Summary

  • Follow This files new shareholder resolution (attached)
  • We anticipate support of Shell and its shareholders for this resolution, for the following reasons:
    1. Shell changed course in response to the previous resolution
    2. Follow This has solved all practical objections to the previous resolution (see paragraph “changes” of the resolution)
    3. Shell has set a target for the emissions of its end products (Scope  3 in jargon), the key controversy of the previous resolution
  • The discussion moves on to how ambitious the target should be in order to be aligned with the Paris Climate Agreement
  • We therefore will continue organising shareholder support for Shell and encouraging the company to set an even more ambitious target
  • ShareAction is among the co-filers of the new resolution

Background: from “fundamental misunderstanding” to “kernel of truth”

  • Thanks to support of green shareholders, Shell changed course, pledging to cut the carbon footprint of its end products (Scope 3 in jargon) in half (November 28, 2017).
  • Institutional investors that voted for the resolution include MN, Actiam, Achmea IM, Van Lanschot Kempen, Church of England, and Aviva.
  • Shell rejected the previous resolution, arguing in the Directors’ Response that it “demonstrates fundamental misunderstanding” (April 2017)
  • “We could see a kernel of truth,” said Shell CEO Ben van Beurden in the Guardian about the previous resolution (November 2017)
  • Shell will now align its targets with the Paris Climate Agreement by setting a target on the emissions of its end products (Scope 3), the key request of the Follow This resolution.

Brains & Billions
Shell just confirmed that the third shareholder resolution of Follow This will be on the agenda of the 2018 AGM. “We hope that Shell and its shareholders will embrace this resolution,” says Mark van Baal, founder of Follow This. “Our mission remains the same: to see to it that Shell feels—and continues to feel—enough support that it will throw its brains & billions behind the energy transition to a renewable energy system. We sincerely hope that this will be our last Shell resolution and that we can shift our efforts to the rest of the oil industry.”

Investors’ support
Most investors who voted against the 2017 resolution did this because of Scope 3 (emissions of end products of Shell, i.e. fuels and natural gas), for example: “ABP does not want to make companies responsible for the emissions of other organisations that buy their products” or “Scope 3 is outside Shell’s control” (Robeco).
“Now Shell has taken responsibility for Scope 3, these shareholders should be able to vote for the 2018 resolution,” says Van Baal.

New resolution
The full text of the resolution is self-explanatory. In the paragraph “changes” you will find the reasons why Shell and its shareholders should be able to embrace this resolution. “Shell should be able to give a positive advice to its shareholders,” says Mark van Baal. “The new resolution (finalised on November 23) and Shell’s new course (communicated on November 28) are aligned.”

First oil major to set targets on CO2-emissions
Thanks to shareholders’ support, Shell is the first oil company in the world to accept responsibility for the CO2 emissions of its products, and the only way they can cut their net carbon footprint is by shifting to renewable energy, in which Shell will now be making much greater investments. At the last shareholders’ meeting, in May 2017, this was a bridge too far for Shell’s top management and the majority of shareholders.

Paris Climate Agreement
Now that Shell is taking responsibility for the CO2 emissions of its end products, it’s no longer a question of “whether or not” but of “how fast.” The discussion moves on to how strong Shell’s commitment should be. “In order to achieve the goals of the Paris Climate Agreement, we will need not just a 50% reduction in CO2 emissions by 2050 but a CO2-neutral energy system by 2050.”

Follow This is a group of green shareholders in Shell. We support Shell to take leadership in the energy transition to a net-zero-emission energy system.
Our mission, formulated in the shareholder resolution “Shareholders support Shell to take leadership in the energy transition by aligning its targets with the Paris Climate Agreement”, now has the support of 3,350 private shareholders and eight out of the ten largest institutional investors in the Netherlands.
Shell responded in November by setting a target on the emissions of its end products (Scope 3), the key request of the Follow This resolution.

ShareAction is a shareholder campaign group that asks for transparency about climate strategy on behalf of institutional investors, for example by the Aiming for A resolution, that asked Shell and other oil majors for transparency about the consequences of climate change for their business models.