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Shell’s board of directors sued over climate strategy in a first-of-its-kind lawsuit

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Shell recently reported its highest-ever annual profit of nearly $40 billion.

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Shell‘s directors are being personally sued for allegedly failing to adequately manage the risks associated with the climate emergency in a first-of-its-kind lawsuit that could have widespread implications for how other companies plan to cut emissions.

Environmental law firm ClientEarth, in its capacity as a shareholder, filed the lawsuit against the British oil major’s board at the high court of England and Wales on Thursday.

It alleges 11 members of Shell’s board are mismanaging climate risk, breaching company law by failing to implement an energy transition strategy that aligns with the landmark 2015 Paris Agreement.

The claim, which has the backing of institutional investors with over 12 million shares in the company, is said to be the first case in the world seeking to hold a board of directors liable for failure to properly prepare for the energy transition.

“Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term,” Paul Benson, senior lawyer at ClientEarth, said in a statement.

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“The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the Board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success — despite the Board’s legal duty to manage those risks,” Benson said.

We hope the whole energy industry sits up and take notice.

Mark Fawcett

Chief Investment Officer at Nest

The group of investors supporting the claim include U.K. pension funds Nest and London CIV, Swedish national pension fund AP3, French asset manager Sanso IS and Danske Bank Asset Management, among others. Altogether, the institutional investors hold more than half a trillion U.S. dollars in total assets under management.

“We do not accept ClientEarth’s allegations,” a Shell spokesperson said. “Our directors have complied with their legal duties and have, at all times, acted in the best interests of the company.”

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“ClientEarth’s attempt, by means of a derivative claim, to overturn the board’s policy as approved by our shareholders has no merit. We will oppose their application to obtain the court’s permission to pursue this claim,” they added.

Shell, which is aiming to become a net-zero emissions business by 2050, said it believes its climate targets are Paris-aligned.

ClientEarth said leading third-party assessments have suggested this is not the case, however, noting Shell’s strategy excludes short to medium-term targets to cut the emissions from the products it sells, known as Scope 3 emissions, despite this accounting for over 90% of the firm’s overall emissions.

The aspirational goal of the Paris Agreement is to pursue efforts to limit global heating to 1.5 degrees Celsius above pre-industrial levels by slashing greenhouse gas emissions. The fight to keep global heating under 1.5 degrees Celsius is widely regarded as critically important because so-called tipping points become more likely beyond this level. These are thresholds at which small changes can lead to dramatic shifts in the Earth’s entire support system.

To be sure, the burning of fossil fuels, such as oil and gas, is the chief driver of the climate emergency.

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Big Oil profit bonanza

The case comes shortly after Shell reported its highest-ever annual profit of nearly $40 billion.

The energy giant’s 2022 earnings smashed its previous annual profit record of $28.4 billion in 2008 and were more than double the firm’s full-year 2021 profit of $19.3 billion.

Shell CEO Wael Sawan described 2022 as a “huge year” for the company, saying he felt privileged to be stepping into the role he started on Jan. 1.

“As we look ahead, I think we have a unique opportunity to be able to succeed as the winner in the energy transition. We have a portfolio that I think is second to none,” Sawan said.

Shell’s results came as part of a Big Oil profit bonanza last year, bolstered by soaring fossil fuel prices and robust demand since Russia’s full-scale invasion of Ukraine.

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Activists from Greenpeace set up a mock-petrol station price board displaying the Shell’s net profit for 2022 as they demonstrate outside the company’s headquarters in London on Feb. 2, 2023.

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Nest Chief Investment Officer Mark Fawcett said the case against Shell’s board of directors showed investors were prepared to challenge those who aren’t deemed to be doing enough to transition their business.

“We hope the whole energy industry sits up and takes notice,” Fawcett said.

Separately, London CIV’s Head of Responsible Investment Jacqueline Amy Jackson said, “In our view, a Board of Directors of a high-emitting company has a fiduciary duty to manage climate risk, and in so doing, consider the impacts of its decisions on climate change, and to reduce its contribution to it.”

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“We consider that ClientEarth’s claim is in our client funds’ interests as a shareholder of Shell, and we support it,” Jackson added.



