Institutional Investors Support Shell Shareholder Resolution Calling For Clear Climate Goals
When Shell holds its annual meeting on May 22, shareholders will be asked to vote in favor of a resolution proposed by Dutch group Follow This which demands the company clearly state how it will transition away from being a traditional oil company and become a leader in renewable energy. The Follow This movement is composed of current Shell stock holders who want the company to affirmatively support the COP21 Paris climate accords.
Bold Action Needed
On its website, Follow This says, “Shell now earns billions with oil and gas. We want Shell to no longer invest that profit in even more oil and gas resources, but in new energy sources. When one of the largest energy companies in the world puts its full weight behind the transition from fossil to sustainable energy, that transition goes much faster. Shell also holds a leading role in the energy supply. Let’s make sure that we can be proud of the largest Dutch company.”
The proposed shareholder resolution that will be up for approval at the annual meeting this year reads in part, “Leadership of companies is crucial to accelerate the energy transition, and leadership in this inevitable transition will create long-term value for shareholders. We support Shell to take leadership by being one of the first oil majors to commit to the Paris Climate Agreement by setting clear targets.”
“Inspirational targets will stimulate imagination beyond oil and gas, lend credence to investments in the exploration of new business models, increase brand value, justify extending the licence to operate, and signal a sense of urgency. Institutional investors need transparency about long-term targets in order to mitigate climate-related risk to comply with their fiduciary duty. Shell setting a clear target regarding its role in the energy transition will provide this transparency and reduce the risk of stranded assets.”
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Major Investors Support The Resolution
The board is opposed to the measure, but The Guardian reports it has earned the support of several major institutional investors including the Church of England, the Dutch pension fund Aegon and Nest, the workplace pension program created by the UK government, which has invested more than $10 million in shares of Shell. Mark van Baal, founder of Follow This, says, “Investors have a choice — vote for Shell’s ‘whatever world’ or vote for the world of the Church of England, a world in which all companies set targets to limit climate change to well below 2C.”
60 large investment groups with more than $10 trillion worth of assets under management have included information about the Follow This resolution in their advice to clients but have stopped short of urging approval of it. In an open letter, they wrote, “Regardless of the result at the Shell annual general meeting, we strongly encourage all companies in this sector to clarify how they see their future in a low-carbon world.”
A spokesperson for Shell issued the following statement. “We share the objective of Follow This for Shell to show leadership in the energy transition but we consider their resolution unnecessary as we have already outlined an approach, through our industry-leading net carbon footprint ambition, that is wider-ranging and more progressive.”
The Third Time’s A Charm?
This is the third consecutive year Follow This has brought such an investor resolution before the annual meeting. CEO Ben van Beurden, acknowledges that the prior resolutions have played a role in convincing his company to announce a plan that will cut the carbon emissions of the products it sell by half over the next 30 years. Follow This says it welcomes those initiatives but believes the company must do more.
“Shell is one of the largest energy companies in the world and has the people, the money, and the power to change the energy supply,” the group says. “Shell should say, ‘In 2030 we are completely sustainable.’ Compare it to the ambition of Unilever, which wants to have its CO2 emissions cut by half in 2020. When Shell sets an ambitious spot on the horizon, the rest of the oil and gas industry will also have to choose — follow or go under.”
Bold statements that may provoke bold action. The world will require nothing less if it is to avoid a climatic event of existential proportions.
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