Shell Withstands Shareholder Grilling on Emissions, While BP Refuses to Answer
Royal Dutch Shell fended off shareholder pressure to take more decisive action on climate change, but still faced a barrage of public questions on its sustainability performance and its proposed pay package for CEO Ben van Beurden during its annual general meeting Tuesday.
More than 25% of shareholders voted against van Beurden’s €8.9-million payout for 2017, motivated largely by “the company’s performance on sustainable development targets and an accident in Pakistan which led to the deaths of 221 people,” The Guardian reports. “Shell also faced a grilling from investors over how sincere its action is on reducing carbon emissions, with about half the questions related to climate change during the four-hour AGM.”
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A measure calling on the company to toughen up its climate targets to align with the Paris Agreement received only 5.54% support after Britain’s largest shareholder advisory bodies, Institutional Shareholder Services (ISS) and Glass Lewis, urged the company to reject the “unduly burdensome” and “problematic” binding resolution. “We do not believe the company should be directed by shareholders to establish goals for activities outside of its own organization that it has no ability to direct or control,” Glass Lewis stated.
But Mark van Baal, head of the activist shareholder group Follow This, still saw a silver lining, noting that seven of the Anglo-Dutch company’s 10 biggest asset owners from The Netherlands had supported the resolution. “Investors are sending a clear signal to Shell, and all oil and gas companies, that they will not accept a goal of halving net carbon emissions by 2050” like Shell’s, he said.
In the lead-up to the meeting, van Baal noted that the resolution was intended to be supportive of Shell’s decarbonization efforts (however feeble or greenwashed they might actually be). “The position we take in supporting the Follow This climate resolution at Shell is not one that is targeted at Shell, nor is it intended to imply that we see you as a laggard on this issue,” the Church of England and the UK Environment Agency Pension Fund stated in a letter to Shell Chair Chad Holliday. “Rather, it is based on our belief that we need targets across the whole oil and gas sector, and not just at Shell.”
But “the Directors’ response to the resolution could potentially make shareholders forget the supportive nature of the resolution,” van Baal subsequently wrote. “Instead of embracing this supportive resolution, the directors recommend unanimously that shareholders vote against the climate resolution, thereby showing support for Shell’s current ambition.”
The Guardian reports that van Beurden “repeatedly defended” the company’s climate performance during the meeting, asserting that “this ambition is truly industry-leading, nobody else comes close. It is seriously ambitious.”
At the BP AGM on Monday, meanwhile, CEO Bob Dudley said the company was “wary of the risk of lawsuits related to climate change,” Bloomberg reports, after paying more than US$65 billion in legal costs for the 2010 Deepwater Horizon disaster.
Dudley “raised the topic of class action lawsuits twice during the company’s annual general meeting,” the news agency notes, “saying he wouldn’t disclose certain climate targets, or even answer some questions from activist investors, because the risk of legal action in the U.S. was too high.”
“You want to get us to make statements here in front of you that you can document that will lead to a class action,” he said, in response to a question from the Union of Concerned Scientists about upcoming U.S. litigation against fossil companies. He added that that kind of legal action is “a business model in the United States”.