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Your votes for climate targets will never be “unnecessary”

There are five identical climate resolutions at oil & gas majors this AGM season. Two saw massive support in Australia last month, with three still to come in Europe

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Here’s the pattern we’ve learned to anticipate. First, responsible investors file a shareholder resolution on climate targets. Second, the company dismisses targets as “unnecessary” while announcing a non-binding “new ambition” – typically endorsed by well-meaning institutions. Third, investors allow the company to buy time to work on a detailed plan – and nothing important happens.

A year passes. On closer scrutiny, the capital spending plans of Big Oil reveal no meaningful change. Their investment pipelines are hopelessly vested in increasing output of fossil fuels – with, consequently, no hope of meeting the Paris targets. The responsible investors re-group and file a new shareholder resolution. To which the company responds with tweaks to its so-called “ambition”.

And repeat, from the top.

Except that now the world is watching. It’s 2020. This familiar pattern already looks, well, familiar. While the planet is warming, the oil price has collapsed in the wake of coronavirus. Gas, the lower-emissions successor to oil, looks vastly more competitive in price terms – but offers no solution to the climate crisis.

The energy transition to renewables – already, in the longer term, inevitable – is rising fast on the geo-political agenda. Building a low-carbon economy is an obvious, immediate priority as governments consider how to manage and mitigate the post-pandemic global recession.

And somehow, in this moment of existential crisis for the oil industry, the boards of oil majors insist on another conversation – even repeating their exact script from previous years.

Take Shell, the company which inspired Follow This, a Dutch campaign of more than 5,000 green shareholders, to test investors’ grasp of fiduciary responsibility in the face of the climate emergency. In 2018, Shell’s board dismissed Paris-aligned targets as “unnecessary” (directors’ response) and advised shareholders to vote against our climate target resolution.

A significant minority of investors – in particular the ‘Supporting Six’ group of Dutch institutional investors *– disagreed. This visionary group insisted on calling for Paris-aligned targets. As recently as April 16, Shell published an improved climate “ambition”. Evidently, a climate targets resolution was not “unnecessary” afterall.

This year, five climate-targets resolutions drafted by activist investors have been, or will be, put to a vote at Santos, Woodside Petroleum, Equinor, Shell and Total. Each resolution adopts the exact same wording, that shareholders support (or request) the company “to set and publish Paris-aligned targets for all emissions (Scope 1, 2, and 3; short-, medium-, and long-term), and invest accordingly”.

This is the point where the story shifts up a gear and moves in a surprising, if long-awaited, new direction. Last month in Australia, these resolutions secured massive shareholder support at the April AGMs of Australia’s two biggest oil companies: 43% at Santos, and a majority of 50.16% at Woodside Petroleum.

Enter, proxies

This landmark result reflected newfound support from proxy organisations. Advisors ISS and Glass Lewis recommended that shareholders vote for binding climate targets. Their decisions send an important signal to shareholders. Watching events in Australia, Follow This hopes ISS and Glass Lewis will act consistently by asking shareholders to vote in favour of the same climate targets resolutions at Equinor, Shell, and Total.

Already, ISS has signalled support for our resolution at Equinor in the following terms: “A vote for this proposal is warranted as the setting and publication of targets would aid shareholders in understanding the company's assessment of how it could reduce its carbon footprint in alignment with greenhouse gas reductions necessary to achieve the Paris Agreement goal of maintaining global warming well below 2 degrees Celsius.”

“In this moment of existential crisis for the oil industry, the boards of oil majors insist on another conversation – even repeating their exact script from previous years.”

Meanwhile, both Equinor and Shell are resolutely opposed. In their statements ahead of their May 2020 AGMs, the boards of both companies have advised shareholders to vote against climate targets. Once again, they have rejected our  resolutions as “unnecessary” (Shell, directors’ response, 16 April 2020). Once again, Shell’s advice refers to the company’s own climate ambitions, released on the same day (April 16, 2020) as its guidance on voting.

The board of Total is yet to publish its advice, but we expect it is likely take a similar stance.

Companies need owners’ support

Even if investors were to accept that the current climate ambitions of Equinor, Shell and Total are in line with the Paris Climate Agreement (they are demonstrably not), every oil major needs shareholder support to set and achieve Paris-aligned targets. Only with a clear imperative set by owners can oil executives invest accordingly. 

In the five years since the Paris Climate Agreement, oil majors have moved too slowly to adopt renewables. Total investment in renewable energy by BP, Equinor, Shell and Total is around 5% of their investment pipelines - nowhere near what is needed to have any chance of reaching the Paris goals.

To date, BP is the only oil major to acknowledge publicly that shareholder support is an imperative to drive the energy transition that the world urgently needs.

In view of this position, approved by BP’s board and announced this year by new CEO Bernard Looney, Follow This has withdrawn the climate resolution we had proposed for BP’s 2020 AGM. Instead, BP and Follow This have agreed - in a joint public statement - to work together on drafting a climate resolution for 2021.

We believe that only concrete targets for all emissions will lead oil majors to the necessary shift in investments from fossil fuels to renewables. Only the biggest industry incumbents have the technical know-how, financial muscle and market-making opportunities to rapidly scale an energy transition to renewables.

We, the shareholders, have the opportunity to compel them to do so. As last month’s AGMs in Australia proved, a growing body of investor opinion sees climate resolutions as integral to their fiduciary responsibility. As the proxies have understood, investors are stewards of both their investee company’s future and a world economy wracked by climate breakdown.

Shareholder votes for these climate targets in Europe will never be “unnecessary”.

* The ‘Supporting Six’ who voted for Follow This climate targets resolutions in recent years are Actiam, Achmea, Aegon, MN (for PME and PMT), NN-IP, and Van Lanschot Kempen.


Mark van Baal is founder of Follow This, a group of green shareholders that supports oil & gas companies to set Paris-aligned targets for all emissions and invest accordingly.



Mark Ashurst is an Ambassador for Follow This and a partner in circular economy specialists the Leaders Bureau.



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