ISS recommends Shell shareholders reject climate activist resolution.

Shell Shareholders Urged to Vote Against Climate Activist Resolution

Shell shareholders are being advised to vote against a climate activist resolution seeking faster emissions cuts, according to proxy advisory firm Institutional Shareholder Services (ISS). The resolution, filed by the Follow This activist shareholder group, asks the energy giant to align with the 2015 Paris climate deal. Scientists say the world needs to cut greenhouse gas emissions by around 43% by 2030, from 2019 levels, to have any hope of meeting the Paris Agreement goal of keeping global warming well below 2C above pre-industrial levels.

Shell’s Emissions Targets

Shell aims to cut the intensity of planet-warming gases across its portfolio and the use of its products by 20% by 2030 and 100% by 2050. It has ruled out setting absolute emissions cuts targets, including the combustion of its products. Measuring emissions by intensity means a company can technically increase its fossil fuel output and overall emissions while using offsets or adding renewable energy or biofuels to its product mix.

ISS Recommendations

ISS, whose recommendations steer many investors’ voting, said Follow This’s “argument that intensity metrics are not a substitute for absolute metrics is entirely valid” and is echoed by ISS analysis. It said the merits of the activist resolution are “fully accepted” but if adopted it would “represent a change in strategy from the one that Shell has adopted” which is why ISS recommends a vote against it. At Shell’s 2022 shareholder meeting, Follow This received 20% of votes, down from 30% the previous year.

Dutch Court Ruling

In 2021, a Dutch court ruling, still in appeal, told Shell to reduce greenhouse gas emissions in absolute terms by 45% by 2030 across the entire lifecycle of its hydrocarbons.

Takeaway: While acknowledging the merits of the proposal, ISS is recommending that Shell shareholders vote against the Follow This activist resolution seeking faster emissions cuts. The resolution asks the energy giant to align with the 2015 Paris climate deal. Shell aims to cut the intensity of planet-warming gases across its portfolio and the use of its products by 20% by 2030 and 100% by 2050. It has ruled out setting absolute emissions cuts targets, including the combustion of its products.

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