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Turkey’s devastating earthquake comes at a critical time for the country’s future

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Civilians look for survivors under the rubble of collapsed buildings in Kahramanmaras, close to the quake’s epicentre, the day after a 7.8-magnitude earthquake struck the country’s southeast, on February 7, 2023.

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Life for millions across Turkey and Syria changed forever on Monday, as two consecutive earthquakes sent shockwaves across hundreds of miles.

Nine hours apart and measuring a magnitude of 7.8 in Turkey and 7.5 in Syria on the Richter scale, the quakes were the region’s strongest in nearly a century.

At the time of writing, the death toll from the quakes is more than 12,000, with many still missing and critically injured. The World Health Organization put the number of people affected by the disaster at 23 million. At least 6,000 buildings collapsed, many with residents still inside them. Rescue efforts continue to be the top priority, with some 25,000 deployed in Turkey and thousands more sent in from overseas — but a bitter winter storm now threatens the lives of the survivors and of those still trapped under rubble.

Syria, ravaged by 12 years of war and terrorism, is the least prepared to deal with such a crisis. Its infrastructure is heavily depleted, and the country remains under Western sanctions. Thousands of those in the affected areas are already refugees or internally displaced people.

With the dust of the catastrophe still settling, regional analysts are zoning in on the longer-term rippling effect that the catastrophe could have on Turkey, a country whose 85 million-strong population was already mired in economic problems — and whose military, economy, and politics have a major impact far beyond its borders.

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A crucial year for Turkey

This year will serve as a critical inflection point for Turkey, as it approaches a presidential election on May 14. The result of that election — whether current President Recep Tayyip Erdogan stays in power or not — has massive consequences for Turkey’s population, economy, currency, and democracy.

Erdogan’s response to the disaster — and potential calls for accountability as to why so many buildings were insufficiently designed to withstand such tremors — will now play a major role in his political future.

“If the rescue effort is mishandled and people get frustrated, there’s backlash,” Mike Harris, founder of Cribstone Strategic Macro, told CNBC on Tuesday. “And the other issue of course, is the buildings and which ones have gone down. To the extent these were built under the new codes and the authorities didn’t impose regulations, there could be some serious blowback for Erdogan. So Erdogan’s lost control of the narrative.”

Erdogan has lost control of the narrative, analyst says

Erdogan called for the early May election amid a national cost of living crisis, with local inflation above 57% — down from more than 80% between August and November. Several analysts say that the move reveals Erdogan’s urgency to secure another term in power before his controversial economic policies backfire.

Harris described the president created “this weird situation where inflation is running at 80%, but he needs to keep the currency stable between now and the election.”

Through very unorthodox policies, Erdogan has “found a very creative way, a very costly way, to de-dollarize the economy, basically,” he said, giving examples like allowing Turks to keep their bank deposits at a 13% interest rate, then promising to cover their losses, if the currency drops further.

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Two massive earthquakes rock Turkey and Syria as death toll exceeds 2,000

Harris boldly predicted: “Actually, the currency has to collapse if he wins, because there will be no confidence and he’s created this artificial scenario that can’t be sustained for a prolonged period of time.”

Additionally, Erdogan’s earlier fiscal pre-election promises — populist moves like increasing salaries and lowering the pension age — may be impossible now, as more public funds will need to be directed toward rebuilding entire cities and towns.

Economic anxiety

Turkey’s economic decline has been fueled by a combination of high global energy prices, the Covid-19 pandemic and war in Ukraine, and, predominantly, by economic policies directed by Erdogan that have suppressed interest rates despite soaring inflation, sending the Turkish lira to a record low against the dollar. Turkey’s FX reserves have dropped sharply in recent years, and Ankara’s current account deficit has ballooned.

The Turkish lira lost nearly 30% of its value against the dollar in the last year, severely damaging Turks’ purchasing power and hurting Erdogan’s popularity.

Turkey’s opposition parties have not yet put forth their candidate. The strongest potential challenger, Istanbul Mayor Ekrem Imamoglu, was arrested and slapped with a political ban in December over charges his allies say are politically motivated and used solely to prevent him from running for president.

