Church of England pension funds will vote against Shell Plc chairman Andrew Mackenzie and the rest of the board, in a rebuke to the company’s climate ambitions under new chief executive Wael Sawan.
The move is part of a broader effort among European institutional shareholders to keep up pressure on oil majors to step up efforts to reduce greenhouse gas emissions after high fossil fuel prices reaped profits record last year. But the efforts may be an uphill battle against markets that are rewarding companies for producing more oil and gas in the short term.
“We are getting signals from Shell’s new chief executive of a return to seeking to maximize short-term returns,” wrote Adam Matthews, chief investment officer at the Church of England Pensions Board. in a post on LinkedIn. “While this thinking may provide short-term dividends, it increases medium- and long-term risk for pension funds by making the transition less likely and more volatile.”
As well as opposing the company’s board at Shell’s annual general meeting on May 23, the Church of England will also back a resolution by activist shareholder group Follow This to line up cuts to CO2 emissions with the objectives of the Paris Agreement. It’s a reversal from previous years when the Church opposed Follow This resolutions. This year it was also supported by Dutch pension advisers MN and PGGM.
“Although Shell is a leader among oil and gas companies, there is insufficient evidence that the company’s current strategy is aligned with a 1.5°C warming pathway, which requires a significant reduction in production of oil and gas and an increase in the supply of carbon solutions,” PGGM wrote in a statement about its decision to vote in favor of the resolution.
Proxy adviser PIRC also recommended investors vote against Shell’s chairman and oppose his annual report for not addressing climate risks.
Earlier this year, BP won support for a move to pump more oil and gas than previously planned, despite opposition from some climate-minded shareholders.
