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SRI investors press Shell on American Petroleum Institute lawsuit at London meeting

Oil major’s Voser and Halliday met with investors last week

Oil major Royal Dutch Shell resisted calls from socially responsible investors to withdraw its backing from the American Petroleum Institute’s (API) lawsuit against US financial regulator the Securities and Exchange Commission at a meeting with SRI investors recently.

The API, the largest US trade association for the oil and natural gas industry, and other trade bodies, sued the SEC in October last year challenging the regulator’s implementation of a Dodd-Frank Act rule obliging listed energy firms to release payment information about foreign and US projects.

Paul Bugala, Senior Sustainability Analyst at $12bn US fund management firm Calvert Investments called on Shell CEO Peter Voser to disassociate the company from the suit at the April 24 event in London.

“We believe that it is in the interest of the industry, its investors and other stakeholders to encourage convergence between US and EU disclosure laws and progress towards a global standard,” Bugala said at the meeting. Calvert was among investors representing more than a $1trn in assets that supported the draft rules. The investors argue that greater disclosure would help them model project cash flows and assess politicalrisk – as well as enabling civil society in resource-rich countries to benefit from increased economic and political stability and improved investment climate.

At the meeting, Voser responded that the company stood behind the API suit, as compliance with the new rule (known as Section 1504) would require breaking existing laws and that the disclosures would create a competitive disadvantage.

Chad Halliday, the Bank of America chairman who heads Shell’s Corporate and Social Responsibility Committee, pointed out that the company is a founder member of the volunatry Extractive Industries Transparency Initiative (EITI), adding that Shell supports a mandatory global reporting rule for all extractives companies.

But he said the recent moves by both the US and the European Union on “more prescriptive” transparency regulation were a case of good intentions creating legislation which could displace a more effective system.

But Clare Short, the former UK Development Secretary who chairs the EITI, has said the new rules will complement its work.

The executives also discussed in some detail Shell’s operations in Alaska, the Niger Delta and carbon capture and storage (CCS), according to a transcript of their comments.