Shell’s shareholders vote for its climate strategy, despite growing support for its activist rival
Energy giant Shell saw its shareholders overwhelmingly support the company’s energy transition strategy today, despite growing backing for a second climate resolution filed by an activist group.
An advisory vote on its climate strategy, which meant it was a non-binding resolution, won 88.74 per cent shareholder support at its annual general meeting (AGM) today.
The plan, which was announced in February, pledges to cut climate destructive carbon emissions to net-zero by 2050 – by distancing itself from oil and gas output.
The energy giant will also focus on bolstering its renewables and low-carbon offerings and offsetting emissions through carbon-capturing technologies in its strategy which is to be revised every three years.
The second resolution, filed by activist group Follow This, urged the Anglo-Dutch company to outline “inspirational” targets to tackle fossil fuel emissions but was rejected by 69.53 per cent of the votes.
Despite the defeat, nearly one-third of votes supported the resolution, which Shell’s board urged shareholders to reject.
Shareholder support for Follow This’ proposal more than doubled this year, rising from 14.4 per cent last year to 30 per cent.
The proposal asked Shell to commit to targets aligned with the 2015 Paris Agreement and for the energy giant to shift its investments towards renewables.
“This year for the first time, Shell put forward its own climate plan for a vote – and yet again, shareholders are sending a strong signal that Shell will have to set new targets. Shell’s policy falls short of what is needed to protect investors from devastating climate change,” Follow This founder Mark van Baal said.
“We know from Shell’s previous response to resolutions, that management cannot ignore investors’ concerns. The company will have to revise its targets once again.”
The proposal, which has traditionally been backed by Dutch pension fund PFZW, also gained backing from 58 per cent of shareholders in ConocoPhillips on 11 May and 80 per cent of shareholders in Phillips66 the next day, according to Follow This.
IEA
It comes as the International Energy Agency (IEA), in a report released today and requested by the UK government, urged policymakers to help companies halt new oil and gas field development and extraction if the world is going to reach net-zero emissions by 2050.
Meanwhile, Big Four firm EY has also warned of the importance of renewable technologies in the push for a low carbon future – and the importance of investors in that process.
“The impact of Covid on economies across the globe seems to have refocused investors’ minds on the environmental, social and corporate governance agenda and there is a growing trend of considering the climate crisis and the energy transition when deploying capital,” EY global power & utilities corporate finance leader and RECAI chief editor, Ben Warren said.
“Increasing appetite for suitable investments is driving a number of new investment strategies amongst institutional capital to better align risk and return between sponsors and investors, or to help locate opportunities that satisfy their specific risk and return expectations.”
Shell’s chief executive officer Ben van Beurden said that shareholder support was “critical” to the business as net-zero ascends to the top of the investor agenda.
“This shareholder vote on our Energy Transition Strategy is a first for an energy company and we are pleased shareholders demonstrated their strong endorsement.
“We will seek to fully understand the reason why shareholders voted as they did, particularly those who voted both ‘For’ Shell’s strategy and ‘For’ the Shareholder Resolution, and will formally report back to investors within six months.”
Reclaim Finance, which formed part of a coalition pushing investors to support Follow This’ strategy, said that IEG report and Shell’s voter turnout came as a “wake-up call”.
“This morning the International Energy Agency gave a wake-up call to the worlds of energy and finance: every single new oil and gas exploration project is incompatible with a climate-safe world,” founder and executive director of Reclaim Finance said.
“Yet for all their greenwashed net-zero commitments, oil and gas giants like Shell and Total are planning to double down on just such fossil fuel projects.”