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AGM results test Shell’s commitment to Paris goals

Follow This gets backing from Axa, while HSBC and Aviva abstain

The climate resolution co-filed by Follow This and ShareAction, asking fellow shareholders to support Shell in setting Paris-aligned climate targets was backed by 5.1% of the votes, with 7.2% of abstentions.  
The result was hailed by coordinators as “small but significant”, and is lower than the 6% support it received last year. However, organisers say the rise in the proportion of abstentions, from around 5% last year, is a sign of growing dissent.
None of the 10 largest Dutch shareholders took Shell’s advice to reject the proposal. Robeco and APG – both of whom voted ‘against’ last year – abstained this time, joining PGGM. Besides the support reported earlier this week by RI, NN, MN, Van Lanschot Kempen, Achmea and Blue Sky Group maintained their backing from the previous year.  
New support came this year from AXA Investment Management, “as part as our responsible investment and stewardship policy to push oil and gas companies to intensify their efforts on climate change,” a spokesperson told RI. 
HSBC Global Asset Management abstained. Stephanie Maier, its Director of Responsible Investment, told RI that Shell’s ambitious climate change objectives are welcome.
“However, we believe that there is a role for emission reduction targets in achieving these and that it would be possible for the company to quantify its ambition over a time period long enough to allow the flexibility to adapt the business and meet targets as management deemed appropriate,” she said.
RI understands that Aviva Investors might have been another leading voice to abstain, having supported the resolution last year.
BMO Global Asset Management voted against the resolution (full proxy voting records are found here). Pieter van Stijn, Director, Governance and Sustainable Investment, told RI that Shell’s 2050 ambition shows significant progress.
“Whilst we still think there is further work to do to improve accountability, we did not support the Follow This resolution, as we believe our engagement is making progress,” he said.RI understands that Legal & General Investment Management also opposed the resolution on similar grounds, alongside the UK’s Universities Superannuation Scheme (USS), which cited Shell’s “willingness” to engage with investors on this issue, indicating management’s commitment to dealing with climate risk.
“We do, however, welcome the debate that Resolution 19 has generated and believe that attention should now shift to the rest of the integrated oil and gas sector,” the spokesperson said.
Bruce Duguid, Head of Stewardship at Hermes EOS, the stewardship and engagement unit of Hermes Investment Management, told RI that, although it was “aligned on the objective to ensure that Shell sets and publishes targets for the implementation of its decarbonisation strategy, in line with the goals of the Paris Agreement”, it advised its clients to vote against the resolution.
Andy Jones, Associate Director of Engagement at Hermes Investment Management, requested from Shell at the AGM that it commits to publish its short- to medium-term decarbonisation targets as soon as possible.
“The use of the term ‘ambition’, rather than ‘target’, has raised doubts about the company’s commitment to this goal. The vote on the resolution does not represent the full level of concern on this issue,” he said.
Such concerns were also raised in a statement signed by members of the IIGCC
“The investors supporting this statement are clear that firm targets to which the company is accountable in the public sphere are necessary and desired,” they said.
The letter was signed by 26 members of the IIGCC, all of whom have holdings in Shell.
RI understands that Follow This turn its attention to Repsol next, filing a similar resolution at the Spanish-listed oil and gas firm.

Correction: This article was amended on 24/05/2018. It originally said the 26 signatories of the letter to Shell were members of the Climate Action 100+. They were in fact members of the IIGCC.