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.
Are these NGOs really opposing the government? Or could it be that the two sides are colluding to enable the government to act in ways that would otherwise be politically difficult?
After all, there have been times when the government has lost court cases and either ignored the courts or changed the law to remove the effect of a case.
LikeLiked by 1 person
It’s not the risk of climate change that the directors are failing to address, it is the risk resulting from the Net Zero transition — a risk that the likes of ClientEarth are doing their best to maximise by increasing the transitional pressure. As you say, climate change risk is within ClientEarth’s remit but the transition risk to companies should be none of their god damn business. They are pissing on the fire they helped start.
LikeLiked by 1 person
As John says, it’s not today’s regulatory requirements that companies have to meet, but what ClientEarth thinks the regulations are going to be in a decade’s time, with a little assistance from themselves.
A couple of days ago we saw the agency created to maximise extraction of oil and gas from the UK’s continental shelf trying to regulate oil and gas companies out of existence.
I am reminded also of the “Sue and Settle” approach to regulatory change in the US, where the EPA was accused of a collaborative approach with environmental groups, thus bypassing legislation. There was fanfare when this practice was supposedly curtailed by Pruitt. What happened next, I wonder?
It is one thing to persuade a dozen witless wonders to overthrow all common justice and declare a little old lady innocent of unadulterated vandalism just because they are impressed by her sincerity and avowed good intent, and it is quite another to persuade the judicial system that a company is single-handedly guilty of causing the demise of society just because of its role in facilitating that society’s previous plans for improving wealth and well-being. Having succeeded in the former and failed in the latter, it is only understandable that the activists have turned their attention to transition risk in an attempt to find an alternative way of legislatively attacking the oil companies. But in so doing, they have had to adopt a phony interest in the well-being of shareholders and they have had to ignore the fact that most companies are equally guilty of failing to take transition risk seriously. This legal attack on oil companies to the exclusion of all others just shows that they are not in the least bit concerned for shareholders and are just engaged in a vindictive campaign in which oil companies have to be brought to justice at all costs. Hence, it’s a matter of ‘if we can’t get you for physical climate risk (which was our hope) we will get you for the transition risk to shareholders (which actually is none of our business but it will do)’.
LikeLiked by 1 person
PS. I should add that the other new ploy is to throw down allegations of greenwashing — another vice that the oil companies share with the rest of the planet’s inhabitants.
I suppose ClientEarth’s successful cases against the government over air pollution were based on sound medical evidence of harm. Presumably in the current case, it will be enough to prove that the government is not acting in line with the Climate Change Act, which they supported when in opposition. Serve them right, in a sense, and maybe it will persuade some MPs to look again at the ludicrous aims that have been written into law.
Over time, the green blob has got further and further from reality. The first wave of green NGOs identified a problem and went after it in a practical fashion, whether it was keeping footpaths open or saving whales. Then they got to campaigning for governments to act, then nudging the public into getting governments to act, and now getting courts to force governments to apply the laws they’ve been nudged into passing in order to get them to act.
LikeLiked by 1 person