The core investor engagement group focused on Shell, including the Church of England, Robeco and the Universities Superannuation Scheme (USS), are giving up their lead engager roles at the European oil major under the Climate Action 100+ (CA100+) initiative.
On Thursday, the Church of England Pension Board (CEPB), which manages more than £3 billion ($3.93 billion; €3.62 billion) on behalf of members, announced that it was stepping down “from leading engagement with Shell” to “begin co-leading engagement with Europe’s largest car manufacturers: BMW, Mercedes-Benz, Renault, and Volkswagen”.
Adam Matthews, CEPB’s chief responsible investment officer, told RI: “We have stepped down from being a co-lead but will remain engaged as part of the wider Shell engagement group.”
He described the multi-year engagement with Shell as “intensive” and pointed to a number of firsts that have resulted from it, including the company being the first to set intensity targets covering all their emissions, including scope 3.
Dutch asset manager Robeco has confirmed to RI that it is also stepping away from acting as a lead for Shell, as has USS.
“We can confirm that we’ve handed over our responsibilities for the Shell collaboration to other members of the CA100+ group,” said Carola van Lamoen, head of sustainable investing at Robeco.
“We’re proud of what we’ve been able to achieve in the period as lead investors by closely working together and we will continue to play an active role in other CA100+ collaborative engagements,” she added.
A spokesperson for USS, the UK’s largest private pension fund, told RI that it too was “no longer co-lead” on Shell.
Neither USS nor Robeco told RI who they are now engaging with as part of CA100+.
*Since publication, a spokesperson for Robeco has confirmed that it is leading engagement under CA100+ with CRH, Enel, Anglo American, LyondellBasel, Phillips 66, BHP Billiton, Rio Tinto.
CEPB has been publicly supportive of Shell’s climate efforts to date. Last year, Matthews outlined in an op-ed in RI why it was backing the oil giant’s ‘Say on Climate’ plan. CEPB also announced ahead of Shell’s 2021 annual general meeting that it would not be supporting the shareholder proposal filed by climate activist Follow This for the second year in a row. The proposal called for Paris-aligned reduction targets covering all of Shell’s emissions (Scope 1,2 and 3).
Shell’s 2021 climate plan garnered support of 88.7 percent when put to shareholders last May – noticeably lower than the average of 97 percent support for climate plans put forward by other European firms last year, according to research by proxy solicitation company Georgeson.
In March, environmental law firm ClientEarth announced that it had started a first-of-its-kind legal action against the board of Shell, claiming that they had collectively failed to “adopt and implement” a Paris-aligned climate strategy – a failure, the law firm alleged, which put them in breach of their duties under the UK Companies Act.
That action came less than a year after Shell lost a landmark ruling in the Netherlands in May 2021, when a Dutch court ordered the company to further reduce its emissions.
The changing of the guard at a CA100+ target company such as Shell is not unheard of. Last year, RI reported that the New York State Common Retirement Fund and the Church Commissioners for England had been replaced as leads on ExxonMobil, with Californian pension giant CalPERS and BNP Paribas Asset Management taking up the reins on the US oil major.
A spokesperson for CA100+ told RI that “lead and supporting change from time to time for a wide range of reasons”. They added that “additional new leads have been appointed for Shell” but that they could not provide details as the decision lies with the investors.
See RI’s own list of companies and lead engagers here.
CEPB’s shift to European car manufacturers is perhaps not unexpected, given that the fund has engaged with several in recent years as part of its focus on climate lobbying. Last month, it announced plans to vote against VW’s leadership over the company’s refusal to table a resolution on the issue, which the CEPB had filed with seven other big institutional investors.
Matthews noted that one of the lessons for CEPB of the engagement with Shell was that “as investors we need far greater focus on the demand side”.
“Engaging the supply side in isolation of an equivalent intensity of focus on the demand side just doesn’t make sense,” he explained. “For Shell and many of their peers to deliver on their targets is intrinsically linked to whether the aviation, shipping, auto and other demand sectors change.”
Matthews told RI: “A more joined up supply and demand strategy should be deployed by CA100+… which looks at the whole value chain of a company and seeks to drive change throughout it.”