INVESTOR BRIEFING media overview
Six institutional investors (managing € 1.3 trillion in total*) have co-filed one or more Follow This climate resolutions for 2023, as featured in Financial Times, Reuters and Bloomberg. We thank these investors for their leadership.
We expect that many investors will follow with their votes in May, especially after seeing oil majors increase investments in fossil fuels, and even dial back their climate pledges, like BP (Washington Post).
The decline in investors’ votes for Paris-aligned targets inflated oil majors’ belief that their shareholders do not want Paris-aligned targets that warrant drastic emission cuts this decade, and have settled for promises for the distant future (net zero by 2050).
Therefore, we have to regain momentum in 2023 (Financial Times). Investors are realising now that if their support for Paris-alignment does not recuperate, another year will be lost.
If the bulk of your investments remain tied to fossil fuels, and you even plan to increase those investments, you cannot claim to be pursuing Paris-alignment, because this will not lead to large-scale emissions reductions by 2030.
The picture is clear now, no oil major plans to drive down emissions this decade. Now it’s up to their shareholders. Together with major investors, we continue to compel BP and other oil majors to put their full weight behind the energy transition. (The Guardian)
Scope 3 by 2030
The Follow This climate resolutions support Shell, BP, Chevron, and ExxonMobil to set medium-term Scope 3 targets for 2030, the crucial but missing target at all oil majors.
Jean-Philippe Desmartin, head of Responsible Investment at Edmond de Rothschild Asset Management, one of the co-filers at Shell, told Reuters: ‘We recognize Shell has made a tremendous improvement in its climate targets. Nevertheless, it still lacks an absolute 2030 (emission reduction) target.’
Other leading investors took a stance on co-filing: Degroof Petercam Asset Management co-filed all four resolutions, Achmea Investment Management co-filed ExxonMobil, and Arjuna Capital Chevron and ExxonMobil; the other co-filers will make public statements later.
Please find attached the climate resolutions filed at Shell, BP, Chevron, and Exxon that support the companies to align their medium-term (2030) Scope 3 targets with the Paris Climate Agreement; or at Resolutions 2023 | Follow This (follow-this.org).
Engagement with eleven oil majors
In our engagement with eleven oil majors where we filed climate resolutions in 2022, we witnessed a universal determination to hold on to carbon-based business model for as long as possible, which is further emboldened by current windfall profits and global energy insecurity. Some executives frankly stated that investments in renewables will only follow if they can expect the same double-digit returns as with fossil fuels.
Investors have much more to worry about than the return on capital of oil major. They have to worry about the returns of their entire portfolio in the global economy, which are in great danger should the world fail to reach the goal of the Paris Accord.
They are stewards of the global economy and should realize that the only formal power they have is the power of the vote (Corporate Knights).
Oil majors feels secure in shareholders’ support for negligible emission cuts given that the majority of their shareholders voted against Paris-aligned targets in 2022. Big Oil’s confidence signals the real risk that investors run when they do not wield the power of their vote appropriately.
In that respect, BP’s reversal is a wake-up call for investors.
We remain convinced that oil majors will only take the bold and brave decisions needed to cut emissions in line with the Paris Climate Agreement when they have secured unequivocal support from their shareholders.
The only way to formalise your support is with your votes.
Your votes for these resolutions will be crucial to compel oil majors to align their 2030 targets with Paris and invest accordingly.
with best regards, on behalf of the Follow This team,
Mark van Baal
PS We hope to see you at the webinar ‘Moving the Needle: How Investors Can Utilize Escalation Pathways to Mitigate Systemic Climate Risk’ with LGIM, NBIM, and the Cambridge Centre for the Study of Existential Risk. You can register here.
* Edmond de Rothschild Asset Management (EDRAM, France, managing € 75 billion, co-filed-Shell), Degroof Petercam Asset Management (DPAM, Belgium, € 51 billion, all resolutions), Achmea Investment Management (Netherlands, € 175 billion, ExxonMobil) and Arjuna Capital (US, $400 million, Chevron and ExxonMobil); the other two co-filers will make public statements later.