Shell endorses shareholder proposal on climate risk disclosure

Royal Dutch Shell

Updated with correction

Royal Dutch Shell PLC on Thursday endorsed a shareholder proposal at the company filed by a group of global pension funds and other institutional investors calling for more disclosure by the company on climate risk.

Representatives of institutional investors at a teleconference Thursday called the move a breakthrough in corporate engagement.

“The board … has decided to recommend that shareholders support the resolution” at the annual general meeting, J.J. Traynor, executive vice president, investor relations, wrote in a letter dated Thursday and posted on The Hague, Netherlands-based company's website.

Helen Wildsmith, head of ethical and responsible investment at CCLA, a fiduciary manager of charity and faith funds, revealed the Shell endorsement at a Ceres-hosted teleconference Thursday on fossil-fuel production companies and risks they face from declining energy prices and climate change.

“It's very unusual for management to support a shareholder resolution, and that's what we've seen today from Shell,” Ms. Wildsmith said in the teleconference featuring representatives of institutional investors, calling for fossil-fuel production companies to shift their focus more to clean energy.

“The Shell agreement is really potentially transformational in the industry engagement with climate risk and makes it much harder for companies to take a less than cooperative approach” with institutional shareholders on the issue, Andrew Logan, oil and gas program director, Ceres, said at the teleconference. Shell's agreement “is a real validation of our concerns.”

In the letter to the filers, Mr. Traynor wrote Shell's board committed to further disclosures this year “in advance of full reporting in response to the resolution in 2016,” the year the proposal called for the company to begin full disclosure.

Andrew Whiley, spokesman of the London-based Local Authority Pension Fund Forum, whose members' combined assets total £150 billion ($225.6 billion) and co-filed the Shell proposal, said in an interview the Shell endorsement “is probably the first time a global energy company has gone this far in disclosure … of its long-term strategy” related to climate.

CCLA led the coalition of institutional shareholders that co-filed the proposal. Other co-filers include the £2.4 billion Environment Agency Pension Fund, Bristol, England; the Montpelier-based Vermont Pension Investment Committee, which oversees $4 billion in assets of three state retirement systems; and three Swedish National Pension Funds, the 280.3 billion Swedish kronor ($33.8 billion) Gothenburg-based AP2, and the 272.6 billion kronor AP3 and 276 billion kronor AP4, both based in Stockholm; and Christian Brothers Investment Services.

Shell's annual meeting is May 19, Taryn Strautins, Shell spokeswoman, said in an e-mail in response to questions.