1st June 2022
Shell’s 2022 Annual General Meeting was one defined by the Board’s response to the climate crisis. After climate protests disrupted the meeting for several hours, all eyes were on how investors voted on the Board’s Energy Transition Progress Report, while directors faced a flood of questions from shareholders on its targets to reduce emissions. Here are our 5 key takeaways from the meeting:
Twenty percent of shareholders rejected the recommendation of the Board to support its Energy Transition Progress Report. In this document, Shell set out how it has been implementing its Energy Transition Strategy, which an analyst report suggests will actually lead to an increase in the company’s emissions over the next decade. With almost double that of the previous year voting against the Board, the result demonstrates the fast-growing dissatisfaction among investors with the company’s direction of travel. Our legal action, which challenges Shell’s directors over the company’s climate strategy, reflects this widely held concern with the Board’s failure to adequately manage climate risks.
Support for the Follow This resolution calling for Shell to adopt climate targets aligned with the Paris Agreement also reached 20%, a drop of 10% from 2021. Despite the dip in support, it is clear from the turn out that shareholder appetite for stronger climate ambition remains strong despite the crisis in the energy markets and windfall profits. Critically, Shell’s Board will now have to engage with these shareholders, as well as those that voted against its own climate strategy, on the issue of the resolution and their concerns with the flaws in its plans.
ClientEarth lawyer Sophie Marjanac questioned the Board on whether it accepts that its goal to become a net zero energy business by 2050 is implausible and simply amounts to a vague hope. The chair replied that its long-term net zero target “has to be something that we do together”, whilst recognising it is determined to be 'a very strong partner and driver in that change'.
Question after question raised at the AGM asked the Board about its plans to reduce emissions and transition to a cleaner energy business. From large institutional investors to retail shareholders, the company’s climate action was the chief concern among meeting attendees seeking clarity from Shell’s Board, reflecting the fact that climate change is a material financial risk.
Activists protesting against Shell’s continued development of fossil fuels caused the AGM to be delayed by almost three hours. The meeting was the first to be held in London after Shell shifted its headquarters from Amsterdam to the UK capital earlier this year, and the first to have been so significantly disrupted due to activism.
The writing is on the wall: without a climate plan that properly prepares for the energy transition, the Board is setting Shell on a path to value destruction. What’s evident from the outcome of this year’s AGM is that discontent over Shell’s plans is widespread and growing at a rate that cannot be ignored. Our legal action seeks to compel the Board to strengthen the company’s climate plans in order to capitalise on the opportunities of the energy transition, while protecting the long-term commercial viability of the company, investors’ capital and the climate.
If you are an investor interested in further information, or to arrange a confidential discussion, sign up here.