Shell must enhance liquefied natural gas disclosures, says Brunel Pension Partnership

Brunel Pension Partnership has said that while Shell’s conceding to provide greater transparency on its liquefied natural gas (LNG) plans is positive, the oil major must also enhance disclosures as opposed to ‘repackaging’ them, following the company’s annual general meeting (AGM) in London yesterday.

More than 20% of shareholders supported a resolution to obtain clarity about the basis for the oil major’s plan to grow its LNG business at yesterday’s meeting, indicating growing investor concern around its long-term strategy and climate goals.

Under UK listing rules, companies that receive a shareholder opposition of more than 20% are forced to explain how they will tackle shareholder concerns.

Commenting on the result, Vaishnavi Ravishankar, head of stewardship at Brunel Pension Partnership, said: “The resolution challenged the board to provide an honest discourse about their trajectory and next steps.”

“The fact that the company has conceded that further transparency is needed and made commitments is a positive development – however, it is important that disclosures are indeed enhanced as opposed to repackaged,” added Ravishankar.

Growing concern

The resolution, filed earlier this year by Brunel Pension Partnership, Greater Manchester Pension Fund (GMPF) and Merseyside Pension Fund, asked Shell to justify its LNG growth strategy for reasons including that the demand anticipated in the company’s 2024 outlook was higher than in all scenarios published by the International Energy Agency (IEA).

This resolution was backed by co-filer Australasian Centre for Corporate Responsibility (ACCR). NGO ShareAction supported the filing along with more than 100 individual shareholders.

Jackie Garton, senior corporate climate campaign manager at ShareAction, said the vote sends a strong message that shareholders will not sit back as Shell doubles down on growing its LNG production despite its own stated climate commitments, adding that the level of investor support was encouraging.

“It’s worrying that instead of addressing their concerns, Shell repeatedly shifted the blame for their oil and gas production growth plans onto consumers during its annual general meeting,” Garton added.

Commenting on the result, Peter Wallach, director of pensions at Merseyside Pension Fund, said: “By making a commitment to enhance its disclosures before the 2026 AGM, it is encouraging that Shell has recognised that these have been insufficient.”

Activist shareholder group Follow This criticised Shell yesterday, saying its board failed to address key shareholder concerns regarding the company’s response to the expected decline in oil and gas demand.

Shell and BP

Responding to yesterday’s outcome, Shell CEO Wael Sawan said the company will meet its obligations and will prepare a note relating to Shell’s LNG business, and how it reconciles with its strategy and climate commitments.

Sawan also responded to speculation over a potential takeover bid for its struggling rival BP, but said the bar to such a deal was “very high”.

Last month, nearly a quarter of BP’s shareholders voted against the reappointment of its chair Helge Lund at BP’s annual meeting in London.

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