RI ESG Briefing, May 21: Shell faces AGM questioning on carbon bubble, stranded assets

The round-up of environmental, social and governance news


Oil major Shell faced questions from shareholders on the carbon bubble and stranded assets at its annual meeting in The Hague today (May 21). Chief Financial Officer Simon Henry told the meeting that it makes no valuation provision in its accounts for the carbon price, though an assumed carbon price built into investment decisions, according to campaign group ShareAction.

More than half of institutional investors (53%) and 65% of retail investors will increasingly look to fossil fuel-free portfolios over the next decade, according to 63% of SRI professionals who participated in US-based investment advisor First Affirmative Financial Network’s Fossil Fuels Divestment Survey. Other key findings reveal that 77% of the more than 2,000 survey participants forecast increased risk for investors with fossil fuel investment holdings; and 30% are already – or preparing to – offer their investors fossil-fuel free portfolios.

Global investment banking giant Goldman Sachs is due to invest JPY50bn (€378m) – with an additional JPY250bn through bank loans and project-financing – in Japanese green energy projects over the next five years. It follows incentives by Japan’s government to encourage renewable sector investment following the Fukushima nuclear crisis. Goldman will use its expertise from its US and India renewable energy investments.


Australia’s A$10.5bn (€8bn) superannuation fund VicSuper, says it will phase out its investment in tobacco, after “careful consideration” of factors, including the expected impact on investment risk and returns for members and the health consequences. Chief Executive Michael Dundon said: “VicSuper takes social and environmental considerations into account alongside economic considerations. With tobacco products imposing a significant burden on society in terms of health care and environmental costs, the Board and management team at VicSuper feel it is the right decision to move away from investing in this industry”. Link

Nasdaq-listed Software firm Symantec has said it will join the advisory council of the new Sustainability Accounting Standards Board (SASB). The company is also participating in SASB’s working group to help develop sustainability accounting standards for the Technology and Communications sector.h6. Governance

The California Public Employees’ Retirement System (CalPERS) is asking shareholders to support its governance proposal at US real estate investment trust (REIT) Hatteras Financial, which holds it annual general meeting today. The proposal, supported by advisory firms Glass Lewis and ISS, calls for changes to require directors to be elected by the “affirmative vote of a majority of the ballots cast”.

Investors holding $1.2bn – or 20% of voting shares – in Pittsburgh-based coal and natural gas firm CONSOL Energy have asked the utility to address the risks of a “carbon bubble”, in the first shareholder resolution of its kind. According to a statement by advocacy group As You Sow, this level of support is rare for a resolution on a new issue and demonstrates concern from institutional investors. CONSOL has agreed to continue discussing the resolution’s request.

A new study by German sustainable rating agency Oekom research shows that scrutiny of the world’s biggest companies by agencies like Oekom is a major factor in their decision to deal with environmental, social and governance (ESG) issues. According to the study, nearly two-thirds of the 199 companies polled said sustainable scoring was making them take a hard look at ESG. Another one-third said the scoring had already influenced their business strategy. Link

Advisory firm Proxinvest advised shareholders to oppose the re-appointment of auditing firm PwC at France-based optics firm Essilor, which held its AGM in Paris last week. It said the firm has certified the accounts for 30 years. Auditor rotation is rising up the agenda, with a campaign from a collation of investors including the UK’s Universities Superannuation Scheme. Link

Just 49.8% of shareholders voted for Apache Corporation’s resolution to approve executive compensation at the US oil and gas group’s annual meeting on May 16 in Houston, Texas. Commentators put it down to a judgment on the company’s share price performance, down around 18% in 2012.

French bank BNP Paribas has announced it will soon publish a sectoral policy for the mining sector. This comes after the group came under fire at its AGM from campaign groups which challenged the bank on its polluting investments in the coal industry – in particular, mountaintop removal (MTR). The French arm of NGO Friends of the Earth (Les Amis de la Terre) stated that BNP Paribas has funded several companies practicing MTR, including ArcelorMittal and Arch Coal.