Shell suffers blow as investor group withholds approval for energy transition plan
Shell’s battle to gain approval for its energy transition plan has suffered a heavy setback, as a major investor announces its intention to abstain on a key resolution at the firm’s upcoming annual general meeting.
Royal London Asset Management (RLAM), which holds a £1.2bn stake in the energy giant, has criticised the oil and gas trader’s climate transition plans.
Shell has committed to reducing net carbon intensity by 20 per cent before the end of the decade, alongside a net zero target of 2050.
However, RLAM has argued the current plans do not go far enough to cut fossil fuel usage.
It has consequently revealed it will abstain on resolution 20 – a motion supporting the energy giant’s transition plan.
Carlota Garcia-Manas at RLAM said: “RLAM has decided to abstain on Shell’s climate transition plan. We acknowledge the considerable progress made in Shell’s climate efforts and the 2021 delivery, however, we cannot fully support the plan as it currently stands.”
“In our view, there is not enough certainty in the plan that it aligns with the goals of the Paris Agreement and the global necessary efforts to constraint temperature increases to below 1.5 degree Celsius.”
“Shell’s climate plan is heavily reliant on nature-based offsets and divestments. It also includes strategies to continue new oil and gas frontier exploration between now and 2025. We would prefer the company to stop all exploration imminently in line with the most recent IEA and IPCC reports.”
“We will continue our engagement on those topics, as we would like to see more stringent short and medium-term targets that seek to reduce emissions in absolute terms and for all emission scopes, including scope 3.”
RLAM did not reveal whether they intended to support resolution 21 – put forward by activist investor group Follow This – which calls on Shell to release short, medium and long-term plans explaining how it will meet the Paris Agreement.
Shell has revealed it will consult with investors if over 20 per cent of votes go against its resolution.
The energy giant has committed £25bn to investing in the UK energy transition over the course of the decade, with a focus on low and zero carbon projects.
However, its record quarterly profits of $9.13bn during the first three months of the year which were powered by soaring oil and gas prices, reflecting the central role of fossil fuels in its business.
This has also reignited Labour calls for a windfall tax, which the government currently remains opposed to.
Instead, it has called on energy firms to honour investment plans in the UK’s energy sector.
Shell has also faced criticism for U-turning on its decision to back away from the Cambo oil field in Scotland, a controversial site that could provide 800m barrels of oil.
Morning Wire has approached Shell for comment.