Royal Dutch Shell shareholders on Tuesday overwhelmingly voted in favor of the oil giant’s energy transition plans at its annual general meeting, though a growing minority defied recommendations and insisted the company do much more to tackle the climate emergency.
Shell said that the company’s own resolution received 88.74% of shareholder votes. The Anglo-Dutch oil major’s board had requested support for its Energy Transition Strategy — a vote that was the first of its kind in the energy sector.
The result, while non-binding, was widely expected and ostensibly provides Shell with a shareholder mandate to proceed with its plans to reach net-zero emissions by 2050. However, 11% of shareholders voted against Shell’s own climate plans.
This contrasted with 19 other resolutions put forward at the online AGM, where up to 99% of investors followed management advice.
Second climate resolution
To be sure, U.K. corporate governance code stipulates that any shareholder vote above 20% requires the company to go back to investors to discuss their concerns.
What’s more, it is perhaps a sharp increase in the number of shareholders choosing to support a separate motion on Tuesday that could be a catalyst for greater action. Shareholders rejected a second climate resolution put forward by activist investor Follow This by a vote of 69.53%. The Dutch group put forward the motion urging investors to vote with them to compel the company to be much more ambitious with its climate policy.
Speaking to CNBC ahead of the vote, Follow This founder Mark van Baal had said he was confident a larger proportion of shareholders would back their proposal at Shell’s AGM. This prediction has now been proven correct, with more than 30% of investors backing their motion — a marked improvement from a vote of 14.4% last year.
In 2016, just 2.7% of investors supported Follow This’ climate motion at Shell’s AGM.
“This year for the first time, Shell put forward its own climate plan for a vote — and yet again, shareholders are sending a strong signal that Shell will have to set new targets. Shell’s policy falls short of what is needed to protect investors from devastating climate change,” Follow This’ van Baal said in a statement shortly after the vote.
He added the company would now have to revise its targets once again.
Immense pressure
Shell’s AGM comes at a time when the world’s largest corporate emitters are under immense pressure to set short, medium and long-term emissions targets that are consistent with the Paris Agreement.
At present, no oil and gas major has disclosed how it will achieve its goals to become a net-zero enterprise by 2050 or sooner, more than five years after the Paris Agreement was ratified by nearly 200 countries. The landmark climate accord is widely recognized as critically important to avoid an irreversible climate crisis.
Shell’s Energy Transition Strategy, published earlier this year, outlined the group’s plans to reach net-zero emissions by 2050. It aims to reduce net carbon emissions by between 6% to 8% by 2023 when compared to 2016 levels. The target jumps up to 20% by 2030, 45% by 2035, and 100% by 2050.
The company has said it will publish an update to its strategy every three years through to 2050. It will also seek an advisory vote on its progress toward its plans and targets every year from 2022.
Shell has not committed to Paris-aligned targets for absolute emissions through to 2030, an omission that has not gone unnoticed by climate activists and investors.
