The UK’s Local Authority Pension Fund Forum (LAPFF) has recommended that Shell shareholders support a climate resolution from activist investor group Follow This, according to a report seen by Reuters.
The forum will back the resolution, which demands the oil and gas giant make stronger its emissions reductions targets for 2030, at Shell’s annual general meeting on 23 May.
The LAPFF represents approximately $441.74bn (£350bn) of UK local authority pensions. It has also recommended that shareholders vote against both bonus pay plans for Shell’s directors, as well as its energy transition plan.
“Given that 2030 is further away than the tenure of most executives and non-executive directors, the incentive framework to deliver a credible transition requires an overhaul, as does the board,” LAPFF said to Reuters.
The Institutional Shareholder Services (ISS) and Glass Lewis, two influential shareholder advisories, have recommended that shareholders reject the resolution, although the ISS accepted that it has merit. A spokesperson for Shell said that the company will ask shareholders to vote against the resolution.
“We strongly disagree with the positions against Shell voting recommendations taken by [European pension funds] PIRC, the LAPFF, PPGM, MN and the Church of England Pensions Board,” the spokesperson said.
“We trust a vast majority of shareholders will agree on the need to collaborate in balancing the supply and use of energy to accelerate the energy transition, while reducing the social costs, and we are pleased that ISS and Glass Lewis concur,” they added.
Activist pressure
At Shell’s 2022 shareholder meeting, Follow This received 20% of votes for a similar resolution to strengthen climate commitments, down 10% from the previous year.
Follow This has recently filed climate resolutions to other oil giants, including TotalEnergies and BP, demanding that they do more to reduce emissions in line with the Paris agreement.
TotalEnergies said in April that it would include the resolution in its AGM, but recommended shareholders reject it, arguing that it does not adequately address the climate crisis. When the resolution was first proposed, Follow This founder Mark van Baal said: “We’re dealing with companies that don’t want to change. Of course, they want to invest a bit in renewable energy, but the bulk is in fossil fuels, and they want to remain oil and gas companies as long as possible.”
In the same week, UK pension funds Nest and the UK universities pension scheme said they would support a similar resolution put to BP at its AGM after the company moved to dilute its emissions reductions targets in February. Shareholders ultimately voted against the resolution.
