The Local Authority Pension Fund Forum (LAPFF) recently welcomed the decision by Royal Dutch Shell’s Board of Directors to recommend support for the ‘Aiming for A’ shareholder resolution submitted by a coalition of shareholders including the Forum, CCLA, Rathbone Greenbank Investments and the Church Investors Group.
In a letter to the investor coalition advising of its decision Shell said:
The Board has given consideration to the Resolution and has decided to recommend that shareholders support the Resolution at the AGM.
The Board further states that it continues to have a commitment to transparency and the provision of further disclosures around a number of themes mentioned in the resolution that had been flagged up in its letter to shareholders in May last year.
Shell says it will provide additional reporting for 2015 in advance of its full reporting response to the resolution in 2016, which will include sustainability reporting as well as its emissions reporting website.
Councillor Kieran Quinn, LAPFF Chair, welcomed the news from Shell saying
This is a very positive response from the Board and demonstrates that they have reached a new level of shareholder engagement on the sustainability agenda. We look forward to their more detailed assessment of the resolution ahead of the annual meeting.
Matt Crossman, Ethical Research & Corporate Engagement, Rathbone Greenbank Investments said,
We are pleased by the company’s decision to support the supportive but stretching resolutions filed by the Aiming for A coalition. The issues of operational emissions management and long term portfolio resilience in a carbon constrained world have never been more pressing for long-term investors. It is therefore heartening that the management of the company considers the areas would to be worthy of much improved consideration and disclosure. Decisions such as this are an important moment for shareholder engagement and stewardship.
And more quotes from proponents of the proposal on climate change at Shell.
“This development from Shell is a clear example the effectiveness of shareholder engagement back by investor commitment. Universal owners taking an active approach to long-term risk, sustainability and carbon management issues has benefits both for our beneficiaries and for our underlying investments,” Kieran Quinn, Chair of both LAPFF and co-filer Greater Manchester Pension Fund said.
“Shell’s response indicates that supportive but stretching shareholder resolutions can play a positive stewardship role. They focus attention on an increasingly complex capital allocation challenge for energy companies, investors and policy makers.” Helen Wildsmith, Head of Ethical & Responsible Investment at charity fund manager CCLA said.
“The Church Commissioners are delighted by Shell’s very constructive decision to recommend that its shareholders support the request for increased disclosure of the company’s strategy on climate change. This shows what an important role shareholders can play in promoting business adaptation to the transition to a low carbon economy. More widely it demonstrates the benefit of corporate engagement and the constructive outcomes it can achieve.” Edward Mason, Head of Responsible Investment, Church Commissioners for England, said.
‘We are delighted that Shell has embraced its owners’ very real concerns. We particularly welcome its willingness to disclose its public policy positions relating to climate change because, given the significant influence of corporate lobbying on national and international climate change policy making, it is important that we, as investors, understand what actions are being taken in our name’. Nick Perks, Trust Secretary, The Joseph Rowntree Charitable Trust said.
A very positive and all-too-rare embracing of shareholder concerns by a major board. Wouldn’t it be nice to see this as a day-to-day event, instead of an exception to the usual resistance to reasonable ideas? James McRitchie, Shareholder Advocate at CorpGov.net. Maybe the falling prices of oil is helping boards see the light. As Global Proxy Watch said,
Expect global shareowner pressure on energy firms following the Shell board’s surprise, table-turning decision yesterday to support a resolution on climate change risk by 150-plus UK and other investors. The resolution, also filed at BP, calls on the firms to stress-test their business models against a 2°C global warming limit; eliminate bonuses that reward climate-harming activities; commit to reducing emissions and investing in renewable energy; and disclose how their public policy aligns with climate change mitigation and risk. “This is a turning point and demonstrates the power of activist strategies to deal with climate change,” declared Catherine Howarth, CEO of the UK’s ShareAction, a co-filer. Still, the resolutions must garner a stiff 75% support at each firm’s AGM, coming in April and May. (Changed Climate, GPW, Jan. 30 2015)
Shell’s letter came on the same day that they announced they would slash spending by more than $15 billion in the next three years as falling oil prices eat away at profits. BP will freeze the wages of its 80,000 workers and sell its stake in two large fields in the Gulf of Mexico.