PFA Jettisons Shell

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    Stockholm (NordSIP) – Denmark’s largest commercial pension fund has finally run out of patience with oil giant Shell.  Having previously defended its engagement-based strategy in the face of public criticism, PFA admitted this week that it had sold all of its DKK 1.2 billion worth of Shell shares.

    PFA had previously considered Shell to be one of a small number of ‘best-in-class’ fossil fuel companies that were taking concrete steps towards decarbonisation.  However, Shell announced in mid-March this year that it was weakening its emissions reduction targets and completely scrapping its ambition to have reduced its carbon intensity levels by 45% in 2035.

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    “Shell have become less ambitious with their 2030 goals and they have not been clear about their capital allocation to green technology, and so our assessment is that we can have more overall influence if we use our efforts on active ownership towards other companies,” Rasmus Bessing, PFA Asset Management’s Head of ESG Investing & CO-CIO told Danish newspaper Børsen.

    Bessing insists that despite this divestment PFA maintains an overall belief in shareholder engagement as opposed to a policy based on excluding whole industry sectors.  The fund retains its holding in TotalEnergies and does not rule out a future reinvestment in Shell, a longstanding position which Bessing says has provided a good level of return for PFA clients.  Bessing acknowledges that PFA has been unable to influence Shell to a significant degree but told Børsen that the decision to divest is a pragmatic one and not overtly influenced by external criticism.  An ActionAid report on Danish fossil fuel investments published in October 2023 revealed PFA and Danica accounting for 42% of the DKK 25 billion worth of coal, oil, and gas shareholdings held by Danish institutions.  This contrasts with other Danish investors like AP Pension, which excludes companies that have oil and gas extraction plans.

    Another AGM storm brewing

    Shell has been making headlines in the run-up to its 21 May annual general meeting (AGM).  It has called for shareholders to reject a resolution proposed by climate campaign group Follow This along with 27 shareholders.  The resolution requires the oil giant to align its Scope 3 emissions with a Paris Agreement temperature pathway.  Among the supporters of the resolution is €135 billion Dutch pensions management company MN.

    Commenting on the move, Follow This Director Mark van Baal said: “MN is the lead investor for the oil and gas industry at investor engagement collective Climate Action 100+.  As such, it would be logical for other CA100+ members to also vote in favour of the Follow This resolution.  If asset managers want large emitters to reduce their carbon footprint, they should follow their lead investor.”  Van Baal hopes that the initiative’s more ambitious second phase that focuses on achieving concrete decarbonisation action should also help glean more votes in favour.

    In a more positive step, Shell has decided to accept a resolution coordinated by ShareAction and supported by institutional investors including Norway’s KLP and Denmark’s Sampension, which requires the company to disclose information on its climate and energy lobbying activities.

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