Royal Dutch Shell PLC under fire for climate plans as PIRC advises shareholders

PLC () shareholders are being urged to vote against the oil giant’s energy transition strategy at its AGM next week by a leading investor pressure group.

PIRC (The Pensions & Investment Research Consultants) said Shell’s strategy to cut emissions “does not seem to have a clear plan for the competitive aspects of the energy transition”.

The oil group was already facing a call to set ‘inspirational targets’ to reduce its greenhouse gas emissions by the Dutch environmental group Follow This, which has tabled its own resolution at the meeting.

Shell has urged shareholders to ignore that motion and vote instead for its own proposals to ‘move the company forward’.

In April, when he set out the ‘net-zero by 2050’ plan, chief executive Ben van Buerden said that the best way for Shell to contribute to the energy transition is to ‘work with our customers to help shape demand for low-carbon energy products and services’, 

The plan involves growing its renewables and low-carbon business and offsetting emissions through carbon capture and reforestation.

Glass Lewis, a US proxy advisory firm similar to PIRC, last month advised supporting the Shell resolution.

PIRC though criticised Shell’s plan to reduce carbon emissions “in step with society,” saying it should be leading instead.

Natasha Landell-Mills, Partner, head of stewardship at fund manager Sarasin & Partners also said investors should back the Follow Thisresolutin rather than managment’s.

“Looking beyond the eye-catching net-zero ambitions announced to shareholders, two things are plain,” she said.

“First, the vast bulk of their [BP and Shell] capex continues to replenish fossil fuel supplies.

“Second, these ambitions are only possible because their balance sheets continue to be propped up by overly optimistic assumptions of future cash flows from selling oil and gas.

In the case of Shell, buried in the notes to its accounts, the company is explicit: ‘Our plan and pricing assumptions do not yet reflect Shell’s 2050 net-zero emissions target.’

“We do not believe BP or Shell can be serious about getting to net-zero until their accounts and capex plans are aligned with that goal. “

BP () shareholders also faced a resolution from Follow This at its AGM today that was similar in tone to the Shell motion.

The UK company has said it wants to cut emissions by 40% by the end of this decade but faced opposition from huge US pension fund Calpers, which said it would vote against the company’s climate strategy.

BP said its plans are in accord with the Paris summit of 2015 and that any redrawing of its plans would disrupt the plans.