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Shell rejects “unreasonable” shareholder proposal on climate change

Oil major warns it will deny shareholders “dependable, competitive returns”

(Updates with response from Follow This)
Oil giant Royal Dutch Shell has rejected out of hand a shareholder proposal from campaign group Follow This on climate change, calling it “unreasonable” and saying it shows a “basic misunderstanding” of the solutions necessary to meet the Paris climate change agreement.

Follow This is calling for the company 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 but the Anglo-Dutch giant today advised its shareholders to vote against the motion at its annual general meeting next month.
The proponents of the motion, in an article for RI this week, argued it’s “good for Shell’s future, good for its shareholders, and good for the world”. Some leading investors have already come out in support of the resolution, including ACTIAM, Blue Sky Group and Ecofi Investissements.
The resolution “is intended to express shareholder support for a course towars a net-zero-emissions energy system”.
But the company says it is “not in the best interests of the company and its shareholders as a whole” and that its directors unanimously recommend voting against it.

It’s a contrast to the ‘Aiming for A’ climate disclosure proposal in 2015 that the company backed and which went on to get almost total shareholder support.

Follow This founder Mark van Baal said he was disappointed Shell had “let this opportunity pass them by”.He added: “We expect that many shareholders will vote for the green resolution because it fully supports their investment policies.”

“The resolution,” Shell says in its notice of meeting for the AGM, “ is unreasonable with regard to what the company can be held accountable for and would be ineffective or even counterproductive.”

In a lengthy response, Shell – which recently set up a New Energies division – argues that the motion is not designed to mitigate risks and would remove the company’s flexibility to “adapt and grow” through a period of change and uncertainty.

It continues: “It could prevent 
us from being a reliable technology and investment partner to governments as they attempt to meet their climate plans. It could disrupt the course of business
 or require imprudent use of company resources and therefore harm the company.

“It could weaken the position of financial strength from which to accelerate our own transition once the pathways and options
 are clearer, both technologically and commercially.”

And – in a nod to the major role that fossil fuel companies play in institutional investors’ portfolios – it concludes that it “would deny shareholders the dependable, competitive returns they look for as they seek to invest in the transition themselves”. The AGM takes place in The Hague on May 23 and there will be a separate presentation for shareholders in London on May 25.