Shell Faces Investor Pressure Over Climate Goals

Energy Giant Asks Shareholders to Reject Push for Tighter Emissions Standards

by Victor Adetimilehin

Shell is locked in a battle with a major investor group over climate change action. The oil and gas company is urging shareholders to vote against a proposal that would require Shell to set stricter climate targets aligned with the Paris Agreement.

This proposal, filed by a group of investors with a combined $4 trillion in assets under management, represents the largest such effort to date. The activist shareholder group Follow This is leading the charge, and a vote on the resolution is scheduled for Shell’s annual general meeting (AGM) on May 21st.

Shell Rejects Proposal

Shell argues that the resolution “goes against good governance, shareholder interests, and has negative consequences for our customers.” The company claims the proposal, if approved, would hurt its finances and hinder its ability to adapt to the changing energy landscape.

Earlier this year, Shell weakened its 2030 carbon reduction goals, citing strong demand for natural gas and uncertainties surrounding the energy transition. However, the company maintains its commitment to achieving net-zero emissions by 2050. This decision mirrors a similar move by rival BP in 2023, with many governments around the world slowing down the rollout of climate policies due to rising energy costs and supply concerns.

Follow This founder Mark van Baal sharply criticized Shell’s position. “Shell’s rejection of this reasonable request from 27 of its largest investors demonstrates the company’s intention to remain out of step with the Paris Climate Agreement,” he stated.

Despite the disagreement over climate goals, Shell’s stock price has risen nearly 11% so far in 2024. This increase reflects similar gains by European energy giants BP and TotalEnergies.

Looking Ahead

Shell will also present its resolution on its energy transition strategy at the upcoming AGM. The outcome of the shareholder vote on climate targets remains to be seen. However, this clash highlights the growing pressure on energy companies to align their business practices with global climate goals.

The pressure from investors is likely to continue growing in the coming years. Also, energy companies that fail to adequately address climate change could face increasing scrutiny and potential financial consequences.

Source: Reuters

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