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Op-Ed: Follow This: Investors, help Shell to win back our trust

Pension funds must support Shell to head in a sustainable direction.

This article was written by Jeremy Leggett, Mark Campanale, Mark van Baal and others.

On April 20, Shell will advise its shareholders whether to vote for or against a green shareholders’ resolution. Larger shareholders such as pension funds must therefore support Shell now in heading in a green direction.

‘Trust (in the oil industry) has been eroded to the point that it is becoming a serious issue for our future,’ said Shell CEO Ben van Beurden in March to an audience of his colleagues in Texas (during CERAWeek). Van Beurden has already been wrestling for some time with the reticence of society to see his company as a force for good, as he himself prefers to see Shell. In interviews he names this as the greatest problem in his entire career.

The solution for this problem is on the agenda at Shell’s next shareholders’ meeting, at which the following shareholder resolution will be put to a vote: ‘Shareholders support Shell to take leadership in the energy transition.’

This green resolution asks Shell to set goals that are compatible with the Paris Climate Accord to limit the warming of the earth to a maximum of 2 degrees Celsius. In layperson’s language: Shell will set its entire weight behind the energy transition to a renewable energy supply, for example by building wind farms instead of drilling more oil and gas wells. It is up to Shell to determine in detail how this goal will be met. This goal is good for Shell’s future, good for its shareholders, and good for the world. It is the chance to become a ‘force for good’.

Tomorrow, Shell will publish its voting advice to its shareholders. Whether this advice will be for or against the resolution will depend strongly on the signals that Shell receives from its shareholders. It is therefore up to Shell’s larger shareholders to make it clear now that they support a change of course.

Asset managers such as ACTIAM (pension funds Zwitserleven and others), Blue Sky Group (KLM, SNS Reaal, and Total Nederland), and French investor Ecofi Investissements have already done this publicly. MN (representing the pension funds PMT and PME) calls the resolution a “fair ask” in the media; other investors are doing it behind the scenes.

By supporting Shell in changing its course, the pension funds are making their holdings compatible with their own green ambitions.Eumedion, the Dutch institutional investors’ representative, wrote last year in its position statement: ‘Members of Eumedion urge companies to provide an overview of their efforts to achieve the goals of the Paris Climate Accord.’

Furthermore, in this way investors can make their investment portfolios less sensitive for the risks of the carbon bubble and future-proof.

Which young person wants to see his or her pension money invested in fossil energy companies that will have disrupted the liveability of the earth and gone bankrupt (unfortunately in that order) by the time he or she retires?

By supporting this green Shell resolution, pension funds can once again explain to their constituents why they have shares in a fossil energy company such as Shell: because Shell is going to accelerate the energy transition.

Investing in new energy sources does not have to detract from dividends. Investments that Shell makes today in exploring for oil or gas will only deliver oil, gas and money years from now. Moving those investments to new energy therefore has no effect on Shell’s ability to pay out a dividend in the next quarter. Investing in the energy supply of the future is in fact the only way to guarantee a dividend for the long term.

Pension funds, help Shell. They need the support of their shareholders in making the energy transition to a new energy supply.

So let Shell know now that you are going to vote for the green Shell resolution, to stimulate Shell to give a positive voting advice. Once Shell has sufficient support from its shareholders, the company will be able to place a green dot on the horizon, society will be able to trust Shell as a ‘force for good’, and Ben van Beurden will have met and solved the greatest challenge of his career.

By: Jeremy Leggett, entrepreneur and Executive Chair of SolarAid
Mark Campanale, founder of Carbon Tracker*
Mark van Baal, founder of Follow This
Ruud Koornstra, National Energy Commissioner (Netherlands)
Jan Rotmans, professor of transition studies
Marjolein Demmers, director Dutch Sustainable Business
Duncan Stutterheim, entrepreneur