Stockholm (NordSIP) – How long can the big oil companies hold out? Much of the time they carry on raking in astronomical profits with business-as-usual activities, safely shielded from scrutiny by well-funded greenwashing campaigns. But then the AGM season comes around again, and they have to deal face-to-face with real people. This week the crude oil really hit the fan for Shell.
Stand up and face the music
The start of the oil giant’s AGM was delayed for over an hour as climate protesters caused chaos, with a crowd of them singing “Go to hell, Shell” to the tune of Hit the Road Jack, the classic break-up song made famous by Ray Charles. There was also a rather more measured, but no less devastating formal intervention from whistleblower Caroline Dennett, who resigned from her role as a senior safety consultant with Shell a year ago. Her departure had been prompted by frustration at the company’s lack of attention to repeated warnings about serious health and safety breaches in Nigeria and the realisation that their stated net-zero ambitions amounted to nothing more than window dressing. Regarding the former, Dennett told the assembled Shell Board members: “The pollution in the Niger Delta is not simply down to sabotage, it is caused by wilful neglect of your own equipment and assets in the pursuit of profits.” She also addressed Shell’s institutional shareholders: “Given this catalogue of process safety failures can you say with your hand on your heart that the funds you represent, the ordinary pension fund members, the savers, the ISA holders […] want to dabble in what is effectively blood money?”
The oil company AGM season has also seen renewed efforts by campaigners to pass resolutions against the Directors and their climate strategies. One such effort by shareholder activist group Follow This garnered 20% support from individual and – significantly – institutional shareholders. Howvere that level of support was the same as last year’s, to the frustration of Follow This founder Mark van Baal: “Many investors have yet to decouple short-term profits from long-term risks for the company and their portfolios.” He remains hopeful, pointing out that: “Considering that up to 99% of shareholders voted along with the board on the other 25 resolutions, 20% of support and a significant number of abstentions in spite of a negative board recommendation clearly indicates shareholder discontent.”
Is delegated stewardship working?
Van Baal may also be encouraged by a statement released this week by Faith Ward, Chair of the UK Asset Owner Roundtable, which brings together large asset owners including local government pensions pool the Brunel Pensions Partnership and life and pensions insurer Scottish Widows. In convening roundtable members to a post-AGM season meeting, Ward explained: “ (We) are concerned at a perceived misalignment between our long-term interests and how investment managers are exercising proxy voting at key annual general meetings of European oil and gas majors.” Ward announced the commissioning of an academic study of asset managers’ stewardship activities following the AGM season, to ascertain whether they are truly acting in the best long-term interests of their pension clients. Laundromat had already spotted the recent rumblings of pension fund discontent, and it now looks like they are seriously questioning the whole proxy voting set-up. Can they no longer trust third parties to act on their behalf, and should they take hold of the wheel to get things back on track? It is high time the fossil fuel giants felt some real pressure from their biggest shareholders, and it does feel like rebellion is in the air.