ISS advises Shell shareholders to vote against climate activist resolution

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Shell investors will vote at an annual general meeting on May 23 on a resolution filed by the Follow This activist shareholder group which asks the energy giant to align with the 2015 Paris climate deal.

Scientists say the world needs to cut greenhouse gas emissions by around 43% by 2030, from 2019 levels, to have any hope of meeting the Paris Agreement goal of keeping global warming well below 2C above pre-industrial levels.

Shell aims to cut the intensity of planet-warming gases across its portfolio and the use of its products by 20% by 2030 and 100% by 2050. It has ruled out setting absolute emissions cuts targets, including the combustion of its products.

Measuring emissions by intensity means a company can technically increase its fossil fuel output and overall emissions while using offsets or adding renewable energy or biofuels to its product mix.

Shell has recommended its shareholders vote against the Follow This proposal.

ISS, whose recommendations steer many investors’ voting, said Follow This’s “argument that intensity metrics are not a substitute for absolute metrics is entirely valid” and is echoed by ISS analysis.

It said the merits of the activist resolution are “fully accepted” but if adopted it would “represent a change in strategy from the one that Shell has adopted” which is why ISS recommends a vote against it.

At Shell’s 2022 shareholder meeting, Follow This received 20% of votes, down from 30% the previous year.

In 2021, a Dutch court ruling, still in appeal, told Shell to reduce greenhouse gas emissions in absolute terms by 45% by 2030 across the entire lifecycle of its hydrocarbons.