To achieve its net-zero climate goals, the environmental, social, and governance (ESG) movement has mainly focused on hijacking control of energy companies as a means to shutting them down. Through regular ESG engagement and annual proxy contests, the agency of energy executives and directors has been slowly eroded to force these corporate managers to agree to self-destructive emission reduction targets.

With the 2030 countdown clock ticking, ESG activists are now taking a more direct approach to pressuring energy company boards by suing individual directors, combining the standard climate lawfare that has been used against the industry for years with Saul Alinsky’s Rule #13 of personalizing one’s progressive target.

In early February, the environmental law firm ClientEarth brought a climate lawsuit against the board of directors of Shell plc, the U.K. integrated oil and gas company, in the High Court of England and Wales.

The shareholder suit alleges that Shell’s 11 directors have mismanaged the company’s exposure to climate risk by “failing to move away from fossil fuels fast enough.” The plaintiffs argue that Shell’s energy transition strategy does not align with the Paris Climate Agreement, while its continued investment in new oil and gas development runs counter to the recommendations of the International Energy Agency. As such, the Shell board stands in breach of its company duties under English law, the lawsuit alleges.

As the law firm’s press release proudly proclaims, the Shell lawsuit is “the first attempt to hold a company’s board of directors personally liable for failing to properly prepare for the energy transition.”

ESG activists have been telegraphing this legal move for some time. Since 2015, ESG has been gradually redefined as a risk framework. Now, mismanaging so-called sustainability risks — chief among them climate — represents a fiduciary breach.

Under the U.K. Companies Act of 2006, directors have a legal duty to promote the success of their companies and, for any board decision, are required to consider the long-term consequences (including reputational ones) and the impact on the community and environment.

U.K. directors must also avoid conflicts of interest. It remains to be seen whether ClientEarth will try to argue that a continued focus on more profitable fossil fuels represents a conflict for Shell’s directors since such a strategy would translate into higher performance-based remuneration for them personally. Such an insane claim would be logically consistent in the inverted world of ESG.

The loose wording of the U.K. law would seem to provide sufficient wiggle room for an adverse ruling against the company. Shell probably stands as good a chance with the English High Court as Charles I did back in 1649.

But climate activists’ crusade against energy companies will not stop in the U.K. Indeed, the Shell director lawsuit should serve as a cautionary tale for U.S. energy companies desperately seeking ESG approval.

Shell has bent over backward to placate the sustainability mob by selling off oil-producing properties to reduce its carbon footprint and ramping up investments in renewable power and biofuels.

Despite such good climate deeds, Shell has become the corporate whipping boy for the climate-crazed ESG movement. It has been labeled a violator of the United Nations Global Compact’s guiding principles around human rights and the environment. Its corporate offices have been repeatedly vandalized by demonstrators. One of its North Sea offshore platforms was recently occupied by climate protesters.

The beleaguered Shell was also successfully sued in the Netherlands by environmentalists, with the Hague District Court ruling in May 2021 that the company had to reduce its worldwide Scope 1 and 2 greenhouse gas emissions by 45% by 2030 to bring itself into alignment with the Paris Climate Agreement. Shell was still appealing the Hague ruling when the ClientEarth lawsuit upped the ante by claiming that Scope 3 emissions should also be included in the company’s net-zero calculations.

Clearly, a policy of ESG appeasement is not working for oil and gas companies. Instead of playing for time or trying to strike a Faustian bargain with government regulators over a carbon tax, the energy industry needs to start copying the aggressive legal tactics of the opposition.

Specifically, there is a strong case to be made for bringing a racketeering charge against the network of environmental, climate, and ESG activist groups now working in concert to shut down fossil fuel production through litigation and other means.

The Racketeer Influenced and Corrupt Organizations Act or RICO was passed in 1970 to combat organized crime in the U.S. but has since been applied to entire industries. It could very well be applicable to today’s climate cartel. Under the law, members of a corrupt enterprise may be prosecuted and indicted en masse for a pattern of criminal activity affecting interstate or foreign commerce — with the racketeering list including economic espionage and extortion, both of which would seem to apply to the tactics being used by ESG advocacy groups.

When it comes to the climate-related attacks on energy companies, the pattern of coordination and collaboration is patently obvious. In the Shell example, the litigious ClientEarth is a U.K. nonprofit organization backed by donations from several green billionaires, including Michael Bloomberg, Jeremy Grantham, and Christopher Hohn.

Bloomberg’s Beyond Carbon initiative is openly working to retire all U.S. coal power plants by 2030 and stop the construction of any new gas-fired generation. The climate research center founded by Grantham at the London School of Economics has published white papers on the need to use “systemic lawyering” and strategic litigation to achieve climate policy goals. For his part, Hohn has provided financial support to Extinction Rebellion, one of the protest groups that has regularly disrupted Shell’s operations because its members view the company as a “climate criminal.”

Showing the way forward for the energy industry on the RICO front is Energy Transfer, the much-maligned U.S. midstream sponsor of the Dakota Access Pipeline, which was placed into service in 2017. After facing a withering synchronized attack against its legally permitted, market-required Bakken oil pipeline — an attack that continues to this day — the company brought a federal RICO lawsuit against the environmental and Indigenous groups conspiring against the project.

The federal suit was dismissed in 2019 by United States District Judge Billy Roy Wilson, a Clinton appointee, before going to trial. But Energy Transfer refiled the RICO case in North Dakota state court, with a trial date now set for June 2023. If successful, the treble damages of nearly $1 billion sought by the company would send a strong, stinging message to climate activists.

Energy industry leaders should disabuse themselves of the notion that there will be a place for fossil fuels in a net-zero world. At this point in the game, the best defense for the industry may be a good legal offense.

Paul Tice is a former Wall Street research analyst and an adjunct professor of finance at New York University’s Stern School of Business. His forthcoming book on ESG and sustainable investing will be published by Encounter Books in the fall of 2023.