Shell and BP face investor calls for transparency on climate change risks

Oil giants Shell and BP are facing calls to disclose business risks associated with climate change after more than 150 investors filed a resolution ahead of the annual general meetings later this year.

The Aiming for A coalition, which includes major investors, asset managers and insurers, have challenged the two fossil fuel companies to stress-test their business models against the requirement to limit global warming to the internationally agreed 2C.

The calls come after a study found the majority of fossil fuel reserves must remain unburnt until at least 2050 if dangerous levels of climate change are to be avoided. The research added that fossil fuel investments are becoming “increasingly risky” as a third of oil reserves, half of gas reserves and over 80% of current coal reserves cannot be used.

Co-filers of the shareholder resolution, who were supported by responsible investment charity ShareAction and environmental law organisation ClinetEarth, include more than 40 clients of Rathbone Greenbank Investments, the Environment Agency Pension Fund, UK local authorities and the Church of England.

In addition to conducting a stress test, BP and Shell are also being urged to reform their bonus system so they no longer reward climate-harming activities, commit to reducing emissions and investing in renewables, and disclose how their public policy plans align with climate mitigation and risk.

BP and Shell are set to hold their annual general meetings in April and May respectively, where shareholders will be given an opportunity to vote on the resolutions. Shell has previously issued a letter to shareholders claiming that climate change efforts would not devalue its proven reserves, however, the firm was accused of misrepresenting the risks.

ShareAction chief executive, Catherine Howarth commented, “We welcome the leadership shown by this international list of investors in BP and Shell, in a crucial year for climate change decisions and diplomacy.

“Millions of pension savers worldwide will want their pension funds to vote in support, demonstrating true commitment to protection their members from the risks of climate change. These resolutions put the global investment community to the text on climate change.”

Photo: Mike Mozart via Flickr  

Further reading:

ShareAction calls for laws to encourage sustainable investment

ShareAction warns investors over Shell’s Arctic drilling plans

ShareAction calls for legal changes to create responsible pension investment

‘Urgent action’ required to protect pension savings from climate change

Investors should be worried by Shell’s revived Arctic oil ambitions, says ShareAction