Record number of investors co-file climate resolution at Shell
A record-breaking 27 global institutions are urging Shell to align its emissions reduction targets with the Paris Climate Agreement in a major call to action.
Dutch activist group Follow This is leading the charge, backed by entities like Nest, Rathbones, Brunel Pension Partnership and Amundi. According to the shareholder resolution co-filled at Shell, they propose Shell sets medium-term goals for scope three greenhouse gas emissions, emissions resulting from consumers using oil and gas.
Founder of Follow This, Mark van Baal, named this push an "extraordinary step" that highlights the investors' commitment to counteracting the climate crisis at its roots.
He stated: "This escalation of 27 leading investors puts the call for emissions reductions by energy companies front and centre for all institutional investors."
Each year, Follow This participates with similar resolutions at large oil firms. Shell's shareholders will be encouraged to support the resolution during an advisory vote slated for their annual general meeting in London this spring.
Protesters planned to kidnap King Charles waxwork and hold it hostage
If the resolution passes, the board will only have to consider the request rather than take specific action. This is a move aimed at gaining support from other investors and voting proxy advisors. Shell has set medium-term targets to decrease its Net Carbon Intensity (NCI), a measure of emissions per unit of energy sold, by 20% by 2030 and 45% by 2035, compared to a 2016 baseline.
By the end of 2022, Shell said it had reduced its NCI by 3.8%, mostly through emissions avoidance and reduction activities. A spokesperson for Shell stated that the company's climate targets are "aligned with the more ambitious goal of the Paris Agreement". However, activist group Follow This disputes this claim.
Follow This cites the Climate Action 100+ benchmark, which says Shell's medium-term emissions reduction targets do not align with the goal of limiting global warming to 1.5C. The group also claims that Shell does not sufficiently demonstrate how it will reach its targets, leading to uncertainty over how its approach contributes to a significant reduction in global emissions this decade.
Mr Van Baal suggested that the record number of co-filers could be due to Shell seemingly backtracking on some of their climate commitments last year. In June, at its New York capital markets day, the company announced that it had dropped its plan to reduce oil production by between 1% to 2% each year until 2030.
The company celebrated, saying they hit the target eight years early by selling off oil fields to others who will extract the oil. The Follow This resolution may struggle to pass, but it will put pressure on the board and CEO Wael Sawan.
Mr Van Baal said this year's resolution has the most support they've seen at any oil major's AGMs. It beats the 17 institutions that backed Follow This's resolution at French oil giant TotalEnergies' AGM last year, securing 30% of votes, a significant shareholder revolt.
Regarding Shell, he said: "We expect votes to increase as more investors follow their leading peers by voting for change at Shell, which is the bare minimum they can do.
"Large shareholders hold the key to tackling the climate crisis with their votes at shareholders' meetings." "Shell will only change if more shareholders vote for change. The resolution is designed to give Shell a shareholder mandate to drive the energy transition."
At the firm's AGM last year, the Follow This resolution sparked a shareholder rebellion when it secured a fifth of the votes, against the board's recommendation. Institutions co-filing this year's resolution include Candriam, Group AMA, Edmond de Rothschild Asset Management, AP4, London CIV, Mandarine Gestion, Ethos Foundation, Emmi, Amundi and Greater Manchester Pension Fund.
Matt Crossman from Rathbones Group said, "With 2023 being the warmest year on record, and COP28 signalling 'the beginning of the end of the fossil fuel era' we are more aware than ever that climate change will create winners and losers."
Sebastian Vettel warns of looming F1 ban and is "very worried about the future"
"Through our engagement with Shell and other companies at the forefront of the energy transition, we hope to create incentives for senior management to align business strategies with net-zero scenarios that will help the world thrive."
Faith Ward from Brunel Pension Partnership stated, "We are escalating our engagement by co-filing this resolution led by Follow This, as it is essential that companies demonstrate credibility in their climate ambitions in alignment with the Paris Agreement."
"We believe that a reversal of progress on climate at oil and gas majors is misaligned with our and our beneficiaries' long-term interests."
A spokesperson for Shell mentioned they will share their first Energy Transition Strategy update soon, which people can vote on at the AGM.
They added, "We remain committed to constructive engagement with our shareholders, and we believe our climate targets are aligned with the more ambitious goal of the Paris Agreement."
"The 2024 resolution from Follow This is broadly unchanged from their 2023 submission, which was rejected by shareholders (as its variations have been every year since first being submitted in 2016)."
"Shell's Board has previously advised shareholders that the Follow This resolution was unrealistic and simplistic, that it would have no impact on mitigating climate change, have negative consequences for our customers, and was against the interests of the company and our shareholders."
"Continued, targeted investment in oil and gas will remain necessary to meet global energy demand over the coming decades as the world transitions to a lower carbon future."
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
Read more similar news:
Comments:
comments powered by Disqus
