Proxinvest advises support for retail shareholders’ renewable energy resolution at Shell

Recommendation backs motion filed by the Follow This initiative

French governance advisory firm Proxinvest has lent its support to a resolution put together by a retail shareholder group called Follow This asking oil major Royal Dutch Shell to radically change its strategy and reinvest its profits in renewable energy.

The proposal, resolution 19 on the Shell proxy ballot, asks the Anglo-Dutch giant to “embark on a new strategy” by investing profits made from its oil and gas operations into renewable energy.

It also calls for Shell to stop the exploration and acquisition of more oil and gas fields, redirecting any freed up cashflow into new projects, but stops short of asking the company to stop producing fossil fuels during its transition to a renewable energy provider, which Follow This suggests could be completed by 2030.

The proposal reads: “We fully understand oil and gas will still be needed for several years, maybe decades. We do however ask the board of Shell to work on a strategy and implement a strategy to finally replace fossil fuels.”

Follow This is a Dutch group founded by journalist Mark van Baal (Twitter motto: ‘Change the world: buy Shell’) which counts Dutch Green MEP Bas Eickhout and Stientje van Velthoven, an MP in the Dutch parliament with the Democrats 66 party, amongst its supporters. The group has a clear mission statement: “We’re going to make the world sustainable quicker by making Shell a renewable energy company. We can achieve this by becoming shareholders in droves.”Shell holds its AGM on May in The Hague. According to pre-disclosures on the Proxy Democracy site, the Florida State Board of Administration and Christian Brothers Investment Services are voting against the proposal.

“We can achieve this by becoming shareholders in droves.”

Proxinvest has advised its shareholder clients to back the resolution, citing that it hopes that it will prompt Shell to “act and think in a more sustainable manner” while recognising the realities and challenges of operating an oil firm in the current environment.

Shell, on the other hand, recommends shareholders vote against the resolution, citing the high cost and “multi-decade” timescale of swapping its investment in oil and gas for renewables and that such a switch would be, in the company’s words, “strategically and commercially unwise”.

Though Proxinvest recognises that the Follow This proposal is light on details such as the legal structure that would dictate any switch in resources and how to measure its profitability – the group hopes that it will encourage Shell to consider how to transition to renewable energy in the long-term. It adds it believes Shell has the “resources, expertise, and balance sheet capacity” to spend more on renewable energy.