Shell’s lead investor to back climate resolution
MN, Climate Action 100+ lead investor for Shell has confirmed that it will back a climate resolution put forward at this year’s AGM
The Dutch manager, which is one of the largest pension administrators and managers for Dutch pension funds managing some €135bn, will also vote against Shell’s board remuneration and energy transition strategy on behalf of Dutch pension fund PMT.
Litmus test
While MN has previously backed climate activist resolutions put forward by Follow This, this year’s announcement is significant because MN acts as the lead investor for Shell within Climate Action 100+.
“With this pre-declaration, MN is basically urging all CA100+ members to vote for as well in order to give their lead engager greater leverage at Shell,” commented Mark van Baal,founder of Follow This.
In a statement announcing its decision, MN said that it welcomed Shell’s ambition to lower Scope 3 emissions by selling off some of its oil products. However, these would be offset by Shell’s planned expansion of fossil LNG production of 20-30% by 2030. “We do not believe this level of fossil LNG growth aligns with pathways to the Paris Climate Agreement” MN warned.
Lead investors were introduced last year as part of Phase 2 of the investor coalition’s engagement models. Under the new proposals, each focus company, including Shell, will be assigned one or two lead investors, who will be asked to disclose their schedule of engagements and escalation strategies with the respective company and also disclose their voting pattern, in an attempt to create greater transparency. Having said that, Climate Action 100+ did not specify that voting intentions must be disclosed in advance.
MN’s announcement could therefore be an important litmus test for the potential signalling power of lead investors, Van Baal argued.
“If CA100+ members want to leverage the engagement position of their lead at Shell, they will need to vote in favour of Paris-aligned targets,” says Mark van Baal, founder of Follow This, “a vote against would undermine their lead’s engagement as we saw when Shell backtracked” he warned.
Revised strategy
The Dutch climate group Follow This has slightly amended its strategy for this year’s Shell AGM and ditched calls for a 2030 short-term carbon reduction target whilst solely focussing on emission reductions. This is apparently in a bid to both prevent Shell from claiming the resolution amounted to “micro-management” which could prevent it from being voted on under the SEC’s “ordinary business rule”.
Another motivating factor for Follow This may have been to maximise institutional shareholder backing ahead of the upcoming Shell AGM on 21 May.
Indeed, a record 27 institutions collectively managing €3.9trn in assets have co-filed this year’s resolution, backers include Amundi, Scottish Widows, Swedish AP3 and AP4, Nest, Brunel, Greater Manchester Pension Fund, the UK’s Pension Protection Fund and London CIV.
However, PFZW, the second largest pension fund in the Netherlands which previously acted as a lead investor announced earlier this year that it had sold off its holdings in Shell earlier this year.
Last year, backing for Follow This’ resolution dipped somewhat with 20% of investors expressing their support, compared to 30% in 2021. This coincided with Shell backtracking on some of its climate ambitions. Follow This is hopeful that this year’s resolution could garner more support.
“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,” Van Baal predicted.
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