At a court room in The Hague, judge Larisa Alwin read out a ruling which ordered Shell to reduce its planet-warming carbon emissions by 45% by 2030 from 2019 levels.
Shell currently has a target to reduce the carbon intensity of its products by at least 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050 compared with 2016 levels.
But the court said that Shell's climate policy was "not concrete and is full of conditions...that's not enough."
"The conclusion of the court is therefore that Shell is in danger of violating its obligation to reduce. And the court will therefore issue an order upon RDS," the judge said.
The court ordered Shell to reduce its absolute levels of carbon emissions, while Shell's intensity-based targets could allow the company to grow its output in theory.
The lawsuit, which was filed by seven groups including Greenpeace and Friends of the Earth Netherlands, marks a first in which environmentalists have turned to the courts to try to force a major energy firm to change strategy.
It was filed in April 2019 on behalf of more than 17 000 Dutch citizens who say Shell is threatening human rights as it continues to invest billions in the production of fossil fuels.
"This is a huge win, for us and for anyone affected by climate change", Friends of the Earth Netherlands director Donald Pols told Reuters.
"It is historic, it is the first time a court has decided that a major polluter has to cut its emissions," Pols added after the verdict, which Shell can appeal.
Shell, which is the world's top oil and gas trader, has said its carbon emissions peaked in 2018 and that its oil output peaked in 2019 and was set to decline by 1% to 2% per year.
However, the Anglo-Dutch company's spending will remain tilted towards oil and gas in the near future.
A rapid reduction would effectively force the firm to quickly move away from oil and gas.
Shell said ahead of the ruling that court action will not accelerate the world's transition away from fossil fuels.
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