Stockholm (NordSIP) – It is not only discouraging news coming from Shell’s headquarters these days. Last week, NordSIP picked up the story about the oil major’s directors recommending shareholders vote against a resolution urging the company to align its Scope 3 emission reduction targets with the goal of the Paris Agreement. Meanwhile, ahead of the upcoming AGM, Shell has just announced it will disclose information about the company’s climate and energy lobbying in emerging and developing markets that are significant for its strategy.
Shell’s announcement comes as a response to a shareholder resolution filed by Norway’s largest pension fund, KLP, Danish pension provider Sampension, and the Australasian Centre for Corporate Responsibility (ACCR) with the assistance of UK-based responsible investment NGO ShareAction and several of its public supporters.
“This commitment is a major shift from Shell, which sees it move from disclosing nothing about its extensive lobbying activities in emerging markets to acknowledging that better disclosure is warranted,” comments Nick Spooner, UK Company Strategy Lead at ACCR. “Until now, investors in Shell have been flying completely blind. Nearly 60% of Shell’s fossil fuels production from 2024 to 2050 is expected to come from emerging markets, yet investors have had no insight into lobbying activities in these markets that are material to the company’s forward business – including if lobbying by Shell and its industry associations is misaligned with the Paris goals and under-cutting Shell’s own decarbonisation strategy. By expanding its disclosures to include emerging markets Shell is taking an important first step to ensuring consistency between the company’s lobbying activity and its strategy,” he adds.
According to Kiran Aziz, Head of Responsible Investments at KLP Asset Management, the latest move from Shell serves as proof that active ownership does have a positive impact. “We expect companies committed to the energy transition to use their leverage in support of progressive government policies and be fully transparent in their lobbying wherever they operate,” she says, applauding the efforts of her colleague, Arild Skedsmo, who has been leading the engagement initiative. “We are pleased to see Shell’s renewed commitment to lead on lobby disclosure and expect no less from other companies in our portfolio.”
Jacob Ehlerth Jørgensen, Head of ESG at Sampension considers Shell’s commitment to expand on its lobbying disclosures “a prerequisite for us as investors to assess the robustness of the company’s climate strategy.” “We are fully committed to continuing to work with both companies and civil society organisations to support the transition to a low carbon economy,” he adds.
However positive, Shell’s current disclosure commitment is just a first step. “Investors need full transparency over Shell’s material lobbying in emerging markets, especially because of the company’s substantial LNG growth strategy, which is focused on these markets,” says Spooner. “ACCR’s research identifies multiple examples of undisclosed lobbying by Shell and its industry associations in emerging markets. A number of these industry associations are actively lobbying for policies that risk locking in levels of fossil fuel demand that are misaligned with the Paris goals. In the context of Shell winding back its own climate targets and its Paris-misaligned projections for gas demand growth, especially in Asia, there remains a concern about how well Shell is positioning itself to thrive in the energy transition.”
