The result of this vote was highly anticipated. The "Follow This" resolution, submitted at the Shell annual meeting of shareholders on May 22, wanted to force Shell to adopt a strategy compatible with the Paris agreement. The score did not reach the results hoped for by climate advocates, but it fueled the debate on the role of investors in the energy transition of oil companies. The first victory remains to have made climate one of the main themes of the General Assembly of Shell. Half of the questions from the four-hour meeting focused on the group's climate strategy.
A coalition of 27 investors representing $ 7.8 trillion in assets (members of the IGCC and Climate 100+, two groups of climate-oriented investors) spoke at the GA to call the company to "translate its climate strategy into short- and medium-term goals, aligned with the Paris Agreement for the crucial period of 2020-2030" and then voted individually among the pros, cons and abstentions on the resolution tabled by the NGO Follow This.
The proponents of the resolution first want to retain the positive vote of the most committed investors to the rank of which there are French management companies such as AXA IM, Aviva Investors, BNP Paribas Asset Management, Ecofi Investments, Mirova, Amundi, the Ircantec or PRO BTP Finance. Mark van Baal, Director of "Follow This", "sent a clear signal to Shell and all oil and gas companies that they set goals and not just ambitions." Share Action, a British shareholder engagement expert, is pleased to have secured the support of 3,600 individual investors in the resolution targeting the Anglo-Dutch company.
Carbon footprint decline vs 2 degree trajectory
As the NGO Carbon Tracker, which published a report on the scenarios proposed by the oil companies in May, explains: "Financial information related to the climate is now under the microscope of investors, but the image is not yet net, "the authors point out. "Companies provide little quantification of the financial risk they face."
The issue of the resolution focused on the most appropriate strategy for dealing with these risks. ‘Follow This’ asked for objectives aligned with the 2-degree trajectory set by the Paris Agreement to prevent Shell from dealing with future massive stranded assets. For its part, the company had made the choice of an ambitious reduction of its carbon footprint. In November 2017, it said it wanted to reduce all of its direct and indirect emissions (Scopes 1, 2 and 3) by 20% by 2035 and by 50% by 2050.
"This ambition is really at the forefront of industry practices, no one else gets close to it," said Ben Van Beurden, the group’s CEO to its shareholders. "Your company wants to take the lead, so let us do it, and follow us," he joked, referring to the name of the NGO that initiated the resolution, "Follow This".
This is how the tug of war between management and shareholders was won by the leaders of the Shell Group: "This vote illustrates the limits of shareholder engagement. In majority, investors are not ready to oppose frontally companies of which they are shareholders, even if they are aware of the risks that weigh on the economic models of the oil companies", analysis Anne-Catherine Husson-Traore, CEO of Novethic.
"However, the signals sent would have to be stronger in order to shift the balance of power, which was the hope of the Exxon GA vote last year and the launch of the Climate 100+ in December 2017. But it would probably take longer to change the shareholder relationship," she adds.