Success for pension funds as Shell publishes climate plan

Pension fund members of the Climate Action 100+ (CA100+) initiative have had some success as Royal Dutch Shell commits to achieving net-zero emissions by 2050 or sooner.

As reported by our sister publication, European Pensions, in a statement, Church of England Pensions Board chief responsible investment officer, Adam Matthews, who also serves as the co-lead for CA100+ engagement with Shell, said: “Investor engagement with Shell has delivered tangible outcomes and will continue to do so.

"This engagement will focus on achieving alignment (by 2023) to the recently launched, and demanding, CA100+ Net Zero company benchmark.”

He noted that in response to investor engagement, different paths are emerging for how a publicly owned oil and gas company can transition. Following continued engagement with CA100+, Shell has set out the first of its three transition plans that will be put to shareholders for an advisory vote during this transition decade. Matthews said the company target is clear: To achieve net-zero absolute emissions reduction by 2050 or sooner.

“As a result of continued investor engagement Shell was the first oil and gas company to break ranks and acknowledge their responsibility to address scope three emissions, which account for the vast majority of the ‘life-cycle’ emissions from the burning of the products they sell and society uses. Shell was the first oil and gas company to set targets to reduce those emissions and the first to include performance indicators for achieving those targets in their executive remuneration.

“Shell was the first in their industry to respond to investor concerns that corporate climate lobbying through industry associations impedes ambitious policy implementation and they have put various associations on notice. Today Shell is the first oil and gas company to give its shareholders the opportunity for an advisory vote on its energy transition plans. These have all been areas of engagement with investors from CA100+,” he said.

However, Matthews said that this is not the end of investor engagement, and CA100+ will continue its work to ensure absolute emission equivalent targets sit alongside short- and medium-term intensity targets, and the need for further evidence of alignment of capital expenditure.

“Aspects of [Shell’s] strategy are dependent on significant scaling of technology such as CCUS (carbon capture, utilisation and storage) and hydrogen and credible provision of biodiversity off-sets. These dependencies and uncertainties are all areas for further engagement and will require Shell to provide evidence of delivery of its strategy,” he explained.

He also said that as investors “we are unquestionably entering a more complex phase in corporate engagement and individually each investor will make a judgement on whether this latest step in Shell’s transition is sufficient”.

“In the context of the progress that Shell has made as a result of engagement and the commitment from the company’s leadership to continue to meaningfully engage on the remaining areas of the Climate Action 100+ benchmark, the Church of England Pensions Board is likely to vote to support this energy transition plan,” he said.

Other UK pension members of CA100+ include but are not limited to, Brunel Pension Partnership, Lothian Pension Fund and Merseyside Pension Fund.

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