The Independent | Investors have repeatedly challenged Shell over its plans for the potential long-term decline in fossil fuel demand at the oil major’s annual general meeting (AGM).
It came after a group of 21 institutional investors, led by Dutch campaign group Follow This, filed a proposal calling for the company to publish a strategy on how it plans to create shareholder value under the scenario that fossil fuel demand falls as the world transitions to clean energy.
The resolution received 12.7% of investor votes, according to provisional figures.
Confronting the board about its “carbon-based business model” during a Q&A session, Mark van Baal, founder of Follow This, highlighted how Shell cut its dividend payments to shareholders by 66% when oil demand plummeted during the 2020 coronavirus pandemic.
“Imagine what happens when it declines structurally,” he said before asking the board why they do not want to publish a plan for this scenario.
“It is easy to be distracted by temporary profits and lose sight of the long term,” he warned other shareholders.
In response, Mr Sawan said the board believes the resolution could “create a precedent for recurring single source scenario-based disclosure, which ultimately adds costs without helping our investors”.
He added that the resolution would not just be “damaging but duplicative” because the issue is already covered in existing reports it shares.
“Shell’s strategy has long been to secure oil and gas production that is advantaged on costs and carbon, offering us resilience in different demand scenarios,” he said.
Mr van Baal challenged the board again, accusing bosses of not wanting to leave their “comfort zone” in fossil fuels and having no plan to diversify in the event of declining demand.
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