A collection of Shell shareholders have co-filed a resolution for the company to set tighter climate targets, meeting guidelines set out by the Paris Agreement.
The group of 27 investors, representing about 5% of Shell’s shares, proposes that the company set medium-term targets for emissions in line with efforts to keep Earth’s temperature below 1.5 degrees Celsius. This includes targets for Scope 3 emissions, or those caused outside of the company’s value chain, which accounts for about 80% to 95% of total carbon emissions from oil and gas companies.
Amidst reports confirming 2023 was the hottest year on record, with global temperatures coming dangerously close to the 1.5 degree limit, Shell CEO Wael Sawan reportedly cut back on renewables investments and aims to grow fossil fuel production to boost the company’s profits.
The new resolution, led by activist shareholder Follow This, was introduced largely in response to the CEO’s announcement and allegations that Shell’s climate approach lacks clarity and does not define how it plans to make significant emissions reductions. Other investors involved in the resolution, which reportedly hold about $4 trillion under management, include Amundi, Scottish Widows, Rathbones Group, and Edmond de Rothschild Asset Management, among others.
According to a Reuters report, Shell responded with a statement claiming that the Follow This resolution is unrealistic and simplistic, would have no impact on mitigating climate change, and would have negative consequences for its customers.
The resolution will come to a vote at Shell’s annual meeting this spring, and the company will reportedly publish its first energy transition strategy update early this year as well.
“We expect votes to increase as more investors follow their leading peers by voting for change at Shell, which is the bare minimum they can do,” said Mark van Baal, founder of Follow This, according to a Yahoo Finance report. “Large shareholders hold the key to tackling the climate crisis with their votes at shareholders’ meetings. Shell will only change if more shareholders vote for change. The resolution is designed to give Shell a shareholder mandate to drive the energy transition.”
In December, COP28 concluded with a global pledge to “transition away” from fossil fuels. Similar to the concerns over Shell’s climate plan, the final agreement lacked clear language about how this goal would be met in reality. Major oil and gas companies have relied on carbon capture and storage to justify continued drilling, but the technology is currently nowhere near removing the amount of emissions for which the industry is responsible. Major structural changes within the fossil fuel industry are expected as renewable energy continues to grow rapidly and more consumers purchase electric vehicles.
