Oil and gas giant Shell is no stranger to climate controversy. The company was the defendant in a major Dutch case which ruled that Shell had a duty to reduce their emissions, a ruling now being appealed. The company also successfully fended off a UK shareholder suit regarding its emissions brought by NGO ClientEarth. Now the company faces a shareholder proposal aimed at encouraging the company to reduce its scope 3 emissions as Responsible Investor reports:
“UK pension pool Brunel Pension Partnership will vote against Shell board members in response to its ‘perceived misalignment’ with the oil major on the importance of material value chain carbon emissions. The £38 billion ($47.3 billion; €44.4 billion) local government pension fund is part of a 27-strong investor group which co-filed an ‘advisory’ proposal at the company with Dutch activist climate Follow This. It calls on the UK-listed oil giant to ‘align its medium-term emissions reduction targets covering the greenhouse gas emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate Agreement’”
While the shareholder proposal is not expected to pass, the proponents of the resolution are hoping to keep steady pressure on Shell to improve its emissions inventory. Last year a similar proposal attracted 20% support. Unsurprisingly, the company believes that reducing its Scope 3 emissions would harm the company’s value and that Shell is not responsible for the emissions generated by its products after they are sold to the end user. This view of Scope 3 emissions management is becoming outdated, and Shell may face increased pressure from investors, regulators, and private lawsuits if it fails to manage its contributions to climate change. On the other hand, if Shell is successful in its defense, that may encourage other companies to push back more aggressively against similar proposals.
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Photo credit: Alexandr Blinov – stock.adobe.com
