Climate vote gets only 20pc support at stormy Shell AGM

Climate-minded investors failed to garner an increase in support for Shell to adopt more aggressive emissions reduction targets at a stormy annual general meeting (AGM) today, after a shareholder-backed resolution received just over 20pc of votes — the same as it achieved last year.

After dozens of protesters spent more than an hour disrupting the start of the AGM — with songs, chanting and an attempt to rush the stage — presentations were eventually given by Shell's chairman Andrew Mackenzie and the chief executive Wael Sawan. These were followed by a lively question-and-answer session, during which both Mackenzie and Sawan repeatedly defended Shell's recent climate record and the company's interim targets for emissions reductions.

The climate resolution, backed by several institutional investors including the Church of England Pensions Board, called for Shell to align its existing 2030 target for reducing emissions — including Scope 3 emissions, which come from the use of the company's energy production — with the 2015 Paris Agreement's goal to limit global warming to 1.5°C above pre-industrial temperatures. Mark van Baal, founder of the Follow This activist investor group which first proposed the resolution, noted that to achieve the Paris goal, the world must almost halve emissions by 2030. "Our company, one of the largest emitters in the world… has no targets that will lead to substantial absolute emissions reductions by 2030," he told fellow investors.

In response, Sawan noted that Shell already achieved a 3.8pc reduction in its Scope 3 emissions last year — against a 2022 target of 3-4pc — and plans to reduce by another 6-8pc in 2024, with further incremental targets beyond then. Sawan said earlier in the meeting that although he sees "common ground" with Follow This on the need to get to net-zero emissions by mid-century, its resolution is not the way to achieve it.

"Quickly reducing oil and gas from international energy businesses like Shell creates more volatility, and drives higher production from coal producers and national oil and gas companies," he said. "Those are two very large groups of energy suppliers that Follow This does not target. A quick global oil and gas reduction also prevents the energy transition from happening at a pace that allows for the right balance. As we have all seen only too well over the past year, cutting supply while demand remains unchanged does not work. It adds to shocks to the system and drives up prices."

Sawan said Shell will continue to work with governments and customers to help society reduce emissions and invest in lower-carbon energy systems. He noted that the US' Inflation Reduction Act is attracting capital to low-carbon energy and that Europe is making similar moves. "So, there is positive momentum that is happening that will allow companies like ourselves to invest your capital in a sustainable and profitable way," he said.

Shell's executives also fielded questions about whether the company will comply with a 2021 ruling by the Hague District Court to reduce its absolute emissions by 45pc by 2030, compared with 2019 levels. The company "will try extremely hard to make progress" on emissions but it is appealing the court's decision because "this is a target that is not on anyone else's back… it's purely directed towards Shell", Mackenzie said.

In a statement released by Follow This after the AGM voting finished, Van Baal said: "We have made it easy for investors to use the power of their votes, but many investors have yet to decouple short-term profits from long-term risks for the company and their portfolios."

Follow This has filed similar climate resolutions at the AGMs of TotalEnergies, Chevron and ExxonMobil later this month.

By Jon Mainwaring