Investors face double vote choice at Shell, as controversies mount

UN secretary general Antonio Guterres might well have had Shell in mind when launching a major climate science study last month. He complained that some government and business leaders are “saying one thing and doing another … they are lying. Investing in new fossil fuels infrastructure is moral and economic madness.” The next few days will show whether investors with climate commitments stand ready to use their power on this.

Ahead of its AGM on 24th May, Shell is doing everything it can to look good. And In the next few days the pension funds, insurance companies and other institutional investors which haven’t divested their Shell shares will decide whether to vote for Shell’s weak climate plan, or back an independent resolution calling for stronger action.

At last year’s AGM 16% of investors that voted chose not to back Shell’s plan, while 30% chose to vote for the independent Follow This resolution.

Now Shell is again claiming that it has “a comprehensive energy transition strategy and is accelerating its transformation into a low- and zero-carbon energy business”. The company advises investors not to back the Follow This proposal that calls for Paris-consistent short-, medium- and long-term greenhouse gas emission targets. Shell says this is “unrealistic”.

Shell’s climate plan is in fact unrealistic and insufficient, with targets that are still too vague and weak, allowing it to expand fossil fuels and increase emissions:

  1. Shell has no absolute Scope 3 emissions reduction target until 2050 (see Carbon Tracker).
    Shell is on track to increase its net carbon emissions 4% over this decade (see Global Climate Insights).
  2. A Dutch court ordered Shell to cut its emissions 45% this decade, finding that Shell’s climate strategy is “not concrete enough and full of caveats”. Shell appealed. (Friends of the Earth).
  3. To meet its carbon offset targets, Shell would need to plant forests on a land area three times the size of the Netherlands (see ActionAid).
  4. Shell is moving to invest in the Cambo and Jackdaw North Sea oil fields despite the IEA recommending a halt to new oil and gas investments (IEA).

Mark van Baal, of Follow This, which has filed independent resolutions at Shell since 2016, the last of which attracted 30% shareholder support, summarised the case for investors to back their resolution this year: “You can’t claim to be in transition if only 12% of your investments are going to new, renewable energy businesses and investments in old, fossil businesses are increasing”.

In a May 2021 letter 40 Nigerian civil society groups summarised that Shell’s Energy Transition Strategy contains: “no absolute carbon emission reduction pledges, huge increases in gas production, and reliance on improbably large amounts of tree-planting”. They went further, warning that “Shell’s rush to find land for ‘nature-based solutions’ might well lead to further carbon colonialism, slavery and human rights violations in the global south”.

At last year’s AGM the Church of England Pensions Board agreed that there are several gaps in Shell’s targets. calling for absolute emissions targets, capital expenditure alignment, a credible offsets plan and lobby alignment. The benchmark issued this March by the US$68 trillion Climate Action 100+ (CA100+) investor grouping shows that Shell still has not provided proper answers on most of these points.

And now the Church of England Pensions Board announced that it is stepping down from its lead engager role with Shell on behalf of CA100+.

Reverend David Ugolor, of the African Network for Environment and Economic Justice, and organiser of the 2021 joint Nigerian letter, commented: “We welcome the news that the Church of England Pensions Board will no longer grant its moral authority to Shell. Shell has wreaked havoc in Nigeria’s Niger Delta for several decades and can’t be trusted to bring about climate justice”.

This apparent change of heart from the Church sends a clear signal to other Shell investors that continued engagement talks, not backed up by votes or by divestment, will be enough to transform companies like Shell.

Mobilisations planned outside Shell’s AGM in London on 24th May will keep a sharp focus on which side investors take. And the following day in Paris investors have another chance to heed the UN Secretary General’s warning about the madness of more fossil fuel investments by voting against TotalEnergie’s flawed climate plan.

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