Investor and media briefing
This briefing is to bring you up to date on the climate targets resolutions that Follow This filed for the 2021 AGMs of BP, Shell, Equinor, and four oil and gas companies in the US.
As in previous years, all resolutions support the companies to set short-, medium-, and long-term emissions reduction targets for operations and products (Scope 1, 2, and 3) that are consistent with the Paris Climate Agreement. We improved the resolutions with input from BP and supporting investors.
Here is an update on the most significant developments of the last few months and our expectations for 2021:
Cooperation between Follow This and BP stumbled on discrepancies between BP’s current ambitions and Paris-consistent emissions reductions
In March 2020, BP and Follow This agreed to work towards a climate resolution for BP’s 2021 AGM, as announced in a joint press release. After confidential meetings, we filed an updated climate targets resolution in which we took all of BP’s input into account within the boundaries specified by the Paris Climate Agreement.
Unfortunately, BP told Bloomberg: “We were unable to agree the wording of a potential joint resolution [to] enable shareholders to show their support for BP’s net-zero ambition”.
There are indeed discrepancies between BP’s current ambitions and Paris-consistent targets:
- BP’s current ambition is to increase overall emissions by 2030
- to halve overall emissions by 2050 (BP’s net-zero ambition only covers their own production),
- and sets non-binding ambitions instead of concrete targets
|
BP’s ambitions |
Paris-consistent emissions reductions |
|
increase emissions by 2030 |
25 to 45% by 2030 |
|
halve relative emissions by 2050 (relative) |
70 to 100% by 2050 |
We still think these discrepancies are bridgeable and BP can ask shareholders at the AGM on May 12 for a mandate to advance their current ambitions into Paris-consistent targets as specified in the resolution.
Scope 3 on the AGM ballot in the US, depending on the SEC
Thanks to the votes of institutional investors for Climate Targets Resolutions, Shell, Equinor, and BP crossed the Rubicon on Scope 3 by setting ambitions to reduce product emissions. In 2021, we hope to bring about the same effect in the US, where all oil majors (save for Occidental Petroleum) still maintain the position that Scope 3 is beyond their responsibility. We have seen this attitude before in their European peers, and we know that with enough support from investors, this can change.
We filed resolutions for Chevron, ConocoPhillips, Occidental Petroleum, and Phillips66. However, in the US the Securities and Exchange Commission (SEC) could allow the companies to block the resolutions; the SEC must decide whether Big Oil are exempt from basic principles of shareholder democracy.
Expectations for 2021: continuation of momentum, thanks to CA100+
Reviewing the recent AGM season, we are encouraged by the consistent pattern in voting. Backing from investors that insist on Paris-consistent targets for all emissions continues to gain momentum; in 2020, an unprecedented number of shareholders voted for climate targets resolutions.
Following these investors, in September, global investors’ alliance Climate Action 100+ embraced support for specific Paris-aligned targets for all emissions.
The new policy is a U-turn by investors managing assets in excess of $50 trillion. Previously, CA100+ did not endorse shareholder resolutions that requested specific emissions targets at Shell, BP, Equinor, and Total. To date, CA100+ had endorsed oil companies’ preference for non-committal climate “ambitions” despite evidence that these ambitions fell well short of Paris-aligned targets.
This new position of the world’s biggest investor alliance could result in a turning point for the fight against climate change; it is now logical for CA100+ to endorse members to vote for the Follow This climate targets resolutions in May. Please read our article about CA100+ Bigger than Big Oil in Responsible Investor.
At the outset of 2021, not a single oil major has a strategy that leads to emissions reductions compatible with emission levels compatible with the Paris Climate Agreement.
We trust in the power and motivation of you, their shareholders, to halt further procrastination. Oil and gas companies need a clear signal to change course to protect your assets in the global economy from devastating climate change.
Resolutions 2021
BP, Shell, and Equinor
Shareholders support the company to set and publish targets that are consistent with the goal of the Paris Climate Agreement: to limit global warming to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C.
These quantitative targets should cover the short-, medium-, and long-term greenhouse gas (GHG) emissions of the company’s operations and the use of its energy products (Scope 1, 2, and 3).
Shareholders request that the company report on the strategy and underlying policies for reaching these targets and on the progress made, at least on an annual basis, at reasonable cost and omitting proprietary information.
Nothing in this resolution shall limit the company’s powers to set and vary their strategy or take any action which they believe in good faith would best contribute to reaching these targets.
You have our support.
Chevron (1)
WHEREAS: We, the shareholders, must protect our assets against devastating climate change, and we therefore support companies to substantially reduce greenhouse gas (GHG) emissions.
RESOLVED: Shareholders request the Company to substantially reduce the greenhouse gas (GHG) emissions of their energy products (Scope 3) in the medium- and long-term future, as defined by the Company.
To allow maximum flexibility, nothing in this resolution shall serve to micromanage the Company by seeking to impose methods for implementing complex policies in place of the ongoing judgement of management as overseen by its board of directors.
You have our support.
Chevron (2)
WHEREAS: In the coming decades, the world will reduce greenhouse gas (GHG) emissions to curb climate change. Companies that fail to reduce overall emissions will incur substantial financial risks, especially fossil fuel companies.
RESOLVED: Shareholders request the company to address the risks and opportunities presented by the global transition towards a lower emissions energy system by devising a method to set emissions reduction targets covering the greenhouse gas (GHG) emissions of the company’s operations as well as their energy products (Scope 1, 2, and 3).
You have our support.
ConocoPhillips
WHEREAS: In the coming decades, the world will reduce greenhouse gas (GHG) emissions to curb climate change. Companies that fail to reduce overall emissions will incur substantial financial risks, especially fossil fuel companies.
RESOLVED: Shareholders request the company to address the risks and opportunities presented by the global transition towards a lower emissions energy system by setting emission reduction targets covering the greenhouse gas (GHG) emissions of the company’s operations as well as their energy products (Scope 1, 2, and 3).
Occidental Petroleum
WHEREAS: Occidental has stated that our future depends on a world with lower greenhouse gas (GHG) emissions, and has thus established a pathway to achieve net zero for the GHG emissions of the Company’s operations (Scope 1 and 2) before 2040, and net zero for their energy products (Scope 3) before 2050 (‘Pathway to Net-Zero’, Occidental Climate Report 2020).
RESOLVED: Shareholders support the Company to include medium-term targets covering the greenhouse gas (GHG) emissions of the Company’s energy products (Scope 3) on their pathway to their long-term target, which is net-zero emissions before 2050.
To allow maximum flexibility, nothing in this resolution shall serve to micromanage the Company by seeking to impose methods for implementing complex policies in place of the ongoing judgement of management as overseen by its board of directors.
You have our support.
Phillips66
WHEREAS: We, the shareholders, must protect our assets against devastating climate change, and therefore support companies to substantially reduce greenhouse gas (GHG) emissions.
RESOLVED: Shareholders request the Company to set and publish emissions reduction targets covering the greenhouse gas (GHG) emissions of the Company’s operations and energy products.
You have our support.
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* To reach the goal of the Paris Climate Agreement, the Intergovernmental Panel on Climate Change (IPCC) special report Global Warming of 1.5°C (2018, page 119, table 2.4) suggests that global absolute net energy-related emissions should be reduced by approximately 25–45% by 2030 and 70–100% by 2050, compared to 2018 levels.
