Investor opposition to Shell energy transition strategy grows at disrupted AGM

Shareholder support for Shell PLC's energy transition strategy fell to nearly 80% at the British oil major's annual general meeting on May 24, as the share of votes against the plan almost doubled compared to 2021.

The strategy, which outlines Shell's pathway to reducing emissions and achieving net-zero by 2050, received 88.74% support last year, when it appeared on the ballot for the first time as an advisory vote. Since then, Shell lost a landmark court case in the Netherlands forcing it to cut emissions more sharply.

A rival shareholder motion from Dutch activist investor Follow This, aimed at speeding up Shell's emissions cuts in line with the Paris Agreement on climate change, also received a smaller share of the vote in 2022, with 20% of shareholders in support compared to 30% last year.

The meeting in London was delayed by over two-and-a-half hours after more than 80 climate activists interrupted the start of proceedings. The activists chanted over Shell Chair Sir Andrew Mackenzie's attempts to begin the event, before gluing themselves to chairs and eventually being removed by police.

Mackenzie welcomed the rights of shareholders and the public to voice their messages and pursue their beliefs, saying that is why Shell had put its energy transition strategy to a vote for the second year running.

"The core disagreement is not whether the Paris Agreement should be achieved, or even when, it is only how the world achieves it," Mackenzie said in his closing remarks. "Today's voting results on our energy transition resolution indicate that we appear to be on the right track."

'Everybody loses'

For Follow This, which has filed multiple shareholder motions at Shell since 2016, the voting result in 2022 represents the first time that support for its campaign has fallen year over year. The activist's first motion six years ago garnered support from 2.7% of shareholders, and its share of the vote has grown steadily since then.

In 2017, after support for the Follow This resolution more than doubled in a year, Shell became the first oil major to set a target to reduce emissions produced by the company's products, known as Scope 3, which account for the vast majority of oil companies' emissions.

Mark van Baal, founder of Follow This, said investors voting at the 2022 AGM had bought into Shell's narrative that Russia's invasion of Ukraine overrides the necessity to tackle climate change.

"Today's voting results are a loss in the fight against the climate crisis," van Baal said in a statement. "Today, everybody loses except the board of Shell, who will hang on to fossil fuels investments for another year and continue to fuel the climate crisis with their outdated business model."

Follow This, whose campaign has contributed to the record number of environmental shareholder resolutions up for votes in the 2022 proxy season, has suffered similar setbacks at other major oil and gas producers in Europe and North America this year.

At BP PLC's AGM in May, 88.53% of shareholders backed the company's net-zero emissions plan — which was on the ballot for the first time — and the Follow This motion received just 14.86% of the vote, having secured 21% support in 2021. Meanwhile, fewer ConocoPhillips shareholders voted for the Follow This motion than in 2021.

Investors at Norwegian state-controlled Equinor ASA also backed the company's own energy transition plan, as 3.57% voted for the Follow This motion calling for speedier emissions cuts. Excluding nongovernment votes, the Follow This share was at 38% — broadly similar to 2021.

"Investors who vote against Paris-consistent emission reductions should realize that they are complicit in Big Oil's refusal to reduce emissions this decade and are therefore complicit if the world fails to meet the Paris goal," van Baal said.

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