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Jan 27, 2015

Investors target BP and Shell over climate risk

More than 150 investors demand change in business models to restrict climate change

An alliance of 150 investors have filed a shareholder resolution calling for two of the UK’s biggest fossil fuel companies to change their plans and adapt to the growing risk of climate change.

Concerned investors have collectively filed a resolution which demands that BP and Shell be more transparent about their plans to comply with climate change goals, incentives paid to executives and their own lobbying activity. In particular, shareholders have questioned whether both companies’ business models are compatible with the international, UN-backed pledge to limit global warming to less than 2 degrees Celsius.

The group, which includes large institutions such as the Church of England, the Environment Agency and pension funds from the UK, US and Sweden, controls around £15 bn ($22.8 bn) in total assets.

Other issues raised in the resolution include a proposal for reforming BP’s bonus system so that the company no longer rewards executives who implement climate-harming activities. There is also a call for both companies to reduce their own carbon emissions and to invest time and money into renewable energy.

Both resolutions will be voted at upcoming AGMs; BP’s is currently scheduled for April, while Shell’s is set for May.

The resolution’s filers have been given direction by ShareAction, a UK charity which promotes responsible investment and helps increase shareholder activism on ESG issues. The organization’s chief executive, Catherine Howarth, says that the movement is a strong show of leadership in a year that is ‘crucial’ for climate change decisions and diplomacy.

‘Millions of pension savers worldwide will want their pension funds to vote in support, demonstrating true commitment to protecting their members from the risks of climate change,’ Howarth says. ‘These resolutions put the global investment community to the test on climate change.’

According to a statement on BP’s website, the firm hopes the resolution will create ‘constructive discussion’ with all shareholders. ‘The shareholder resolution is being filed for our 2015 AGM, and we will carefully consider it and respond appropriately before the meeting,’ it reads.

Both companies have been recognized for their commitment to transparency on previous occasions: in October 2013, BP and Shell were named by the Church Investors Group as top performers in the disclosure and management of carbon emissions, while in December 2014 Shell was named in Sustainalytics’ list of top corporate governance reporters.

Laurie Havelock

Laurie has been part of the IR Magazine team for more than a decade, starting out as a reporter and research editor before becoming editor in 2023. He was previously acting business editor at the i newspaper and deputy business editor at The Daily...