Oil giant Shell is facing a shareholder resolution at its AGM next week (23rd May) calling for it to set and publish targets for reduction of its greenhouse gas emissions (GHG) that are aligned with the Paris Climate Agreement goal of reducing global warming to two degrees celsius.
The resolution suggests that following the management and shareholder backing of the resolution put to Shell in 2015 by the Aiming for A coalition of investors which directed that annual reporting by the company would include information relating to climate change, the next step for the company would be to disclose more detailed targets. The resolution noted that investors have said that increasingly they will adjust their portfolios with the aim of reducing their exposure to climate risk.
The management of Shell has rejected the resolution says that this kind of disclosure is not in the best interests of the company. Shell said it supports the Paris agreement and the aspirations of achieving global net zero emissions by 2050 and said it would work with governments to meet this aspiration. Shell claims that it has taken steps to meet the challenges posed by climate change and had invested billions of dollars in a range of low carbon technologies, including biofuels, carbon capture and storage, hydrogen and wind that will all be necessary to enable the transition to a low carbon economy.
French corporate governance and proxy adviser Proxinvest said it recommended a vote in favour of the shareholder resolution. Proxinvest said:”We do believe that it is of paramount importance for oil majors such as Shell to play a fundamental role in a low-carbon future by honouring and implementing the commitments under the Paris Agreement. Shell has made some progress towards reducing its GHG emissions in recent years and given that it has set some emissions-related targets such as refining efficiency, we believe SHELL is capable of defining a global range of possible emissions reductions and has to be aligned with the goals of the Paris Climate Agreement as intended by this resolution.”
Meanwhile in the US shareholder resolutions asking for climate change risk assessment reports have won record levels of support at the AGMs of US energy companies. The resolution at Occidental Petroleum won 67% support while at the AGM of natural gas provider PPL received 57% backing. Recent research released by US pressure group Ceres found that global investors have concluded that some of the largest global oil and gas companies such as Statoil, Eni and Total are well ahead of others like ExxonMobil when it comes to climate change management and disclosure.
The Council of Institutional Investors (CII) said that a number of its members, including CalPERS, the New York State Common Retirement Fund, New York City Funds, Connecticut Retirement Plans, were major sponsors of one or more of the resolutions. The backing for these resolutions follows US investor and company public support for the Paris Agreement at a time when there is uncertainty as to whether President Trump might pull the US out of the agreement. The CII said the results of the shareholder resolution votes also showed the importance of this form of investor activism at a time when it was under threat from the Republican Financial CHOICE Act proposals.
Last Updated: 21 May 2017