardian on 15th March 2022, which carried on with the secondary headline “Environmental law organisation ClientEarth brings action and urges other shareholders to join”.
As the Guardian tells us:
ClientEarth has said it is taking the action against Shell in the company’s best interests. Their claim says the board has failed to properly account for the risks climate change poses to the company. Under the Companies Act, directors are legally bound to act in a way that promotes the company’s success and to exercise reasonable care, skill and diligence.
Paul Benson, a ClientEarth lawyer, said: “It’s the first of its kind, this case. It’s the first time that anyone has sought to hold the board accountable for failing to properly prepare for the net zero transition.”
“It is highly novel, we’re in uncharted territory here but we see real merit with this claim. We think, frankly, the longer the board delays with this the more likely it is that the company is going to have to execute this sort of handbrake turn to retain commercial competitiveness, to meet the challenges of inevitable regulatory developments.”
…“We say in our claim that Shell’s board is mismanaging the material and foreseeable climate risk facing the company,” Benson said.
“Shell is actually really quite exposed to the risks of climate change those are physical risks and transitional risks. They are exposed to what we call stranded asset risk, where their assets – for example their facilities, their physical infrastructure – the value of that is just going to reduce or it will become a liability as the net zero transition progresses.
“And they are exposed to massive write-downs of those assets.”
Client Earth is a charity. Is this what charities should be doing? Isn’t this a matter solely for Shell and its shareholders?
But it gets even worse.
We’ve got permission to take the UK government to court over its net zero strategy
This is the heading to a section of the ClientEarth websiteiv devoted to covering its latest litigation, this time against the UK Government:
Along with Friends of the Earth and Good Law Project, we’ve been granted permission to sue the UK Government over its inadequate net zero strategy, arguing that the Government has failed to set out sufficient policies to tackle climate change and reach net zero emissions by 2050.
Needless to say, Friends of the Earth is also a UK registered charity (though in fairness the Good Law Project is not, despite being a company limited by guarantee and a not-for-profit organisation). As a brief digression, the most recent accountsv for Friends of the Earth show it receiving grants from the Big Lottery Fund of £118,589 (it also received more than £3M from the People’s Postcode Lottery. ClientEarth, too, receives £millions from the People’s Postcode Lottery. Given that lotteries tend to be subscribed by the less well-off, rather than by rich people, these organisations are in effect being partially funded by a form of voluntary regressive taxation. They then use the money provided by poor people to demand policies that will make poor people even poorer).
ClientEarth suing the UK Government is nothing new. In 2016 the High Court granted ClientEarth leave to take the government to Court with regard to its plans to tackle air pollution. And that was also just the latest (at the time) in a string of cases brought by this charity against the Government:
ClientEarth has previously won three cases against the UK Government over the country’s illegal and harmful levels of air pollution.
So we are gleefully told by ClientEarth’s websitevi.
Feeding The Mouth That Bites You
Perhaps all this needn’t stick too much in the craw of the average UK taxpayer if ClientEarth was simply taking advantage of its charitable status to avoid what taxes it can. But it’s so much worse than that. Note 7 to its accountsvii for the year ended 31st December 2020 shows the Department for International Development (DfID) to be among its top 10 donors, to the tune (that year) of £1,078,401.
Accounts for earlier years also show substantial payments to ClientEarth from DfID, though they appear to be for restricted purposes (i.e. DfID is funnelling funds for specific projects through ClientEarth, to be spent only on those projects).
I have no idea whether DfID’s grants to ClientEarth in 2020 are restricted or unrestricted (the accounts don’t go into that level of detail). I hope they are restricted, but regardless of that, is it really a good idea for the UK Government to continue funding an organisation that takes it to Court with monotonous regularity? When ClientEarth keeps biting the hand that feeds it, the taxpayer-funded trough should be withdrawn.