A resolution proposed by climate activists has sparked a rebellion among Shell’s shareholders.
The board of Shell is being challenged by shareholders as major investors, including the UK’s largest pension fund, are poised to support a resolution put forth by a climate activist.
Twenty-seven individuals who have invested in the company have come to an agreement to support a proposal made by Dutch shareholders from Follow This. This proposal urges the oil company to synchronize its goals for reducing emissions in the medium-term with the 2015 Paris agreement.
The coalition of investors collectively holds approximately 5% of Shell’s shares. This coalition includes Nest, a government-supported organization responsible for managing pensions for nearly a quarter of the UK’s workforce.
Amundi, a French asset management company with assets totaling almost €2tn (£1.7tn), has also expressed support for the resolution, along with Candriam, Scottish Widows, and Rathbones Group.
Diandra Soobiah, the head of responsible investment at Nest, said: “We urge Shell to set a credible scope 3 absolute emissions target. This would demonstrate leadership, show Shell is serious about transitioning its business, and play a role in generating real world change.”
Emissions categorized as “Scope 3” encompass all greenhouse gas emissions that are not produced or bought directly by companies for their own energy consumption. This includes factors such as the materials used in production and the transportation of products to consumers.
Investors who collectively hold approximately €4tn in assets under management have already shown support for the resolution, which will be voted on at the £160bn company’s annual general meeting in May. According to Follow This founder Mark van Baal, this support is expected to increase in the months leading up to the meeting.
According to Van Baal, this increase in participation by 27 prominent investors highlights the importance for all institutional investors to prioritize emissions reductions in energy companies.
In recent years, Follow This has received more support for its climate campaign. However, the group has not yet been able to secure a majority vote in favor of its proposals. In response to criticism from Shell that its demands are too restrictive, the latest shareholder resolution no longer mentions 2030.
Shell is likely to encounter increasing resistance from socially responsible investors and environmental activists following its decision to scrap its goal of cutting oil and gas output by the end of the 2020s.
Last year’s annual general meeting (AGM) of the company in London was disrupted by climate activists, resulting in a one-hour delay in the meeting’s start. This was due to the board’s refusal to comply with shareholder demands for stricter targets regarding carbon emissions reduction.
A representative from Shell stated that the 2024 proposal from Follow This remains largely unchanged from their 2023 proposal, which was previously rejected by shareholders. This trend has continued every year since the proposal was first submitted in 2016.
“The Shell board has previously stated to shareholders that the Follow This resolution was deemed impractical and oversimplified. They believed it would not effectively address the issue of climate change, could potentially harm our clientele, and would go against the best interests of the company and our shareholders.”