Investors Increase Pressure on Big Oil companies to Establish 2030 Climate Targets

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by KnowESG

Four of the world's largest oil and gas companies are being asked by a group of investors to set broad climate goals for 2030. This comes after a year in which governments increased their focus on energy security.

Activist group ' Follow This' stated that it has co-filed the resolutions with six big institutional investors managing $1.3 trillion in assets ahead of BP, Chevron, Exxon Mobil, and Shell's annual general meetings next year.

The resolutions ask the companies to set goals to cut greenhouse gas emissions by 2030, especially Scope 3 emissions, which come from fuel sold to customers and make up the vast majority of pollution in the sector.

Investors have increased pressure on the oil and gas industry in recent years to help combat climate change, and the Follow This climate-related resolutions have gained traction among shareholders.

However, last year's attempts mostly stalled as investors shifted their focus to increasing energy prices and energy security in the aftermath of Russia's invasion of Ukraine.

BP, Shell, and Chevron have all set some 2030 greenhouse emissions reduction targets that include Scope 3, though Follow This said, they are not in line with the goal of the United Nations to keep global warming to 1.5 degrees Celsius above pre-industrial levels.

“Follow This has consistently proposed shareholder resolutions that are simplistic, unrealistic, and against the best interests of Shell. We remain committed to constructive engagement with our investors,” a Shell spokesperson said.

The group of investors co-filing the resolutions includes Edmond de Rothschild Asset Management, Degroof Petercam Asset Management, and Achmea Asset Management. Follow This did not provide the names of the other backers.

"We acknowledge Shell's tremendous progress in meeting its climate targets. Nevertheless, it still lacks an absolute 2030 (emission reduction) target,” said Jean-Philippe Desmartin, head of Responsible Investment at Edmond de Rothschild Asset Management.

Shell, BP, and European companies like TotalEnergies and Eni have set policies and goals to cut emissions to zero by 2050. They plan to do this by cutting oil and gas production and growing businesses that use low-carbon and renewable energy.

“The focus on Scope 3 by 2030 leaves the oil majors no wiggle room for smokescreens about ‘net zero emissions by 2050,'” Follow This founder Mark van Baal said.

In the United States, 2022 saw a wave of efforts driven by Republican politicians and right-leaning investors to focus executives’ attention away from environmental, social, or governance (ESG) themes.

For example, activist investor Strive Asset Management wants Chevron shareholders to vote at the company's spring meeting to get rid of a rule that requires Scope 3 emissions to be cut.

In the past, Exxon and Chevron were able to stop attempts to file resolutions about climate change with the Securities and Exchange Commission.

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Source: Reuters


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