Shell: ISS recommends shareholders vote against climate activists’ resolution

LONDON (Reuters) – Consultancy Institutional Shareholder Services (ISS) is recommending that Shell shareholders vote against a resolution by climate activists calling on the energy giant to align with the Paris climate accord of 2015, while acknowledging the merits of the proposal.

Shell investors must vote on this resolution, tabled by the environmental shareholder group Follow This, at the annual general meeting on May 23.

Scientists say the world needs to reduce greenhouse gas emissions by around 43% by 2030, compared to 2019 levels, to have a chance of meeting the Paris agreement target to keep global warming well below 2°C above pre-industrial levels.

Shell aims to reduce its net carbon intensity across its portfolio and product use by 20% by 2030 and 100% by 2050, but has ruled out setting absolute targets reduction of emissions, including for the combustion of its products.

Measuring emissions by intensity means that a company can technically increase its fossil fuel production and overall emissions while using offsets or adding renewables or biofuels to its product line.

According to ISS, whose recommendations guide the vote of many investors, “Follow This’s argument that intensity measures cannot substitute for absolute measures is entirely valid”, and it is echoed in its analysis.

However, the cabinet recommends voting against, as it believes that if the resolution were passed, it “would represent a change in strategy from that which Shell has adopted”.

At Shell’s 2022 general meeting of shareholders, Follow This won 20% of the vote, up from 30% the previous year.

In 2021, a Dutch court decision, still on appeal, called on Shell to reduce greenhouse gas emissions in absolute terms by 45% by 2030 over the entire life cycle of its hydrocarbons .

(Reporting by Shadia Nasralla; French version by Kate Entringer)