Shareholders threw their weight behind Shell’s watered-down climate transition plan at its annual general meeting yesterday.
The company’s decarbonisation strategy secured 78.2% support at a vote, despite vocal opposition from some asset owners, including Aegon and Brunel Pension Partnership.
In March, Shell published a revised energy transition plan, which saw it abandon its 2035 targets, maintain oil production levels, reduce its carbon intensity targets for 2030, and increase its reliance on liquefied natural gas.
It insists that it will still be able to deliver net zero by 2050 under the new strategy, with chair Andrew Mackenzie telling yesterday’s meeting that “Shell believes continued investment in oil and gas will be needed”.
The Institutional Investor Group on Climate Change (IIGCC) co-launched an assessment framework for corporate climate transition strategies last week, in which it said investors should assign any company growing its fossil fuel activities the lowest score, regardless of the robustness of the rest of the climate plan.
Reduced support for counter proposal
Only a fifth of shareholders supported a rival climate proposal at Shell, tabled by 27 investors including Brunel, Amundi, Scottish Widows and Rathbones Group, and coordinated by campaign group Follow This.
That resolution, which Shell urged shareholders to reject, called on the energy giant to align its medium-term decarbonisation targets with the Paris Agreement.
The focus was on Scope 3 emissions, which represent the biggest portion of the oil majors’ emissions because they include carbon generated when customers use a company’s products.
It garnered 18.6% support, compared with around 20% when it was tabled last year.
What the results show
Shell’s chief executive officer, Wail Sawan, said the results were a sign of shareholders’ faith in the firm’s decarbonisation strategy.
“I’m pleased that we have seen the Follow This resolution get an even lower share of the votes compared to previous years,” he told the media yesterday.
“That’s a sign of growing trust and confidence in our ability to navigate the energy transition,” he added.
Norges Bank Investment Management pre-declared its intention to side with Shell on its climate plans, saying its revised strategy was still sufficient.
Lindsey Stewart, director of investment stewardship research at Morningstar, told IPE the fact that the voting results for both Shell’s own climate strategy and the resolution tabled by Follow This were roughly the same as last year showed “institutional shareholders’ positions on climate have crystallised where they were last proxy season”.
He noted that the Securities & Exchange Commission’s decision earlier this year to exclude Scope 3 emissions from its new climate disclosure rules will have reinforced the sense among many large US managers that they should not support shareholder requests for more transparency on the issue.
“Even some of the more sustainability-conscious managers express nuanced views on how to balance the need for a low-carbon transition with the need to preserve energy security,” said Stewart.
“So, that just leaves a consistent minority of shareholders who are generally inclined to push for higher ambition.”
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