Shareholders back Shell climate plan after eventful annual meeting

The majority of Shell shareholders support the oil and gas company’s plans to reduce its emissions and become climate-neutral by 2050. However, a resolution by activist shareholder Follow This to force Shell to set even stronger climate targets did not get the majority of votes and received less support than last year.

The annual meeting in London was halted for about two hours by chairman Andrew Mackenzie because of a protest by climate activists in the hall and in the shareholder’s room. Police arrested three climate activists, reports British news channel ITV.

“Shame on Shell”

About 80 activists from Milieudefensie and other environmental organizations such as Extinction Rebellion took part in the action, said Money Rebellion. They were chanting and singing slogans such as “Shame on Shell”, and “We will, we will stop you” to the tune of Queen’s “We will rock you.” Some even had glued themselves to their chairs.

“We respect everyone’s right to express their views,” but “this kind of disruption at our AGM is the opposite of constructive discussion,” the company said in a statement.

An essential role in energy supply

While Shell was one of the first companies in the industry to give shareholders a say on climate, some shareholders find that the company does not go far enough in its actions against the global climate crisis.

“I believe we have already reinvented the company considerably,” countered CEO Ben van Beurden. “We believe that our strategy and the goal we have set for ourselves is well in line with the Paris agreement”, which aims to limit global warming to +1,5% above pre-industrial levels.

According to him, Shell – the company has meanwhile withdrawn from Russia – plays an essential role in energy supply, especially now that energy prices have risen sharply due to the war in Ukraine.

Change in mentality

Still, shareholders approved Shell’s climate strategy by 80% on Tuesday afternoon. Shell wants to reduce emissions from its own operations by 50% by 2030 compared to 2016 levels. This does not include the emissions released by the use of Shell’s fuel products by consumers. Those emissions are much higher than Shell’s own.

Another climate resolution, this time from shareholders like Follow This calling on Shell to “report” on its progress at least once a year, was rejected by almost 80% of the votes received. Last year, the resolution to be even more ambitious still received 30%.

Climate pause

Founder Mark van Baal of Follow This reveals that shareholders gave the company a “climate pause” because of the war in Ukraine. “Investors have succumbed to Shell’s narrative that the energy crisis created by the war in Ukraine outweighs the climate crisis”, says van Baal. “Both crises must be addressed simultaneously by shifting investments to renewable energy sources.”

That there is a new sentiment among shareholders is also evident from BlackRock’s stance, for example. Last year, the world’s largest asset manager still supported resolutions calling for ambitious climate targets. This year, the asset manager will vote against such resolutions, the company announced earlier. And BlackRock has done so on several occasions.

According to the Dutch newspaper Algemeen Dagblad, climate seems no longer a hot topic for shareholders in oil companies. On the contrary, the prevailing thought is that the tap must be opened further so that the supply increases and the price can drop. As a result, more short-term-oriented shareholders, for example, have started investing in oil companies.

This strategy is successful, as the shares of oil companies are among the biggest risers this year. And oil companies are richly rewarding shareholders with higher dividends and share buybacks.

Pressure on Shell remains

Yet there are also still fervent naysayers. On Monday, a Shell consultant resigned with a bang, accusing the British oil and gas giant of “completely failing in (its) ambition to transition to carbon neutrality”.

An institutional investor, Royal London Asset Management, had also criticised Shell’s climate transition plan last week, saying it did not reduce oil consumption enough.

Last year, the Dutch organization Milieudefensie (environmental defense) won a court case against Shell, a worldwide first. The court ruled that Shell must reduce its emissions by 45% by 2030, including the emissions from the use of products by consumers.

Shell has lodged an appeal. The company mainly objects to the requirement that it compensates the emissions of users. The multinational does not consider this obligation to be feasible.

Violation of human rights

Last month, Milieudefensie has also sent a warning letter to Shell. Directors of the company can be held liable for violating human rights by not carrying out the verdict of the court, according to Nine de Pater, campaign leader of Milieudefensie.

Organisations from various parts of the world were present at the action in London, including clubs from Nigeria, South Africa, and the United States. Shell must pay compensation to various Nigerian farmers. This is because oil pipelines leaked into the country for years. The Court of Appeal in The Hague ruled in 2021 that Shell was liable.

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