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Pensions and Fund Managers Scold Shell Over Climate Targets

Pension funds and fund managers at the oil giant’s annual meeting took turns voicing disapproval over the company’s greenhouse gas emissions efforts.

  • Joe McGrath

Institutional investors admonished the board of oil giant Royal Dutch Shell on Tuesday for failing to make sufficient progress on establishing greenhouse gas reduction targets.

Speaking at the company’s annual general meeting, some of Europe’s largest pension funds — including APG, ABP, and PGGM — joined fund managers Aegon, RobecoSAM, and NN Investment Partners in criticizing Shell’s progress on the reduction of noxious emissions from its activities. The protests come as institutional investors in Europe are becoming increasingly vocal on so-called ESG issues, or environment, social and governance. Today’s environmental corporate strategy vote at Shell follows a series of recent shareholder rebellions at blue chip AGMs over remuneration and bonus issues.

Speaking at the meeting at The Hague, Netherlands, Sylvia van Waveren, senior engagement specialist representing RobecoSAM and Aegon Asset Management, said investors have been seeking more ambitious greenhouse gas reduction targets “for many years,” adding, “We have a strong and urgent message for Shell’s board: We think Shell has not shown enough progress in formulating a long-term vision for operational emission reduction. Investors need a clearer statement and we expect the company to show us this.”

Pieter van Stijn, senior advisor for PGGM Investments, criticized the board for not having corporate greenhouse gas reduction goals “despite multiple demands from investors” and added that PGGM wants Shell’s board to develop a program with its peers on how to reduce emissions from its customers. “We want you to acknowledge the urgency,” he said.

Follow This, an activist group representing 3,000 shareholders, had put forward a resolution to shareholders at the meeting, with the goal of forcing Shell into stricter rules governing its own emissions, the emissions of its suppliers, and those from Shell’s customers when they use its products.

“Today we can show Shell that we mean business on climate change,” said Mark van Baal, founder of Follow This. “We encourage Shell to set targets that are inspirational for society, for employees, and for shareholders.”

Follow This was unsuccessful in getting the resolution adopted, but several prominent investors used the annual meeting as a platform to raise concerns with the board. Van Waveren said she had been instructed by Aegon to abstain from the vote in accordance with the concerns outlined. Her instruction from RobecoSAM, however, was to oppose the resolution because the firm felt targets were too prescriptive, despite agreeing with some of the sentiment.

Jags Walia, senior portfolio manager at APG Asset Management, also voted against the resolution for the same reason, but added that he had an obligation to provide returns in a “responsible manner” and that Shell should play its part in meeting emissions targets set out in the UN’s Paris Agreement.

PGGM and NN Investment Partners abstained from voting, with the latter claiming the past year had been “a missed opportunity” for the company in setting ambitious targets.

In response to the investors’ comments, Ben van Beurden, chief executive officer of Shell, said the company would continue to engage to find “the right way” to make progress.

“You can make up your mind whether you like what you see,” he said. “Institutional shareholders are under a lot of scrutiny and pressure to demonstrate they are holding a portfolio that is compatible with what society desires.”