FORESIGHT | Shareholder activism is on the rise. Groups of eco-conscious investors are trying to force some of the biggest or most polluting companies in the world to change their business strategies from within.
The plan sounds easy enough. Buy a handful of shares in one of the world’s biggest oil and gas companies and use it as leverage to change how they do business.
Becoming a shareholder affords you certain rights. You can vote at the company’s Annual General Meeting (AGM) on everything from the CEO’s pay packet to the makeup of the board. Crucially, you have the right to put forward resolutions on how the company is run, what it should prioritise and, for example, whether it should stop investing in oil and gas.
[…]The most visible of these campaigns are from climate groups, such as Follow This, a Dutch non-profit organisation. The group is led by Mark van Baal, a former journalist and refrigerator salesman turned corporate agitator. Van Baal has been a frequent speaker at Shell’s AGMs over the past decade where he uses his position as a minority shareholder to directly challenge the company on its transition plans.
In 2023, he stood up and announced, “I will not waste anyone’s time today by trying to convince the board, instead I will try to address our dear shareholders.” But while Follow This has been successful in keeping climate on the agenda, it has so far failed to convince Shell’s shareholders to vote in large enough numbers to pass its resolutions. On average, its campaigns secure around 20% of the investor base to vote for new emissions targets in line with the Paris Agreement.
“[Follow This has] filed multiple climate resolutions at the world’s largest oil & gas companies. To date, thanks to the support of shareholders, four of the five oil majors have promised to cut product emissions,” says Karel Kuipéri from the organisation.
Kuipéri feels that Shell’s AGM in 2024 could be different. For the first time, a record 27 institutional investors—representing €4 trillion in assets—have co-filed a climate resolution with Follow This. The question remains whether this can push ambivalent investors to join forces with the activists and push support towards the 50% mark for the resolution to pass.
[…]Exxon now seems to have zero tolerance for similar campaigns. The oil and gas giant recently launched legal action against Follow This and impact investor Arjuna Capital for filing a resolution to force the company to set carbon targets. Even when the proposed resolution was withdrawn, Exxon sought to continue the legal fight.
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