Global Courant 2023-05-23 14:08:01
Shell reported full-year 2022 adjusted profit of $39.9 billion.
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LONDON – The annual general meeting of British oil giant Shell on Tuesday looks set to be a bitter one, with climate-focused investors looking to ramp up pressure on the energy giant after an extraordinary run of record profits.
Follow This, a small Dutch activist investor and activist group with interests in several major oil companies, has tabled a resolution at Shell’s shareholders’ meeting. The meeting will be held online and in person at the ExCel London exhibition center from 10am UK time.
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Climate Resolution 26 calls on Shell to align its climate targets with the groundbreaking Paris Agreement and commit to absolute CO2 reductions by 2030. These reductions, says Follow This, should also include emissions generated from the use of their oil and gas by customers, known as Scope 3 emissions.
It echoes a 2021 Dutch court ruling that Shell must cut its global carbon emissions by 45% by the end of the decade, which the company has appealed.
For the first time, the Dutch pension managers MN and PGGM – both Shell shareholders – have endorsed the decision. The institutional investors are leading the dialogue with Shell on behalf of the world’s largest climate-focused investor group Climate Action 100+, representing $68 trillion in assets.
It’s because investors are increasingly seeing a warming planet as a growing risk to their portfolios. The burning of fossil fuels, such as oil, gas and coal, is the main cause of the climate crisis.
Meanwhile, the Church of England Pensions Board, the UK’s Local Authorities Pensions Funds Forum, the UK’s National Employment Savings Trust and shareholder adviser PIRC have announced they will either vote against or recommend a vote against the reappointment of Shell Chairman Andrew Mackenzie.
Adam Matthews, Chief Responsible Investment Officer at the Church of England Pensions Board, Reportedly said earlier this month it had “lost confidence in the company’s direction”.
Shell, which aims to become a net-zero emissions company by 2050, has recommended that shareholders vote against the Follow This motion. Company described Climate Resolution 26 as “unclear, generic and would create confusion about the responsibilities of the board of directors and shareholders.”
“We strongly disagree with the Follow This resolution and with the organizations that have recommended supporting it or voting against board members. The focus should be on changing the use of energy as well as its supply, and this is being reflected in our approach,” a Shell spokesperson said in a statement.
“We will continue to invest in producing the energy the world needs today and for the foreseeable future. All of our investments must deliver returns that our investors demand,” they added.
Proxy advisors Glass Lewis and ISS have both advised their clients to vote against resolution 26.
Follow This says it represents nearly 10,000 Shell shareholders, though the majority only own a few shares.
Those planning to vote for the resolution are unlikely to provoke a wider shareholder revolt or succeed in ousting board members, but Follow This says it hopes investors take the opportunity to force the company to close their doors. align emission reduction targets for 2030 with the Paris agreement.
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 stood at 17%, though this was up from 15% last year.
Bumper gains
Big Oil posted huge profits last year, supported by rising fossil fuel prices and strong demand following Russia’s full-scale invasion of Ukraine.
For its part, Shell reported its highest-ever annual profit in nearly $40 billion by 2022. That more than surpassed the $28.4 billion in 2008, which Shell said was its previous full-year record, and was more than double the company’s full-year 2021 earnings of $19. 29 billion.
Earlier this month, Shell posted an adjusted profit of $9.6 billion for the first three months of 2023.
The record profits were seen by the industry as a kind of justification. Oil and gas giants came under immense pressure from shareholders and activists to invest in clean energy as oil demand collapsed during the peak of 2020 Covid lockdowns.
However, the push for green reforms lost momentum last year, alarming investors and campaigners as the world’s leading climate scientists warned of “a short and fast-closing window to secure a livable future.”
After ultimately failing several 2022 climate resolutions, Follow This’ Mark van Baal told CNBC earlier this year that it was clear from conversations with oil majors that they were determined to fend off pressure from activists and shareholders and continue with their core oil and gas business. .
