Activist shareholders will grant Royal Dutch Shell a reprieve over climate targets ahead of the company’s annual general meeting next month, as investors said they would withdraw a high-profile resolution about the oil group’s environmental goals.

In a reversal, Dutch shareholder group Follow This, which had spearheaded a campaign over Shell’s climate targets, said the company had become “an industry leader” in adopting emissions targets. It will now increase its focus on other companies.

The shift comes after Shell adopted its first short-term carbon dioxide target last month, on top of its ambition to reduce its carbon footprint by 50 per cent by 2050, including its own emissions as well as those from the use of its products.

“Shell has made good progress in the past year to achieve the climate targets set out by the Paris agreement,” said Adrie Heinsbroek, a spokesperson for a group of six large Dutch investors with more than $1tn under management.

“We are giving Shell this year to align its climate ambitions. We will continue to monitor closely and actively engage with Shell in the coming months and years,” added Mr Heinsbroek, head of responsible investment at NN Investment Partners.

The investor group — which includes asset managers Actiam, MN, NN, Blue Sky Group, Van Lanschot Kempen and Aegon — all supported a similar climate resolution last year, but have now changed their tune.

Oil majors including Shell, BP and Chevron have come under growing pressure from activist shareholders who have lobbied the groups to adopt tougher environmental targets, at a time when the companies also acknowledge climate change as a material risk.

Not all of these efforts have been successful; last week, the US Securities and Exchange Commission supported Exxon Mobil’s efforts to throw out a shareholder resolution on climate, meaning shareholders will not vote on the proposal.

At Shell, the now-withdrawn shareholder resolution from Follow This had asked the company to align its business to the Paris climate agreement. Similar resolutions proposed by Follow This in previous years were supported by about 6 per cent of Shell shareholders at the 2017 and 2018 general meetings.

Last month Shell announced it was linking executive pay to a new climate goal — cutting its carbon dioxide footprint by 2 per cent to 3 per cent in 2021, compared with 2016 levels. The company also conducted a review of its membership in industry groups, and quit one US lobby group because of differences over climate policy.

Mark van Baal, founder of Follow This, said Shell still did not align with the Paris climate goals, but it had made progress.

“We should recognise they are an industry leader, we should give them breathing room,” he said. “The investors more or less advised us to withdraw [the resolution]. They said, let’s give Shell as the industry leader, the time and the trust to align their net carbon footprint with the Paris climate agreement.”

Robeco, one of the biggest Dutch asset managers with more than €160bn under management, also said Shell had “met its wishes” with new climate targets, making the shareholder resolution superfluous.

“Over the last couple of years we’ve had a constructive dialogue with Shell, resulting in the fact that the company has set long-term climate ambitions, translated into concrete medium- and short-term targets,” said Carola van Lamoen, head of active ownership at Robeco.

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