Big UK managers oppose all Follow This climate target proposals at oil majors

Analysis by Dutch activist reveals HSBC AM is the only big UK asset manager to support all five of its resolutions this year.

UK investment heavyweights Legal & General Investment Management (LGIM) and abrdn voted against all five climate targets proposals put forward this year by Follow This, along with Janus Henderson Investors, according to an analysis published today by the Dutch NGO.  

In the case of US oil giants Chevron and Exxon, the trio reversed their positions on Follow This’s resolutions after supporting them last year.

Aviva Investors was also found to have opposed most of the Follow This proposals this year, with solitary support for the one at Exxon. 

HSBC Asset Management was the only big UK-based manager assessed that was found to have supported all the proposals put forward by the campaign group in 2023.  

While Royal London Asset Management also did not vote against any of the activist’s proposals, supporting them at TotalEnergies, Exxon and Chevron, it abstained on those put to BP and Shell.  

Responding to the analysis, a spokesperson for LGIM said the fund “fundamentally rejects the assertion from Follow This about sacrificing Paris for short-term profits”. 

“To the end of May 2023, LGIM had supported 70 percent of shareholder resolutions on climate, and will be voting against almost 300 company directors for not meeting our climate expectations,” they added. 

The spokesperson also pointed to climate proposals co-filed by LGIM at Exxon and mining giant Glencore this year.  

Abrdn, Janus Henderson and Aviva Investors had not responded to a request for comment at the time of publication. 

“HSBC is the only true steward of the global economy in the UK top 10,” said Mark van Baal, founder of Follow This. “Their peers enable most oil majors to continue to cause climate breakdown.” 

Refined proposals

This proxy season, Follow This refined its proposal at the oil majors, focusing on Paris-aligned medium-term Scope 3 emission reduction targets, including those linked to the use of firms’ products.  

Unlike the resolutions at Exxon, Chevron and Total, the filings at BP and Shell were binding, a feature that prompted some big asset managers to oppose them due to the “inflexibility” posed by the wording.    

Despite this, tallies at the European majors eclipsed those at their US counterparts.  

Support has historically been easier to come by in the US for Follow This’s resolutions, due to the prevailing view that European oil giants are more progressive when it comes to responding to climate risks.   

But just a tenth of shareholders backed the advisory resolution at Chevron and Exxon in May. Last year, Follow This saw close to three times that level of support at the duo with a more expansive proposal, which also included a request for medium-term Paris-aligned targets.   

This year, Follow This resolutions were backed by 17 percent, 20 percent and 30 percent of shareholders, respectively, at BP, Shell and Total.  

The tally at Total equalled the highest level of backing for a Follow This climate resolution at a European major.  

All the UK asset managers assessed by Follow This are signatories to Climate Action 100+, the multi-trillion-dollar engagement initiative targeting the world’s biggest emitters.  

According to the CA100+ benchmark, none of the five oil giants targeted by the NGO has Paris-aligned medium-term emission reduction targets, and Chevron and Exxon perform worse on emission target indicators than their European counterparts.  

Record profits

This year’s votes took place amid record profits for oil companies and the growing anti-ESG backlash.  

In February, BP revealed that, in addition to posting historic profits, it was cutting its 2030 emissions reduction goal for oil and gas production from 35-40 percent, compared with a 2019 baseline, to 20-30 percent.    

The announcement came less than a year after shareholders endorsed the UK oil major’s climate plan, via a so-called Say on Climate vote, with 88 percent support.   

Also this year, in response to a survey by Dutch asset manager Robeco, one-third of institutional investors reported that oil and gas firms have become less receptive to engagement amid rising profitability and concerns around energy security.  

Following the votes at BP and Shell, the UK Asset Owner Roundtable said it plans to bring in large managers to scrutinise how their voting at the European majors aligns with asset owner’s long-term interests as universal owners. 

Last month, the Church of England Pensions Board and Church Commissioners for England announced plans to axe all remaining oil and gas majors from its £3.2 billion pension fund ($4.1bn, €3.7bn) and £10.3 billion endowment, including BP, Shell, Exxon and Total, due to their lack of progress on climate.

A spokesperson for HSBC AM confirmed that the manager supported all the Follow This proposals.