Mon, Jun 17 2024 17 June, 2024

Activist shareholders target Shell

A group of 27 investors, including Europe’s largest asset manager, have filed a shareholder resolution that calls on Shell to align its operations with the Paris Climate agreement.

Shell logo on top of glass building (Photo credit: Adobe Stock/Askar)

A group of investors have filed a shareholder resolution that calls on Shell to align its medium-term greenhouse gas emissions with the Paris Climate agreement, a challenge to the oil major and its plans to continue investing in production growth.

The resolution was filed by a group of 27 investors, including UK pension manager National Employment Savings Trust (Nest) and Europe’s largest asset manager Amundi. Collectively, the group holds about 5 percent of Shell and manages a combined €3.9 trillion in assets.

The effort was spearheaded by Dutch shareholder activist group Follow This.

“This extraordinary step shows how dedicated these investors are to tackling the climate crisis at its source,” Mark van Baal, founder of Follow This, said in a statement. “This escalation of 27 leading investors puts the call for emissions reductions by energy companies front and center for all institutional investors.”

Shell has pledged to cut its Scope 1 and 2 emissions – which cover direct and indirect emissions at the company’s facilities – by 50 percent by 2030.

However, Shell has not made commitments to cut Scope 3 emissions — the burning of oil and gas by end users, which accounts for a much larger portion of the company’s climate impact. Instead, Shell says it will reduce the carbon “intensity” of its products, a metric favoured by oil and gas companies that measures emissions impact on a per-barrel basis, but allows for an overall increase in emissions if production rises.

Climate campaigners and activist shareholder groups denounce carbon intensity targets as inadequate.

“We urge Shell to set a credible Scope 3 absolute emissions target. This would demonstrate leadership, show Shell is serious about transitioning its business, and play a role in generating real world change,” said Diandra Soobiah, head of responsible investment at British pension scheme NEST.

Shell called the resolution “unrealistic and simplistic.”

The company has also come under intense criticism for backtracking on its commitment to gradually reduce oil and gas production. Wael Sawan, who took over as CEO at the start of 2023, changed course from his predecessor and laid out a corporate strategy that emphasized boosting returns to investors from fossil fuel production.

In addition to a major global producer of oil, Shell is also one of the largest LNG suppliers in the world. Sawan aims to boost LNG output by 20 to 30 percent by 2030.

Shareholders will vote on the resolution at Shell’s annual general meeting in May.

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