Oil giant Shell has issued a letter urging shareholders to back a resolution calling for transparency on the risks around climate change. The move has been described as a “turning point” and welcomed by those that filed the resolution.
A coalition of more than 150 investors filed resolutions for both Shell and BP calling on the two companies to stress test their business models against the requirement to limit global warming to the internationally agreed 2C earlier this month. Additionally, investors want the firms to reform their bonus system, 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.
The letter from Shell, addressed to shareholders, states that the firm’s board has decided to recommend the resolution, noting, “Shell has a commitment to transparency”. The letter adds that Shell will provide additional reporting in 2015, in advance of full reporting in response to the resolution in 2016, covering areas such as ongoing operational emissions management, low carbon energy research and development and investment strategies, and asset portfolio resilience to post-2035 scenarios.
Catherine Howarth, chief executive of ShareAction, which supported the resolutions, said, “This is a turning point and demonstrates the power of activist strategies to deal with climate change. This development throws the gauntlet to BP.
“The resolutions still need to pass at the annual general meetings in April and May, which requires 75% support for shareholders. As such, we still have a major campaign on our hands to reach out to shareholders across the world to actually cast their votes in favour.”
Howarth added that ShareAction had been deeply involved in conversations with shareholders that belong to investor coalitions on climate risk but were nevertheless “too timid to join co-filers”. In a year that will see world leaders meet in Paris to negotiate and agree on a universal climate change treaty, Howarth commented, “These resolutions present an important test for long-term investors to show that they are part of the solution.”
Photo: Lee Jordan via Flickr