Climate Matters
The global starting signal for climate cases sounded with the 2015 ruling of the District Court of The Hague, in the proceedings of Stichting Urgenda against the Dutch State.[1] The State must ensure that emissions in the Netherlands are at least 25% lower in 2020 than in 1990. Grounded on the consideration that it is a duty of the State to protect the current generation from loss of life and/or disruption of family life. These are two fundamental rights that belong to everyone under the European Convention on Human Rights (ECHR).
In 2019, in the case of Environmental Defense & Greenpeace v. Shell, among others, the same court ruled that Shell was in violation of unwritten social due diligence and thus acting unlawfully with respect to human rights.[2] According to the Court, Shell must reduce its CO2 emissions by 45% by the end of 2030 compared to 2019. One of the considerations underlying this judgment is that all companies must respect human rights regardless of sector, operational context, ownership and structure.
So every company is expected to do their part to make their operations more sustainable and reduce CO2 emissions. This also applies to the energy-intensive transport and logistics sector.
Urgency for change
There are now 2,300 climate cases pending against governments and companies worldwide.[3] Sustainability is now a necessity rather than a choice. In addition to increasing pressure from legislators and the courts, sustainability is also being urged by the sector itself. Transport en Logistiek Nederland (TLN), for example, is pushing for emission-free trucks in inner cities from 2025 and driving on sustainable biofuels in outlying areas. In addition, efforts are being made to achieve efficiency in the logistics chain, which will require trucks to drive fewer miles. The Netherlands Organization for Applied Scientific Research (TNO) is committed to an integrated system approach to sustainable logistics by analyzing all modes of transport for their CO2 emissions.
Establishing agreements on CO2 reduction
To reduce CO2 emissions as much as possible, parties can make agreements about this. The first step in making such agreements is to map your own CO2 emissions and those of your partners in the supply chain. Then it is important to determine how the emissions are measured, what the reference year is and what reduction is intended. The agreements about this can be included in a contract.
Failure to keep appointments
The next question is what you can do if your contracting party does not keep its agreements. In that case, you are - in general - entitled to performance. If performance is permanently impossible or you have suffered damages, you may be eligible for compensation. However, the damage you suffer if your contracting party emits too much is difficult to impossible to determine. If the damages cannot be determined, claiming damages will not help you.
Furthermore, in principle, the party against whom default is made has the power to rescind the contract. This power is nuanced in the law because the default must outweigh the dissolution of the contract. If this is not the case, the authority to rescind lapses. Assuming that your contracting party only fails to meet the agreements regarding the reduction of CO2 emissions, this may not be sufficient grounds to dissolve the contract.
So the remedies of damages and termination offer little relief in these cases. More promising is the agreement of a bonus-malus system, in which achieving the agreed emission reduction is financially rewarded. On the other hand, failure to achieve the agreed emissions can be penalized with a penalty clause. In this way, your cooperation partner has the right incentive for sustainability.
[1] Court of The Hague of 2015, ECLI:NL:RBDHA:2015:7145 & upheld by the Supreme Court of 2019, ECLI:NL:HR:2019:2006.
[2] Hague District Court of 2019, ECLI:NL:RBDHA:2021:5337 & Hague District Court of 2019, ECLI:NL:RBDHA:2021:5339.
[3] See Environmental Defense website.
