Investors at odds over Shell’s climate policy
Ahead of Shell’s AGM next week, investors are at odds over voting for a climate resolution filed against UK oil and gas supermajor Shell as one of its biggest shareholders has come out to back the board
Norges Bank Investment Management (NBIM), which has $1.4trn of assets under management and one of Shell’s biggest shareholders (3%), has announced that it will vote against a climate resolution at the company’s AGM on 21 May.
The climate resolution led by campaign group Follow This, which has been co-filed by 27 investors holding shares of 5% in Shell, urges the energy company to set tighter climate targets.
It calls for the oil firm to align its medium-term carbon emissions reduction targets with the Paris Agreement, including scope 3 emissions. Follow This’ climate resolution is the only one filed this AGM season at oil and gas supermajors Exxon, TotalEnergies and BP.
Norwegian oil fund argued that it intends to for vote against the climate resolution due to its belief that Shell has a Paris-aligned transition plan.
But Follow This founder Mark van Baal challenged this view: “NBIM’s ‘belief’ that an oil and gas company that will not reduce its total emissions this decade is Paris-aligned is remarkable,” he responded.
“Luckily, more and more investors base their decisions on science and take leadership by co-filing and voting in favour of climate resolutions. NBIM will follow their leadership one day.”
NBIM's decision was also criticised by David Ugolor, executive director of the African Network for Environmental and Economic Justice (ANEEJ):
"The decision shows the Fund putting profit above responsibility to our climate and to oil-affected communities. Shell’s climate plan is as full of holes as its promises to Niger Delta communities.
NBIM failing to challenge Shell’s directors at the AGM undermines our faith in Norway's officials. Their claim to achieve justice as the company departs the Niger Delta is so far turning out to be an empty word” he added.
Proxy advisors advise against
Alongside NBIM, proxy advisory Glass Lewis has also advised Shell’s shareholders to vote against the resolution filed by Follow This.
“We do not believe that adoption of this proposal would benefit the company or its shareholders at this time," Glass Lewis said, citing Shell's greenhouse gas emission reduction goals and disclosure on its actions.
Despite Glass Lewis’ recommendations for the Shell AGM, the advisor has recommended that investors vote against Exxon’s lead independent director Joseph Hooley.
Glass Lewis stated that its reasoning behind this is the energy company’s “unusual and aggressive tactics” in pursuing a lawsuit seeking to block a vote on a climate proposal submitted by two activist investors.
The world’s largest proxy advisor International Shareholder Services (ISS) has also advised shareholders to vote against the climate resolution, due to the “uncertainty” of the impact of the resolutions. Follow This has called the ISS’s voting recommendation for the oil firms AGM “illogical and contradictory”.
Similar to Glass Lewis and ISS, Shell’s board have also urged investors to vote against the resolution.
Backing of the climate resolution
However, on the other side of the battleground, investors including Border to Coast and Aegon UK have announced their opposition to Shell’s climate strategy. This comes as Dutch investment manager MN, who is also the investor lead for Climate Action 100+ for Shell has said it intends to back the Follow This resolution.
Local Government Pension Scheme (LGPS) pool Border to Coast, which has £60bn in assets under management, announced today (17 May) that it has escalated engagement with Shell and TotalEnergies.
Border to Coast announced its voting intention for Follow This’ climate resolution at Shell. It also stated that it will vote against Shell’s chair of the board due to its short, medium and long-term targets not being aligned to limiting global warming to 1.5C, with it also failing to meet CA100+ net zero benchmark indicators for its decarbonisation strategy.
Border to Coast cited that it would vote against the chair of the board at TotalEnergies AGM on May 24 under the same reasoning.
In addition, £88bn Aegon has also called on its fund managers to vote against climate plans at the respective AGMs of Shell and Glencore.
The investor has urged its asset managers to vote against Shell’s energy transition strategy and/ or the re-election of directors.
Hilkka Komulainen, head of responsible investing at Aegon, said: “We’d like to see Shell provide more accountability and comprehensive disclosures in line with its stated support for the Paris Agreement goals.
“There’s a lack of a credible plan for reducing absolute scope 3 emissions across the organisation. This can be seen by Shell’s weakened climate ambition, a new remuneration policy that rewards liquefied natural gas sales instead of low carbon product sales or building renewables, and the use of higher oil and gas price assumptions and lower investment hurdle rates than peers.”
Shell's lead investor to back climate resolution
