An influential investment adviser has added its weight to a move to oust the Shell chair, Sir Andrew Mackenzie, at next week’s annual shareholder meeting as a row over the energy company’s climate goals intensifies.
Pirc, which advises shareholders on how to vote at annual meetings, has recommended that investors vote against Mackenzie’s re-election and oppose its annual report to “hold board members to account”.
The Church of England has also said it plans to vote to oust Mackenzie, as well as recently appointed chief executive Wael Sawan, at the event at the ExCeL centre in London on 23 May.
Shell has faced repeated criticism from green campaigners who claim its climate goals are not ambitious enough and are not aligned with the target of limiting global heating to 1.5C over industrial levels.
In a report to investors, Pirc said that “while Shell has short and medium-term targets, there is specific concern that these targets are not aligned to a 1.5 degree pathway which is not heavily reliant on carbon offsetting”.
Pirc also advised shareholders to vote against Shell’s “energy transition” resolution, citing concerns that it has not set “absolute emission reduction targets” for “scope 3” emissions, which occur indirectly in companies’ supply chains. Instead, Pirc wants investors to back a resolution filed by the green shareholder group Follow This, which has been pressing companies to align their scope 3 reduction targets with the goals of the Paris climate agreement.
The meeting will follow a series of fiery shareholder meetings, with climate protests interrupting proceedings at BP, Barclays and Drax in recent weeks. Last year a large number of protesters sang and chanted outside and inside Shell’s AGM, forcing Mackenzie to delay proceedings while police were called.
Oil and gas companies have also been in the crosshairs of MPs, the public and campaigners after racking up record profits aided by the increase in commodity prices linked to the war in Ukraine.
Governments have introduced windfall taxes in an attempt to use their excess profits to fund measures to cushion the cost of living crisis, but some have argued the levies do not go far enough.
Shell was last week accused of a “profiteering bonanza” after it reported record first-quarter profits of more than $9.6bn.
Paul Hunter, the head of policy at Pirc, said: “Time is running out if we are to limit global warming to 1.5 degrees and reduce the climate risks facing investors. While targets are now being set, too often they are not aligned to a 1.5 degree pathway not heavily reliant on unproven offsetting technologies …
“Pirc is recommending investors hold board members to account where targets fall short of the climate expectations of responsible investors.”
Separately on Tuesday, Adam Matthews, the chief responsible investment officer for the Church of England Pension Board, wrote in the Telegraph that the fund would be voting against Mackenzie and Sawan “with genuine regret”. He said: “We have lost confidence in the direction of the company.”
The Church’s £3bn retirement fund, a small shareholder in Shell, has accused the company of prioritising short-term profits over investing in renewables and downplaying the importance of green energy.
Shell said in response that its strategy is to “become a net zero energy company by 2050 or sooner”.
“Shell and the CofE pensions board have worked together as partners on the energy transition for almost a decade, with an emphasis on changing the use of energy as much as its supply. We continue to believe that is the right approach and strongly disagree with the pension board’s changed position,” the company said.