A CLIMATE-CHANGE resolution backed by the Church of England Pensions Board and Church Commissioners was rejected by a 95-per-cent majority at the AGM of the oil and gas company Royal Dutch Shell this week.
The resolution “Follow This” requests that Shell becomes the first major oil company to comply with the greenhouse-gas intensity targets set by the Paris Climate Agreement (News, 18 December 2015).
It was proposed at the AGM in a statement from a group of 27 investors who manage £7.9 trillion in assets, including HSBC and AXA. Two previous resolutions tabled under the same name, in 2016 and 2017, received 6.3 per cent and 2.8 per cent of shareholder votes respectively.
The Shell AGM was held in The Hague, in the Netherlands, on Tuesday.
Shell had already set out “seriously ambitious” plans to halve carbon emissions by 2050, and expand in renewables, the company’s chief executive, Ben van Beurden, told shareholders. But the board would not make a commitment to setting specific targets to reduce carbon emissions.
The head of engagement for the Church Commissioners and C of E Pensions Board, Adam Matthews, was unfazed by the outcome, however.
“The key outcome was not the result of the vote on the shareholder resolution, but the fact that some of Europe’s largest asset managers are supporting the call for targets across the oil and gas sector, and at Shell, that align to the ambition of the Paris Agreement,” he said on Wednesday.
“The debate has shifted from disclosure requests to direct expectations of companies’ setting targets. We are now engaging with companies, saying that they need to set targets to manage that transition, and assure those invested in them that they are able to deliver.”
In the meeting, Mr Matthews had urged the company to consider its responsibility for “Scope 3” emissions. These are emissions that are indirect of the company, such as the extraction of bought materials and fuels, or transport-related activities in third-party vehicles.
“The position we take in supporting the Follow This resolution at Shell is not one that is targeted at Shell, nor is it intended to imply that we see you as a laggard on this issue. Quite the reverse,” he said.
“Rather, it is based on our belief that we need targets across the whole oil and gas sector, and not just at Shell. We expect all oil and gas companies to come forward with similar targets that include Scope 3 emissions.”
He continued: “My question is therefore to ask if the Board — whatever the outcome of the Follow This vote — will reconsider its position on targets. . . Shell is a leader, and we are asking you to take a further step. Is there a way that we can work together that will find a future resolution or announcement that the board and shareholders could jointly support?”
Mr Matthews referred to an open letter sent to the chair of Shell, Charles Holliday, this month (News, 4 May). In it, the First Church Estates Commissioner, Loretta Minghella; the chair of the C of E Pensions Board, Jonathan Spencer; and the chair of the Environment Agency Pension Fund, Emma Howard Boyd, write of their intention to vote in favour of the resolution.
“We do so as we believe that targets are more meaningful than ambitions. . . We recognise that companies have been reluctant to set targets, expressing concern that targets may constrain their ability to act and to take advantage of opportunities as they emerge. We do not agree with this argument.”
The Church in Wales was among other UK investors — representing more than £28 billion in assets — who voted in favour of the resolution at the AGM, as well as Sarasin and Partners; Ealing, Islington, and Lewisham pension funds; and ShareAction.
Mr Matthews made similar propositions at the BP AGM on Monday. “We believe Scope 3 targets for the full life-cycle energy intensity of the company’s products are required. Such targets will bring focus and direct the company’s capital allocation and activities to advance lower-carbon fuels.”
The company should set a “clear target for product-use carbon intensity” of emissions in line with the Paris Agreement, he said: and BP should also work with Professor Simon Dietz, at the London School of Economics Grantham Research Institute, to assess its future carbon performance and emissions against by the Transition Pathway Initiative (News, 13 January 2017).