Taken from Diligent Market Intelligence’s ‘Activism and Voting this Week’ newsletter.
This week was a significant one for environmental advocates, with Tuesday playing host to Shell’s 2024 annual meeting.
For the ninth consecutive year, environmental advocacy firm Follow This had filed a shareholder proposal urging the U.K. energy giant to align its greenhouse gas (GHG) emissions with Paris Agreement goals.
The proposal took aim at Shell’s 2030 carbon reduction targets, which were weakened in March, with the company citing strong gas demand and uncertainty in the energy transition.
“For its oil products, Shell has set a ‘new ambition to reduce customer emissions’ by 15-20% by 2030. Although we welcome an absolute Scope 3 emissions reduction target, oil products cause only half of Shell’s total Scope 3 emissions, and the emissions decrease will be undone by the 20-30% growth in liquefied natural gas Shell plans for,” Follow This said, in an email seen by Diligent Market Intelligence (DMI). “Combined with weakening and scrapping of medium-term targets that cover all emissions, [this] represents no progress towards Paris alignment.”
The resolution won 18.6% support at Shell’s Tuesday annual meeting, compared to 20.2% a year prior. The company’s climate transition plan secured support from 78% of votes cast.
Follow This’ proposal had proved divisive ahead of the meeting, with Glass Lewis recommending shareholders vote against the proposal. Norges Bank Investment Management (NBIM) also revealed its intention to vote against the proposal ahead of the meeting, noting that Shell’s energy transition strategy has “evolved under the new CEO.” Despite this, however, the $1.6 billion sovereign wealth fund “encouraged” Shell to make additional disclosures to “reduce uncertainty about the company’s direction in the mid-2030s.”
In contrast, some investors opted not only to support the proposal but to also vote against incumbent directors. In April, Brunel Pension Partnership revealed its plans to vote against certain directors, in response to Shell recommending investors vote against Follow This’ resolution. Others, such as Dutch pension fund Stichting Pensioenfonds Zorg en Welzijn (PFZW), divested from Shell entirely this year.
The global energy sector is no stranger to ESG shareholder proposals. As of May 23, seven climate change proposals have been subject to a vote at global energy companies, winning 13.9% average support. In comparison, 24 and 25 proposals of this kind were voted on throughout 2022 and 2023, securing 23.9% and 21.7% average support, respectively.
This year, proposals calling on Kinder Morgan to disclose its emissions reduction targets secured 31% support, while a request for Enbridge to report on Scope 3 emissions secured 27.6% support.
Energy giant ExxonMobil has also made headlines this year, filing a lawsuit against Follow This and Arjuna Capital in a bid to remove their proposal seeking more ambitious emissions reduction targets from its ballot. Despite the proposal being withdrawn, a U.S. district judge ruled this week that the case can continue against U.S.-based Arjuna Capital.
Exxon investors will have their say at the company’s May 29 annual meeting, where Wespath Investment Management and Mercy Investments have launched a withhold campaign against CEO and Chair Darren Woods and Joseph Hooley.
The Illinois State Treasurer, the New York State Common Retirement Fund and the California Public Employees’ Retirement System (CalPERS) rank among the investors which reportedly plan to vote against several directors at the upcoming meeting.
Rebecca Sherratt 