ESG round-up: Shell faces pressure amid greenwashing accusations

The latest developments in sustainable finance: BlackRock expands proxy voting programme; oil and gas execs rewarded for increased production.

Shell is facing mounting pressure from global institutions following multiple accusations of greenwashing. Last month, the Environmental Defenders Office filed a complaint to Australia’s consumer watchdog and corporate regulator accusing the energy giant of misleading the public about its plans to reach net zero by 2050 on its website and social media. This follows several allegations of greenwashing against Shell across Europe and the US. The company was made to remove ads promoting carbon neutrality in the Netherlands following the decision from the Netherlands’ Advertising Code Committee that they were misleading. A House of Representatives committee in the US also discovered an internal Shell email discussing carbon capture, utilisation and storage warned “to be careful not to talk about CCUS as prolonging the life of oil, gas or fossil fuels”.

A spokesperson from Shell said: “Our investment in gas is critical to the energy transition, helping customers, mainly in Asia, transition away from coal and wood burning. Addressing a challenge as big as climate change requires a truly collaborative, society-wide approach. We believe smart policy from government, supported by action from business and society, is the appropriate way to reach solutions and drive progress.”

BlackRock is expanding its proxy voting programme, including a UK pilot project for individual investors, according to a letter from CEO Larry Fink. He wrote that BlackRock “believes that choice can and should extend, not just to the strategies in which clients invest, but also to how clients engage in the governance of companies their money is ultimately invested in”. The asset manager will work with a digital investor communications platform to launch the UK pilot initiative. The voting choice programme was created last year for institutional investors to participate in the proxy voting process.

Carbon Tracker has published a report on executives being rewarded for increasing oil and gas production, despite it going against company climate policies. The report found that the worst offenders include companies with some of the most ambitious climate commitments. Growth targets determine 30 percent of management pay at bp, 18 percent at Eni, 15 percent at TotalEnergies and 12 percent at Repsol. The firms have all pledged to cut emissions from production and use of their products by around a third by 2030. At ExxonMobil, 41 percent of executive pay is linked to production growth, 20 percent at Shell, 10 percent at Chevron and 6 percent at ConocoPhillips. None have committed to absolute cuts in emissions before 2050.

The UN Development Programme has joined the Task Force on Inequality-related Financial Disclosures (TIFD) as the newest member of the Interim Secretariat. Existing members include the Argentine Network for International Corporation, Predistribution Initiative, Rights CoLab, and the Southern Centre for Inequality Studies. The TIFD Interim Secretariat, which was established in 2021, evaluates the opportunities to integrate diverse representation into the governance of the framework.

Bloomberg has released science-based implied temperature rise metrics based on a methodology recommended by the Science Based Targets initiative. The metrics will be used to assess how companies and portfolios align with risk goals, such as the 1.5C Paris goal. This has been launched following increasing demand from investors to reallocate capital in line with science-based, net-zero targets. The metrics are based on the temperature rating tool developed by SBTi.

The environmental disclosure non-profit CDP has found that extreme weather events and climate change has costed European companies some $575 billion, based on a survey of 503 STOXX Europe 600 and 225 FTSE 350 companies. Around 80 percent of the amount was identified by financial sector companies, which suggests “the real economy may be underestimating the impact of climate change”, said CDP. A separate survey of companies in both indices estimated that climate-related opportunities could be worth $1.9 trillion.

The quality of reporting against the UK Corporate Governance Code has increased but still has room for improvement, according to the Financial Reporting Council’s annual report. The FRC has seen year-on-year improvements in reporting but has found that there are few companies whose disclosures meet the highest standards throughout their report. Firms have been advised to “go further in reporting how they apply the code’s principles and comply with the provisions, describing the actions and outcomes that come from them to improve market confidence and facilitate better stewardship” by FRC CEO Jonathan Thompson.