We still think Turkey is a 'viable' place to invest, Mark Mobius says

Investors in recent years have been pulling their money out of Turkey in droves. One major emerging markets guru, Mark Mobius of Mobius Capital Partners LLP, remains bullish despite the earthquake disaster and economic problems.

“When it comes to investing in Turkey, we still believe it’s a viable place to invest,” Mobius said. “In fact, we do have investments there. The reason is the Turks are so flexible, so able to adjust to all these disasters and problems … even with high inflation that with a very weak Turkish Lira … So it doesn’t scare us at all to invest in Turkey.”

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Mobius did note the glaring issue of Turkey’s earthquake preparation, which may soon come to haunt Erdogan’s election chances.

“This is one of the big problems, the building codes in some of these areas are not up to par,” he said.

NATO and Turkey’s powerful role on the global stage

Internationally, Turkey’s future affects the war in Ukraine, given Erdogan’s role as a mediator between Ukraine and Russia. Turkey is the main NATO member still standing in the way of Sweden and Finland’s accession to the powerful defense alliance.

Ankara is also brokering the Black Sea Grain Initiative between Ukraine and Russia, which allows vital supplies of grain to be exported from Ukraine to the rest of the world despite a Russian naval blockade on Ukraine’s Black Sea ports.

Erdogan’s response to the earthquakes — and subsequent election performance — will have an impact on all of these.

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Russian President Vladimir Putin is expected to meet Turkey’s President Recep Tayyip Erdogan on Thursday.

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Turkey will get some relief from Western pressure on its NATO stance in the wake of the earthquakes, but not for long, says Sinan Ulgen, chairman of the Istanbul-based Center for Economics and Foreign Policy.

“It’s going to be temporary,” Ulgen said. “Turkey will look at a few weeks of reprieve, but after that it will be more back to business on the foreign policy side.”

For now, Western allies and countries from around the world are sending aid and rescue teams to help with Turkey’s disaster relief efforts. Ankara will need to roll out massive public spending to support those in need and rebuild all the areas affected by the quakes.

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“The positive side is that Turkey has fiscal space,” Ulgen said. Turkey has a public debt-to-GDP ratio of around 34%, which is very low compared to the U.S. and Europe. According to him, this “means that Turkey has room for fiscal spending, even if that means a sizeable increase in the public debt ratio.”

As a large country, Turkey has significant capacity to handle natural emergencies. Still, Ulgen added, “no matter what the capacity at hand, it was going to be insufficient to respond to this type of disaster unfortunately.”



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Singapore drops pre-departure requirements for travelers, further eases mask rules

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People gather outside the ArtScience Museum at Marina Bay Sands in Singapore on January 17, 2023. (Photo by Roslan RAHMAN / AFP) (Photo by ROSLAN RAHMAN/AFP via Getty Images)

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SINGAPORE — Singapore is set to allow non-fully vaccinated travelers to enter the country without a negative pre-departure test from next week, health authorities announced Thursday.

The country is set to remove mask-wearing on public transport from Monday, as it seeks to exit the “acute phase” of the pandemic, said the Ministry of Health.

The country’s Covid task force, created in January 2020, will be deactivated.

“Our Covid situation has remained stable over the recent months, despite increased travel over the year and holidays and China’s shift from zero Covid,” said Singapore’s deputy prime minister Lawrence Wong, who is also co-chair of the Covid task force.

“Our population has developed a high level of hybrid immunity. The risk of infections leading to severe illness or deaths is very low — comparable to other endemic respiratory diseases like influenza.”

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The further relaxation of pre-departure travel and mask requirements are “significant steps” that mark Covid-19 as an endemic and “new norm” for Singapore.

Changes to travel

Mask-wearing rules ease

Mask-wearing on public transport and indoor health settings will no longer be mandatory, but Wong encouraged the public to continue wearing masks if they showed any symptoms.

However, mask-wearing is still required be in places like hospital wards, clinics and nursing homes, where there is “interaction with patients” and “indoor patient-facing areas,” the health ministry said.

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“This is to better protect patients and healthcare workers from infectious diseases in general,” it added.

The Ministry of Health said that private enterprises may also choose to maintain mask-wearing requirements as company policy for workplace health and safety, or “business continuity reasons.”

Back to pre-pandemic levels



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