Shell criticised by Europe’s largest asset management company over climate policy

Amundi, Europe’s biggest asset manager, has joined 26 investors in demanding Shell improves its environmental targets during its annual meeting. This is the largest shareholder push for climate policy that the oil and gas company faces.

The resolution, coordinated by the activist group Follow This called upon Shell aligning its “medium term” greenhouse gas emission target with the Paris Agreement to limit global heating. To meet these targets, global emissions must drop by nearly half by 2030.

Shell claims that its Paris targets are already met, but the activists wanted Shell to do more. This would include accounting all emissions from its products sold to customers (known as scope 3).

Diandra SOOBIAH, Head of Responsible Investment at UK Pension Fund Nest said: “We urge Shell set a credible Scope 3 absolute emission target.” This would show Shell’s leadership and that it is serious about its transition. It could also play a part in creating real change.

Mark van Baal, founder of Follow This, said his group has been organizing similar motions at Shell meetings since 2016.However the support for this upcoming resolution attracted the most investment managers.

Shell is owned by about 5 percent of the investors. Together, they control more than €3.8tn. The investors include the UK pension fund London CIV and international managers Rathbones Candriam & Edmond de Rothschild as well as Swedish pension fund AP4 & Ethos Foundation representing Swiss investors.

Last year, two shareholders submitted a resolution to Shell and garnered the backing of around 20% of all voting investors.
“With 2023 as the warmest year ever recorded, and COP28 announcing the ‘beginning of the end of fossil fuel era,’ we are more aware now than ever before that climate change is going to create winners and losers,” Matt Crossman, Rathbones’ stewardship manager, said, referring to last month’s UN climate summit agreement to move away from fossil-fuels.

He said the goal was to create incentives for senior managers “to align their business strategies with scenarios of net-zero that will help make the world thrive”.

The traditional investment groups avoided shareholder resolutions in the past, instead relying on discussions behind closed doors. Some have been frustrated by the lack of action taken on climate risks and have turned to more radical measures.

Wael Sawan, the Shell chief executive who took over last year, outlined his plans to continue investing in fossil fuels. Shell’s chief executive Wael Sawan said that in order to meet the global energy demand while maintaining shareholder returns, Shell must continue to invest in oil production, grow its gas business and also invest in energy sources with lower emissions, such as biofuels and hydrogen.

Shell aims to cut its operational emissions by 50% by 2030.Shell has committed to reducing the “net carbon intensities” of its products by 20 percent by 2030 but not their absolute emission levels.

Carbon intensity is an ambiguous measure of emissions that represents a percentage of the total energy sold. Shell can offset its carbon emissions from its oil and natural gas operations by using its lower-carbon products.

Shell said that the shareholder resolution is “unrealistic, simplistic,” and “basically unchanged” from the one submitted by Follow This in the previous year.
It said that the plan would not have any impact on climate change and have negative effects for customers. The company and its shareholders also argued against it.

Shell is updating its energy transformation strategy, which includes climate targets. Shareholders will be able to vote on this plan at the annual meetings.
The International Energy Agency states that to achieve the goals of the Paris Agreement, no new oil or gas projects should be developed.