Aegon, the €817bn Dutch provider of life insurance, pensions and asset management, will support shareholder proposals filed at BP and Equinor by campaign group Follow This and the Australasian Centre for Corporate Responsibility (ACCR), which ask for Paris-compliant emissions targets.
Follow This, best known for its climate resolutions at Royal Dutch Shell, widened its focus this season to cover UK oil major BP and Equinor (formerly Statoil), the oil firm majority-owned by the Norwegian state. The latter resolution was co-filed with ACCR.
The shareholder activism of Follow This and the ACCR has overlapped with the more recent work of big institutional investors under the umbrella of the Climate Action 100+ (CA100+) initiative.
CA100+ filed its own climate resolution at BP, pre-agreed with the company’s board, and signed a joint statement with Equinor, in which the Norwegian oil major committed to pursuing a business strategy consistent with the goals of the Paris Agreement.
Equinor’s commitment followed a joint statement on climate in December from CA100+ and Shell, which prompted Follow This to withdraw its own climate resolution at the company. Follow This had intensive discussions with its key supporters – Dutch investors, including Aegon – before deciding to withdraw.
Eric Rutten, Chairman of Aegon’s Responsible Investment Committee, said yesterday that other oil majors should follow Shell and “play a leading role in the transition to climate-neutral energy supply”.
“We believe it is of utmost importance that the Paris objectives are really achieved [and] hope our support for the resolutions will strengthen and accelerate the transition,”he said in a statement.
Regarding BP, the two main proxy advisor firms have recommended to support the resolution from CA100+, but vote against the resolution from Follow This.
Proxinvest, which was the first proxy advisor to recommend voting for Follow This resolutions at Shell last year, was still drafting its voting report at the time this article was written.
Glass Lewis considered the terms of the Follow This resolution “problematic”, as it would mean BP was directed by shareholders to establish Scope 3 emissions reduction goals “for activities outside of its own organisation that it has no ability to direct or control”. Such goals, it says, should be determined by management and the board, as they could significantly affect the way the company operates.
“And, in the case of an energy company, being required to adopt an overly ambitious Scope 3 reduction target, by necessity, means that the Company would likely need to scale back its operations, which in no way would benefit its shareholders,” Glass Lewis noted.Glass Lewis recommended instead to support CA100+’s resolution, through which BP “demonstrates both leadership in this area and responsiveness to shareholder concerns.”
“We believe it is of utmost importance that the Paris objectives are really achieved [and] hope our support for the resolutions will strengthen and accelerate the transition” – Aegon’s Eric Rutten
Similarly, ISS observed “practical concerns” with the Follow This resolution, saying it would bind BP to Paris Agreement targets and prevent a response to “the constantly evolving external factors through the energy transition without further shareholder approval”.
By contrast, ISS argued that CA100+’s resolution “crucially… does not restrict the Company’s ability to set its own strategic course”. It acknowledged Shell has included Scope 3 in its ambition to halve its carbon intensity by 2050, and BP had room to follow suit, but this could be achieved through the CA100+ resolution.
“While the Company does provide some information on Scope 3 emissions, this could be made more robust by providing more supporting information around the carbon intensity of BP’s energy products – also information which this resolution [CA100+] specifically asks for,” ISS stated.
Dominic Emery, BP’s Vice President of Group Strategic Planning, recently told RI that the “carbon intensity of our product is something we will seek to report on in due course” emphasising that this is not the same as Scope 3 emissions.
In an op-ed for Responsible Investor, Follow This Founder Mark van Baal, and ACCR Executive Director Brynn O’Brien emphasised that the failure of an oil company to set a target for reduction of Scope 3 emissions is incompatible with the goals of the Paris Climate Agreement.
Van Baal and O’Brien wrote: “Most institutional investors are reluctant to vote against management, often for good reason. We believe that these climate resolutions are an exception. Our motivation is not to punish companies but to support leading oil and gas companies to rapidly scale the energy transition from fossil fuels to renewables.”