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Church and local authority investors drafting climate resolutions for BP and Shell AGMs

Rare shareholder resolutions considered as CDP publishes its global A-list

The UK’s largest church investors and the £150bn (€188.9bn) Local Authority Pension Fund Forum (LAPFF) are planning to file climate change-related resolutions at the annual meetings of oil majors BP and Shell next year.
The pair are being targeted as they have the highest carbon footprints in the FTSE100 index, the investors say. It’s the next phase of the ‘Aiming for A’ coalition that was launched in 2012.

It uses rankings on the CDP’s (the former Carbon Disclosure Project) Climate Performance Leaders Index (CPLI) – seen as the global “A List” for companies and climate change – as a spur to engage with UK listed extractives and utilities companies.

The Church of England is headed by former oil industry executive Archbishop Justin Welby, in the news recently for offering places in a new quasi-monastic community for young bankers and financiers.

The coalition is currently drafting and consulting on the resolutions, which it expects to file in mid December. BP and Shell’s AGMs are usually in April and May. Shareholder proposals are rare in the UK, though BP faced one spearheaded by Christian Brothers Investment Services, relating to the Deepwater Horizon disaster, in 2011.
News of the possible resolutions was linked with the launch of the latest CPLI today (October 15) by the CDP, which acts on behalf of 767 investors with assets of $92trn.

UK firms in the top bracket include energy firms Centrica and SSE. Extractives firms BHP Billiton and Glencore, along with BP, have also moved up a band to a “B” to join National Grid, Rio Tinto and Shell. Anglo American and BG Group have slipped out of the CPLI.
The ‘Aiming for A’ coalition, which also includes £695m asset manager Rathbone Greenbank, had been focusingon engaging with the companies, asking them to aim for ongoing inclusion in the CPLI and putting questions to them at their AGMs.

Now this effort is being ramped up with “supportive but stretching” resolutions at the two oil giants. The coalition hopes the resolutions will “amplify” long-term investors’ concerns about shareholder value creation and risk amid the global energy transition.
The campaign is coordinated by Helen Wildsmith, Head of Ethical & Responsible Investment at charity fund manager CCLA, who is the former Executive Director of UKSIF (the UK Sustainable Investment and Finance Association) and current chair of the Chair of the Network for Sustainable Financial Markets. She said: “Climate change and associated public policy uncertainty create material risks for investors. We think supportive but stretching shareholder resolutions have a role to play in focussing attention on the complex collective challenge we face.”
“We’ve chosen BP and Shell for our first shareholder resolutions because they have the highest carbon footprints in the FTSE100 and will play a key role in the multi-decade global energy transition,” added Matt Crossman, Ethical Research & Corporate Engagement at Rathbone Greenbank.
The CDP said 187 global businesses got an A grade and a berth on the CPLI, adding it was the first time it had produced “a truly global list of performance leaders, regardless of market capitalization”.
The CDP also points out that the CPLI “generates superior returns”, having outperformed the Dow Jones Sustainability World Index by 19.6% and the Bloomberg World Index by 9.6%. Index provider ECPI said this supports “the adoption of quantitative carbon data in developing investment strategies”.