London-based oil and gas giant Shell PLC received what one news outlet called a “bloody nose” at its annual general meeting Monday, with the holders of 20.56% of voting shares calling on the company to disclose how its liquefied natural gas (LNG) production plans match up with its declared climate targets.
Shareholder resolutions aren’t legally binding, and this one fell far enough short of a majority that CEO Wael Sawan could interpret it as strong support for Shell’s plans to aggressively increase gas extraction.
But “support for shareholder resolutions can put pressure on business leaders to respond to the matters raised, and more than 20% of dissent against the board can be considered a rebellion,” The Independent reports. “Previous shareholder resolutions focused on climate received similar levels of support over the last five years, ranging from 18.6% to 30.5%.”
Shell said its board “will meet its obligation to explain what actions it will take to consult with shareholders to understand the reasons why just over a fifth supported the resolution,” the news story states.
“Today’s vote sends a strong message that shareholders will not sit back as Shell doubles down on growing its liquified natural gas production despite its own stated climate commitments,” said Jackie Garton, senior corporate climate campaign manager at ShareAction, which filed the resolution alongside Brunel Pension Partnership, Greater Manchester Pension Fund, Merseyside Pension Fund, the Australasian Centre for Corporate Responsibility, and more than 100 individual investors.
“It’s worrying that instead of addressing their concerns, Shell repeatedly shifted the blame for their oil and gas production growth plans onto consumers during its annual general meeting.”
“It is welcome that shareholders have called out Shell for its climate-wrecking focus on increasing LNG production,” Paris-based Reclaim Finance added in a release. “As shareholders repeatedly pointed out, LNG is not a low-carbon fuel, and its increased production is extremely damaging for the climate as well as impacting local communities. While the vote today will not change Shell’s practices, investors should keep pushing for change and stop making new investments in the company.”
The Independent says Sawan urged shareholders to vote down “these sorts of resolutions”, declaring that “what they are undermining is the ability of the board that you have elected to be able to drive the strategy of the company to do their job.”
Shell Chair Sir Andrew Mackenzie defended Shell’s recent moves to abandon its previous, half-hearted commitment to the energy transition and double down on fossil fuels. “Shell believes the world needs more liquified natural gas to replace coal in Asia for energy security, and to complement and enable renewables,” he said. “No business can operate outside the rules of supply and demand,” and “for the energy transition to succeed, there must also be demand for low carbon options from customers who are willing and able to pay for it.”
Independent analysts including the International Energy Agency expect global demand for all three fossil fuels to peak this decade before going into permanent decline, and have questioned business plans that depend on sustained LNG demand in Asia. Gas expansion plans in many countries, including Canada, have raised concerns about the climate and economic impacts of new projects under development today.
Lindsey Stewart, director of investment stewardship research and policy at Morningstar Sustainalytics, recently told Net Zero Investor that shareholder opposition to Shell’s climate plans has only averaged about 20% over the last three years, while 90% backed the company’s decision to dial back its energy transition strategy. But the company does face other pressures.
On Monday, The Independent says, protesters from Amnesty International UK, Fossil Free London, and Justice 4 Nigeria gathered outside Shell headquarters in downtown London, after the company scheduled its annual meeting near Heathrow Airport, where a recent High Court injunction prohibits environmental protests. One of the protesters, former Shell safety consultant and whistleblower Caroline Dennett, said the company’s troubles are beginning to escalate.
“It’s not all plain sailing for Shell, the social licence is disintegrating,” Dennett told The Energy Mix in an email. “They are haemorrhaging talent, once-abundant graduates are body-swerving Shell. Nigerian cleanup and compensation cases are being heard in the British courts, Milieudefensie (Friends of the Earth Netherlands) are taking them to the Supreme Court over their Scope 3 emissions. These are liabilities that Sawan may attempt to brush off, but investors may start to see as financially less attractive. If litigation comes for Big Oil, it is only a matter of time before it comes for their backers and insurers.”
So far, however, “Sawan is unapologetic in his pursuit of profits before people and planet,” Dennett wrote. “It could be argued that his predecessor Ben van Beurden displayed at least an ounce of concern, even if it was just for PR to retain some sort of social licence. But not Sawan. He makes no pretence; cancelling low-carbon jobs, rolling back on emissions commitments, peddling LNG as the low-carbon solution we should gratefully receive.”