Shell PLC's (LSE:SHEL, NYSE:SHEL) annual shareholder meeting will include two climate votes and comes a day after a senior safety consultant quit working with the company, accusing it of having “disregard for climate change risks”.
Caroline Dennett, who had worked with the company for 11 years, said the FTSE 100 oil producer was causing “extreme harms” to the environment and “not putting environmental safety before production”.
In an open letter to the board and in a video on LinkedIn, she urged others in the oil and gas industry to “walk away while there’s still time”, echoing departures from the company in recent years as executives say the company is going too slow in its shift away from fossil fuels.
The executive, who works for the independent agency Clout, ended her working relationship with Shell in an open letter to its executives and 1,400 employees. In an accompanying video, posted on LinkedIn, she .
Activists say fears of energy shortages are leading to environmental issues being sidelined, other companies have either ignored large votes against their climate strategies or seen investor support dwindle, as at BP.
The first vote is an advisory poll brought by the company on its energy transition strategy progress report, where the FTSE 100 oil company said it reduced absolute emissions from its operations by 18%, compared with a target of 50% by 2030 against 2016 levels.
An early target to trim net carbon intensity by 2-3% by the end of 2021 from 2016 was also met.
The other vote, resolution 21 at the AGM, is a special resolution tabled by Dutch activist investor Follow This and backed by two major Climate Action 100 investors based in the Netherlands, calling on Shell to set and publish quantitative targets that are consistent with the goals of the Paris Climate Agreement covering short, medium, and long-term greenhouse gas emissions of the company’s operations and the use of its energy products.
Without adopting this resolution, the investors say that Shell's emissions will increase in the coming decade.
Requiring at least 75% of shareholders to vote in favour for it to pass, hopes are not high after last week rival BP saw support for its own climate resolution drop to 15% from 20% a year ago, and an HSBC executive gave a speech criticising climate "nut jobs" and saying he was being asked to prioritise “looking at something that's going to happen in 20 or 30 years” over more immediate concerns like inflation.
While Shell in the last two years called the proposals “unnecessary” and “unrealistic”, offering a counterpoint, Dutch pension fund PGGM argued: “In the boardrooms of these companies, the question needs to be asked: do we invest the current super profits, which are the immediate result of the geopolitical situation, in sustainable energy like green hydrogen or battery technology, or do we give in to shareholders eager for short-term profits from oil and gas?
“The security of our energy supply may now be attracting a lot of attention, but the climate problem remains – and its urgency is increasing by the day.”
Shell believes its targets are already aligned with Paris goals, though the activists point out that its short- and medium-term plans are not aligned with the aim of limiting global warming to the 1.5 degrees Celsius compared to pre-industrial levels.
Barclays said the Follow This resolution "is incompatible with current strategy".
Barclays added: “The world needs energy. Shell will keep investing in this area, but lower-carbon and zero-carbon energy in the form of renewables, biofuels and hydrogen, etc will play a larger part in the mix in a more sustainable future. The percentage of capex and opex on energy transition segments will grow from a third today to 50% by 2025."
Either way, the AGM will be “a brilliant opportunity for shareholder scrutiny, and not one to be missed", said Lee Wild, head of equity strategy at Interactive Investor.
After recent shareholder votes at Barclays, HSBC, Rio and StanChart and Ocado in the past couple of months saw significant opposition largely ignored by the companies, Wild said, “Rome wasn’t built in a day, and shareholders should not be too disheartened if votes don’t immediately go their way.
“The important thing is that they are making their voices heard. Shareholders are becoming increasingly involved in the running of the companies they own, and directors are being made to sit up and take notice. While it is difficult to overturn decisions on boardroom pay, it is not impossible. Similarly with climate policy.
“The publicity that shareholder revolts frequently generate can often be enough to make management teams think twice. What’s certain is that investors who don’t vote stand no chance of driving change.
“The opinion of large investors like pension funds will have the biggest impact at AGM votes, but, as with political elections, success could depend on just a few votes. Retail investors typically have a greater stake in smaller companies and have better access to the board, making it easier to grill the decision makers. Whatever the situation, and whatever the topic, shareholders must keep voting if they want to move the discussion forward."