Shell PLC's annual meeting Tuesday is being closely followed by shareholders eager to see more progress on addressing climate change and pledging to support proposals or oppose directors.
One shareholder proposal from climate advocacy group Follow This calls for Shell to align an existing 2030 emissions-reduction target to cover its Scope 3 emissions.
The advocacy group said in an emailed statement that the vote represents the first time that members of Climate Action 100+ leading engagement with Shell are endorsing the resolution, which is also backed by PGGM and Church of England Pensions Board, among other asset owners.
Lindsey Stewart, director of investment stewardship research for Morningstar, said in an emailed statement that "it would be very surprising for a number of reasons" if the shareholder climate proposal at Shell gained stronger support than a similar one at BP in April that received 17% support, less than the 20% that typically triggers a formal board response.
One factor compelling some asset managers to vote against the BP proposal was a perception that it was inflexible or better handled through engagement, Mr. Stewart said. "It is hard to see a reason why they would view the proposal at Shell differently," he said. "We are in an era where large asset managers, particularly U.S.-based ones, are reticent to be seen dictating strategy to management."
Some asset owners, including the £73.7 billion ($91.7 billion) Universities Superannuation Scheme, London, are setting their sights on Shell's chairman and corporate directors, vowing to oppose their re-elections over climate strategy.
"We no longer have confidence in Shell's overall progress to decarbonize," said a spokesman for USS. "While Shell's 2035 target aligns with a less-than 2°C pathway, the company's operating plans don't show how it will achieve this. We're also concerned with the company's continued investment in new oil and gas production. We see Shell's actions as them prioritising short-terms gains over long-term goals, which is misaligned with our view as a responsible, long-term investor looking to pay pensions long into the future," he said in an email.
Similar resolutions filed at Chevron, Exxon Mobil and TotalEnergies will be voted on later this month.
In February, ClientEarth and pension funds in the U.K. filed a novel lawsuit against Shell, alleging that its directors breached their legal duties by failing to manage climate risk or plan for the energy transition. The lawsuit backed by institutional investors with a collective £450 billion in assets was recently dismissed.
