Lisa Boerop, Business Insider Netherlands
The calendar shows it is May 2016, and Mark van Baal is on his way to the Shell shareholders’ meeting in the Circus Theatre in Scheveningen, the Netherlands. He has enough shares in the company to submit a shareholder’s proposal. Even though he knows that Shell will reject it, he is going to ask the company to invest its oil and gas profits in renewable energy.
He has managed to gather together these shares (worth around 5 million euros) with his organization called Follow This, through which he has asked people to invest in shares of Shell in order to be able to change the company. He has been working on this since 2015, and in 2018 he has brought together over 4,000 green shareholders. He is going to the shareholders’ meeting on their behalf.
It takes guts to tackle one of the biggest companies in the world on your own.
“How often have I heard people say, ‘Oh, you want to change Shell. That’s a noble cause.’ They didn’t believe that we would actually succeed. Now it turns out that it is in fact working. But we are not satisfied yet,” Van Baal tells Business Insider.
Shell is not interested in the distant future
Van Baal’s story: It’s 2002, and Van Baal is travelling throughout Europe selling Carrier’s refrigeration machines for shipping containers. He is happy with hisjob, but the work requires little creativity, and he wants to be doing something socially responsible.
“With that idea running around in my mind, I went on a sailing vacation that summer. For a week I stood at the helm looking at the Mediterranean horizon. There was plenty of time for thinking, and the only occupation that I could come up with that is both creative and socially responsible was journalism.”
He studied evenings in order to be able to give up his sales job. In 2006, soon after he had started a journalism career, he saw the Al Gore’s documentary An Inconvenient Truthin which Gore makes the case that climate change is an urgent issue.
Van Baal saw clearly the direction that he would take: in the years to come he would be writing about energy and global warming.
The articles that he wrote became more and more forceful. “I became increasingly convinced that the fossil fuel industry would have to change. Renewable energy holds enormous opportunities for these companies, and fossil energy will only keep becoming more expensive. Making the switch to a sustainable energy company is the only chance that they have to survive, and for us it is the only possibility to limit the consequences of climate change.”
For Van Baal it was entirely logical that Shell would make this switch, but Shell didn’t see things that way. “Every time that I asked someone inside the company why they weren’t doing it, the answer that I got was that shareholders are only interested in the next quarter, not in the distant future.”
“After ten years I came to the conclusion that Shell does not listen to journalists, nor to activist groups, nor to governments. The only ones who can convince Shell to choose another course are its shareholders.”
Changing the company from within
Van Baal saw that becoming a shareholder himself was the only way to proceed.
“I knew that one small shareholder can change the course of a company,” he says. “In 2007 the British hedge fund TCI did exactly that. TCI held only 1% of the shares in ABN AMRO Bankbut they managed to force the bank to split up. TCI thought that the company would be worth more as the sum of its separate constituents, and the other shareholders voted for their proposal.”
Van Baal thought: if I can buy enough shares to submit a resolution to the shareholders’ meeting, just as TCI did, then I will only have to convince the other shareholders, and not Shell itself. He called his idea Follow This.
The idea quickly took shape. Submitting a resolution requires at least 5 million euros in shares, so in 2015 he put up a website where people could buy a share for about thirty euros. He also wanted to convince a couple of wealthy individuals to invest a lot of money in Shell so that he could satisfy the minimum requirement.
But it didn’t go all that quickly. “The first months were really difficult,” he relates. “Do you know the video clip ‘Leadership Lessons from Dancing Guy’? In it you see a young guy dancing in a park for several minutes all by himself. After awhile a couple of others join him – the first followers – and then it takes off and a whole crowd joins in. When I decided that I wanted to change Shell my wife showed me the video clip, and said, ‘That’s what you are going to do.’ And she was right.”
In the first months, new shareholders joined very slowly via his website, but he still had to find the larger shareholders.
“I e-mailed a bunch of people who had both money and ideals to ask whether they wanted to invest half a million in Shell. That is a tidy sum of money, and Follow This was still the new kid on the block. For that reason, a lot of people didn’t want to help me.”
He did however get a positive e-mail back from one person: Bob Crébas, who made a fortune by selling the Dutch classified advertising website Marktplaatsto eBay. “He wrote ‘Good idea. I’ll buy a half million worth of shares this afternoon’.”
As Follow This grew in the months after that, more people began to trust Van Baal and his mission. “Duncan Stutterheim of ID&T, a famous Dutch entrepreneur, for example; after he had read a couple of articles about Follow This in the newspaper, he e-mailed me to ask whether I needed help.”
More and more people got in touch and wanted to help with the mission of Follow This. The team of volunteers that helps Van Baal grew larger and larger. “I am impressed every day by the drive and the brainpower of our young team members: students and recent graduates who are looking for work with a purpose.”
A climate ambition thanks to Follow This
So Follow This finally pulled together enough money to submit a resolution for the first time at the 2016 shareholders’ meeting. The resolution asked Shell to invest all profits from oil and gas in renewable energy. Shell’s CEO, Ben van Beurden, appealed to his shareholders to vote against the resolution; nevertheless, 3% voted for it and another 3% withheld from voting.
In 2017 things went better. Follow This submitted another resolution, this time asking Shell to take leadership in the transition to a net zero emission energy system. Van Baal wants Shell to align its corporate targets with the Paris climate agreement. Shell directors call this proposal a ‘fundamental misunderstanding’ and ‘unreasonable’, but 6% of shareholders voted in favour of it, double 2016. Thanks to the support of large institutional shareholders such as Actiam, Van Lanschot Kempen, MN, The Blue Sky Group, and the Church of England, Shell now has to listen to its shareholders.
Shell reacted half a year later by announcing a ‘climate ambition’ as the first oil company in the world to do so.
Because of this, in 2018 the company considered it ‘unnecessary’ to accept the resolution of Follow This. In a heated altercation with Van Baal at the shareholders’ meeting, Shell’s CEO, Ben van Beurden, explained why he did not want to accept the resolution and why he wanted shareholders to vote against it.
The nine biggest Dutch investors turned a deaf ear to Van Beurden’s appeal. “Of the shareholders voting, 5.5% voted for the resolution and 7% abstained, which means that nearly 13% no longer support the Shell board,” says Van Baal.
He is glad that Shell has formulated a climate ambition, but it does not go far enough. “According to this ambition, Shell will halve its carbon footprint by 2050. It is revolutionary that the company has this ambition, and it really did come about through the support for the Follow This resolution. But a relative reduction of 50% (an absolute reduction of 30%, because energy demand will grow) is not nearly enough to achieve the goals of the Paris climate agreement.”
“Ultimately the entire industry will have to come around. Oil and gas companies will only survive if they become more sustainable, and without them we will never be able to achieve the Paris climate goals. If that happens, we will all be in much more danger. And it is not just our investments that are endangered, but our safety.”
So Van Baal is not yet satisfied. “I’ll only be satisfied when climate change has been halted. In the coming years we will find out whether that is even possible. If we let the oil industry have their way for another five years, we don’t have a chance.”
(C) Business Insider Netherlands, translation Piper Hollier and Carrie Ballard.