Oil giant Shell braces for shareholder revolt against climate plans

Shell announced adjusted earnings of $39.9 billion for the year 2022.

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LONDON — British oil giant Shell’s annual general meeting on Tuesday promises to be acrimonious, with climate-focused investors seeking to increase pressure on the energy giant after an extraordinary run of record profits.

Follow This, a small Dutch activist investor and campaign group with stakes in several major oil companies, tabled a resolution at Shell’s shareholders’ meeting. The meeting will be held online and in person at the ExCel exhibition center in London from 10am UK time.

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Climate Resolution 26 calls on Shell to align its climate targets with the historic Paris Agreement and commit to reducing absolute carbon emissions by 2030. These reductions, according to Follow This, should include emissions generated by the customers’ use of their oil and gas, known as Scope 3 emissions.

It echoes a 2021 ruling by a Dutch court that Shell should cut its global carbon emissions by 45% by the end of the decade, a decision the company has appealed.

For the first time, Dutch pension fund managers MN and PGGM – both Shell shareholders – approved the resolution. Institutional investors are leading the engagement with Shell on behalf of the world’s largest group of climate-focused investors, Climate Action 100+, which represents $68 trillion in assets.

It comes as investors increasingly see global warming as a growing risk to their portfolios. The burning of fossil fuels, such as oil, gas and coal, is the main driver of the climate crisis.

Meanwhile, the Church of England Pensions Council, the UK Local Authority Pension Funds Forum, the UK’s National Employment Savings Trust and shareholder adviser PIRC said they would vote against or would recommend a vote against the reappointment of Shell Chairman Andrew Mackenzie.

Adam Matthews, Director of Responsible Investments at the Church of England Pensions Board, would have said earlier this month that he had “lost confidence in the management of the company”.

Shell, which aims to become a net-zero company by 2050, recommended shareholders vote against the motion filed by Follow This. The company describe Climate Resolution 26 is seen as “vague, generic and would create confusion about board and shareholder responsibilities”.

“We strongly disagree with the Follow This resolution and with the organizations that have recommended supporting it or voting against Council members. The focus should be on changing energy use as much as on its supply, and this is reflected in our approach,” a Shell spokesperson said in a statement.

“We will continue to invest in generating the energy the world needs today and for the foreseeable future. All of our investments must provide a rate of return that our investors demand,” they added.

Proxy advisers Glass Lewis and ISS have both recommended that their clients vote against Resolution 26.

It's a huge year for Shell - and a huge year to look back on, says CEO

Follow This said it represented nearly 10,000 Shell shareholders, although the majority held just a few shares.

Those planning to vote in favor of the resolution are unlikely to spark a broader shareholder revolt or succeed in ousting board members, but Follow This says it hopes investors will seize the opportunity to force the company to align its 2030 emissions reduction targets with those of Paris. OK.

At BP’s annual general meeting last month, support for a Follow This resolution calling for tougher emissions reduction targets by the end of the decade was 17%, although that figure up from 15% last year.

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