Swedish national pension fund AP4 has stated its disagreement with advice from proxy advisers Glass Lewis and Institutional Shareholder Services (ISS) that shareholders should vote against the institutional investor-backed Follow This resolution on Shell’s approach to emissions targets and reporting.

Glass Lewis issued advice to vote against the shareholder resolution last week, according to Follow This, with ISS following suit this week.

AP4 is one of the co-filers of the shareholder resolution at Shell, which has urged investors to vote against the proposal at its annual general meeting (AGM) on Tuesday, 21 May. 

Speaking to IPE, Tobias Fransson, head of sustainability at the SEK499.6bn (€42.8bn) fund, said: “We do not agree with the views of Glass Lewis or ISS on this matter.”

Follow This said Glass Lewis and ISS were stalling climate action by big oil companies.

The Dutch NGO went on to say that while the “Big Two” have huge influence on shareholder voting results at oil majors, their advice is inconsistent and their influence on climate voting is waning.

It singled out ISS’s advice on its Shell resolution this year as “outright illogical”, saying the advice it had seen contained many compelling arguments to vote for the climate resolution, but was for a No vote. 

Faith Ward, chief responsible investment officer at Brunel Pension Partnership, spoke out against Shell’s justification for rejecting the Follow This resolution, and told IPE: “Shell’s recent energy transition strategy fails to clearly indicate the path it will take to achieve its climate commitments.”

She added: “Given the scale of its operations and its influence, Shell should fulfil its commitment to set appropriate targets, engage with its value chain and shape policy to enable a smooth energy transition. The resolution is an important tool to encourage Shell to play its part in the transition.”

Mark van Baal, the founder of Follow This, said: “Why would investors pay for advice that you can get for free from an oil major?” 

The NGO said that in 2016, only 2.7% of investors deviated from negative proxy voting advice on one of its climate resolutions, jumping to 30% in 2021 before decreasing in 2023. 

This is not the first-time advice given by the two proxy firms has caused concern. Last year 36 investors, including a range of pension funds, called on proxy adviser ISS to enhance its climate-related guidance, saying they “continue to be concerned about the research and recommendations” from the firm on environmental issues.

Both Glass Lewis and ISS declined to comment when contacted by IPE, with ISS referring to its 2024 proxy voting advice report.

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