Shell urged to clarify climate targets as it
braces for shareholder rebellion
NBIM, one of oil group’s largest investors, calls for
‘additional disclosures’ about green commitments ahead of AGM
Jillian
Ambrose
Fri 17 May
2024 15.52 CEST
Norway’s
state investment fund has urged Shell to clarify its climate targets as the oil
group braces for its biggest ever green shareholder rebellion at next week’s
annual general meeting.
Norges Bank
Investment Management (NBIM), which manages $1.6tn on behalf of the people of
Norway and is one of Shell’s largest investors, urged the company to give
investors more information about its plans for the next decade after its new
chief executive watered down climate commitments earlier this year.
Shell’s
board will on Tuesday face a shareholder resolution backed by 27 of its
investors – holding 2.5% of its shares – calling for the company to align its
business plans with the Paris climate agreement.
The push,
which has been coordinated by the Dutch campaign group Follow This, is
understood to be the largest such climate rebellion mounted against Shell’s
directors in terms of the size of the funds involved.
NBIM, which
invests the proceeds from Norway’s own fossil fuel reserves and holds just over
3% of Shell, has stopped short of backing the campaign but has called for the
company to make “additional disclosures” to reduce the uncertainty over its
climate agenda.
Shell
angered green groups earlier this year after its new chief executive watered
down a key climate target as it prepared to grow its liquefied natural gas
business through the 2030s.
NBIM said
Shell’s strategy “has evolved” under the leadership of Wael Sawan – who last
year claimed it was “dangerous” to reduce fossil fuel production – but it still
believed its strategy retained “the core components of a Paris-aligned
transition plan”.
Shell has
signalled it may slow the pace of carbon reforms for this decade, with a plan
to cut the emissions intensity of the energy it sells by 15-20% by the end of
the decade, down from a previous target of 20%. It has not set a scope 3
emissions target for its gas business, which is expected to grow by 50% by
2040.
“Our
expectations ask for interim and net zero targets. We have encouraged Shell to
make additional strategy disclosures that could reduce uncertainty about the
company’s direction in the mid-2030s,” NBIM said.
Mark van
Baal, the founder of Follow This, said NBIM’s decision to vote against the
campaign’s climate resolution “puts its climate credibility into question” and
could delay Shell’s climate progress.
“Why should
Shell do more than just talk about climate if one of its biggest shareholders
only talks and refuses to do the bare minimum, which is to vote for a climate
resolution filed by 27 of its peers,” Van Baal said.
The main
investor proxy voting advisory agencies, Glass Lewis and ISS, have advised
shareholders to vote against the Follow This resolution.
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