PRESS RELEASE
Board rejects opportunity for shareholder support on climate targets
Shell’s directors advise shareholders to vote against the Follow This climate resolution that supports the company to align with the Paris Climate Agreement. The board calls the resolution “unnecessary” and “potentially counter-productive.” (Notice AGM on 19 May). At the same time that Shell announced its new climate ambition. Follow This expects that responsible investors will recognize the inadequacy of Shell’s new ambition and vote for our climate resolution (explanation below).
“With today’s new ambition and negative voting advice, Shell’s Board is still failing in its responsibility to show leadership at a time of devastating climate change,” says Mark van Baal, founder of Follow This, the group of green shareholders that files climate resolutions at Shell and other oil majors since 2016.
Oil and gas companies can make or break the Paris Climate Agreement
“The world needs Big Oil to lead the energy transition from fossil fuels to renewables. While Shell repeatedly claims its ambition is to support Paris, management consistently refuses to adopt the concrete emissions targets needed to reach the Paris goal of well-below 2°C.”
Investors support for climate targets resolution still necessary
“A vote for the Follow This climate resolution will send a strong signal to Shell and other oil majors that institutional investors mean business about stopping climate change. Management requires unambiguous support from shareholders to align its targets with the Paris Agreement and to invest accordingly.
A vote against the climate targets resolutions will in effect legitimize the inadequate targets of Shell and most oil majors, and deny management the support to radically shift capital investment from fossil fuels to renewables. Shell’s current capital spending on oil and gas is incompatible with the goal of the Paris Climate Agreement.”
Shell’s new ambition
Shell responds to Follow This climate resolution again (#) by advancing its climate ambition
New ambition: relative emissions reductions of 65% by 2050 and a projected growth of 40% in energy demand (Shell Sky scenario) lead to absolute emissions reductions of approx. 50%
Therefore, the new ambition (50% emissions reductions by 2050 in absolute terms) still falls short of Paris targets: a reduction of 70% (2°C) – 100% (1.5°C) according to IPCC.
“Shell made another step in the direction of Paris, thanks to the investors that voted for our climate resolution that encouraged Paris-alignment in 2018. Unfortunately, this new ambition is not a target and is not Paris-aligned yet. This will not lead to a radical shift in Shell’s spending away from fossil fuels to renewables.
The oil industry can make or break the Paris Climate Agreement. We expect that the first oil major to rapidly scale the energy transition to renewables will be rewarded by shareholders and customers, and that other oil majors will follow.
We are sorry Shell doesn’t see the imperative of shareholder support to drive the energy transition which the world urgently needs, and advises against our supportive resolution.”
# in 2017 Shell set its Net Carbon Footprint ambition for Scope 3 in response to investor support for the Follow This climate resolution
Background
Our resolution supports Shell to bring its emissions targets (Scopes 1, 2, and 3) in line with the goal of the Paris Climate Agreement to limit global warming to well below 2°C.
Our 2020 resolution repeats the substance of previous Follow This resolutions in 2017 and 2018.
In 2019, with support from the ‘Supporting Six’ group of Dutch institutional investors, Follow This withdrew its climate resolution in order to extend a grace period of one year for Shell to demonstrate progress in advancing its climate ambition to targets in line with “the lower-2°C pathway of the IPCC” (Statement: investor’s expectations of oil and gas companies – attached).
Motivation
The supporting statement of the 2020 resolution specifies the (energy-related) emissions reductions required for a well-below-2°C pathway, equivalent to a 70% reduction in absolute terms.
Proxy Advisors
A growing body of investor opinion accepts a fiduciary duty to stop the devastating effects of climate change. On April 3rd this year, proxy advisors ISS and Glass Lewis recommended that shareholders vote FOR the same climate targets resolution at Santos, Australia’s second biggest oil company. In view of this important signal to shareholders, Follow This expects that ISS and Glass Lewis will act consistently by asking shareholders to vote in favour of our climate targets resolutions at Shell.
From “unwise” (2016), “unreasonable” (2017) to “unnecessary” (2018) and “potentially counter-productive” (2020)
In previous years, Shell called the resolution “unwise” (2016), “unreasonable” (2017) and “unnecessary” (2018). This year “unnecessary” and “potentially counter-productive.”
Further information
Shell’s Net Carbon Footprint ambition
On November 28, 2017, Shell announced its industry-leading Net Carbon Footprint ambition for all emissions, including Scope 3 emissions from its products. This made Shell the first oil major to declare an “ambition” – though still not a target, and not in line with Paris – for emissions reductions in all categories. Shell’s U-turn followed support from a minority of visionary shareholders for Follow This climate resolutions, despite advice from management which had previously rejected Scope 3 targets as “unreasonable” (directors’ response).
Shell and CA100+
A year after the announcement of the Net Carbon Footprint ambition, on December 3, 2018, Shell published a joint statement with Climate Action 100+, an alliance of institutional investors in the world’s most polluting companies. The joint announcement re-stated Shell’s 2017 climate ambition and added detail on two points. First, Shell would translate its (insufficient) long-term ambition into (insufficient) short-term targets. Second, Shell would postpone setting further climate ambitions aligned with Paris until after 2022.
Supporting Six
In 2019, Follow This agreed with six of the ten biggest Dutch institutional investors* to allow Shell a grace period of one year to set targets that are in line with “the lower-2°C pathway of the IPCC” (see statement: investor’s expectations of oil and gas companies – attached). To clarify the emissions reductions this pathway requires, Follow This included the median of the lower-2°C pathway group (70% by 2050) in the supporting statement of its 2020 resolution. Accordingly, Follow This withdrew its resolution in 2019.
* The Supporting Six who voted for Follow This climate targets resolutions in recent years are Actiam, Achmea, Aegon, MN (for PME and PMT), NN-IP, and Van Lanschot Kempen.
