Shell AGM: Fifth vote in favour of climate resolution
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Investors rejected tightening climate targets at oil and gas giant Shell’s annual general meeting, but the resolution garnered a significant minority of just over 20%.
The meeting on Tuesday saw climate protestors try to take the stage and sing, ‘Go to hell, Shell’ to the melody of Ray Charles’ ‘Hit the road, Jack’, delaying the start by about an hour. UK institutional investors were less riotous but also in an activist mood. A special resolution by campaign group Follow This, while not being carried, was supported by a fifth of shareholders, among them several large pension funds. It demanded that the Anglo-Dutch fossil fuel company should make the existing 2030 emissions reduction targets for its products Paris-aligned.
The firm currently plans to be net zero by 2050; by 2030, it aims to reduce the net carbon intensity of the energy products it sells by 20%, including scopes 1, 2 and 3, but investors have said they want to see absolute scope 3 emissions reduction targets in the short and medium term.
“We have made it easy for investors to use the power of their votes, but many investors have yet to decouple short-term profits from long-term risks for the company and their portfolios,” said Mark van Baal, founder of Follow This.
“Thankfully, prominent investors have voted in favour of our climate resolution; we thank them for their determination to achieve Paris. We hope that other investors will follow their leadership and view Total’s, Exxon’s, and Chevron’s AGMs later this month as retakes to correct their oversight,” he added. Investors in these firms will be asked to vote on a resolution about medium-term scope 3 targets.
Van Baal said considering that up to 99% of shareholders voted in line with the board’s recommendations on the other 25 resolutions, a 20% support in spite of a negative board recommendation “clearly indicates shareholder discontent”. A similar resolution last year garnered 20% of votes as well.
Faith Ward, who chairs the UK Asset Owner Roundtable, thanked supporting investors for their determination to achieve the Paris goal.
“We expect that they will take the same leadership positions at the AGMs of Total, Exxon, and Chevron later this month and we hope that their peers will follow their lead,” Ward said, adding: “We hope that the investors that voted against will view Total’s, Exxon’s and Chevron’s AGMs as retakes to correct this oversight.”
The UK Asset Owner Roundtable recently expressed concerns over proxy voting and has invited fund managers to discuss their voting at European oil and gas companies.
A resolution of no confidence in Shell’s chair, Andrew Mackenzie, which the Church of England’s pension and endowment funds were supportive of among others, was also not carried, with just under 7% voting against his reappointment, a higher proportion than for most of the other resolutions. Between 5% and 5.5% voted against the directors’ remuneration policy and report.
Any vote against the chairman of Shell is “a clear indication of the growing frustration of shareholders and investors at the company’s failure to adapt its business model", said Simon Rawson, deputy chief executive of campaign group ShareAction, calling on the company to sit down with investors “to avoid further embarrassment”.
Oil and gas companies are in focus as global temperatures continue to rise and extreme weather events have increased. Campaigners ClientEarth have tried to take Shell’s directors to court over the company’s climate strategy, but the High Court rejected the application earlier this month. The group has won permission for a hearing to ask the judge to reconsider his verdict.
Rival BP has recently come under pressure over backtracking on some of its climate goals, leading to heightened concern among institutional investors that short-term revenue, resulting from the war in Ukraine, is put before long-term profitability.
Do oil and gas majors struggle with devising a long-term strategy?