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Jan 16, 2024

Major investors bring heat to Shell, calling for increase in climate goals

Resolution co-filed by Amundi, Scottish Widows and Rathbones Group

Nearly 30 major investors in energy company Shell have co-filed a climate resolution calling on the $222 bn firm to align its medium-term emissions reduction targets with the Paris Climate Agreement.

The urgent calling is backed by 27 big investors, including Amundi, Scottish Widows, Candriam and Rathbones Group.

The resolution, which was originally instigated by green shareholder group Follow This, calls on the energy giant to commit to helping limit global warming to below 2°C and to pursue efforts to limit the temperature increase to 1.5°C. 

Follow This has been one of the most vocal shareholder activists at the energy group for many years now. Most notably last year, the activist gained mass media attention and more shareholder support for its resolution than in previous years, though still not enough to garner a majority.

The vote last year received a 79 percent majority against the resolution, while Shell’s own energy plan was passed with 80 percent of shareholders on board.

Beginning of the end

‘This extraordinary step shows how dedicated these investors are to tackling the climate crisis at its source,’ says Mark van Baal, founder of Follow This. ‘This escalation of 27 leading investors puts the call for emissions reductions by energy companies front and center for all institutional investors.’

Matt Crossman, stewardship director at Rathbones Group, which co-filed the resolution, says COP28 signaled ‘the beginning of the end of the fossil fuel era’.

‘We are more aware than ever that climate change will create winners and losers,’ he says. ‘We hope to create incentives for senior management to align business strategies with net-zero scenarios that will help the world thrive.’

Diandra Soobiah, head of responsible investment at the National Employment Savings Trust says: ‘We urge Shell to set a credible Scope 3 absolute emissions target. This would demonstrate leadership, show Shell is serious about transitioning its business and play a role in generating real-world change.’

A spokesperson at the Pension Protection Fund adds that in co-filing the Follow This resolution, ‘we want to send a clear message to the Shell board on the importance of setting and achieving Paris-aligned reduction targets. Shell has a real opportunity to drive meaningful change in society, and we want to work together to help reduce overall global emissions by almost half this decade.’

In response to the filing, a Shell spokesperson says the company remains committed to constructive engagement with shareholders and believes its climate targets are aligned with the ‘more ambitious’ goal of the Paris Agreement.

‘The 2024 resolution from Follow This is broadly unchanged from its 2023 submission, which was rejected by shareholders,’ the spokesperson continues. ‘Shell’s board has previously advised shareholders that the Follow This resolution was unrealistic and simplistic, that it would have no impact on mitigating climate change, have negative consequences for our customers and was against the interests of the company and our shareholders. 

‘Continued, targeted investment in oil and gas will remain necessary to meet global energy demand over the coming decades as the world transitions to a lower-carbon future.’