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The Church of England (CofE) will vote against the reappointment of all directors at upcoming AGMs – starting with Shell later this month – in response to a perceived lack of progress over climate change objectives.
The Church Commissioners, which manages the CofE’s £10bn endowment fund, will vote to oust Shell’s chief executive Wael Sawan and chairman Sir Andrew Mackenzie at the energy giant’s upcoming shareholder meeting on May 23.
Shell has been accused across the industry of backtracking on net zero commitments, and the CofE is particularly concerned that the London-listed company has rowed back on promises to switch to clean power after the Ukraine war sent oil and gas prices soaring.
Olga Hancock, acting head of responsible investment at the Church Commissioners said: “High energy prices produced huge profits at oil and gas companies last year – a golden opportunity to invest very significantly in the transition to a low carbon economy, and one that was comprehensively missed. So we will be supporting all the relevant climate resolutions, and voting against all of their directors.”
Meanwhile, the CofE’s Pensions Board – which separately manages the church’s £3.2bn retirement pot – has also confirmed it will vote against re-approving members of Shell’s senior leadership team.
Adam Matthews, chief responsible investment officer for the CofE’s Pension Board, told The Telegraph it was “with genuine regret” that he was preparing to vote against Sawan and Sir Andrew but claimed closed door talks on climate issues had ground to a halt.
Matthews said: “We have lost confidence in the direction of the company.”
He accused Sawan of downplaying the importance of renewables and prioritising short-term profits since he took over as chief executive in January with the energy boss open to raising oil and gas production.
It also feared the company was refusing to use the cash windfalls to ramp up investment in renewables, instead handing £9.5bn to shareholders.
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Shell reported an annual profit of £32.2bn earlier this year the biggest in its 116-year history.
Matthews argued this approach “may provide short-term dividends” but risked making the global switch to green energy “less likely and more unstable”.
When approached for comment, a Shell spokesperson said: “Shell and the CofE pensions board have worked together as partners on the energy transition for almost a decade, with an emphasis on changing the use of energy as much as its supply. We continue to believe that is the right approach and strongly disagree with the pension board’s changed position.
“Our strategy remains unchanged – to become a net zero energy company by 2050 or sooner. And in the last year we’ve made very good progress in reducing emissions and investing in low carbon energy.
“We trust a vast majority of shareholders will agree on the need to collaborate in balancing the supply and use of energy to accelerate the energy transition and minimise the social costs.”
Both church bodies plan to vote against Shell’s proposed green energy strategy and will instead back Follow This’ alternative proposals – which include stringent scope three targets.
Mark van Baal, founder of Follow This, welcomed praised the CofE for “joining the leading investors in the fight against the climate crisis.”
He said: “Big Oil can make or break the Paris Climate Agreement and will only change if shareholders vote for change. As long as investors enable Big Oil to cause climate breakdown with their votes against climate resolutions that request Paris-alignment, oil majors will hang on to their fossil business model as long as possible, investing in fossil fuel extraction far outside the boundaries of the Paris Accord.”
North Sea climate transition group Uplift also praised the CofE’s latest stance towards energy giants.
Tessa Khan, executive director, said: “The Church is right to call time on Shell’s short term profiteering and demand that it shifts its investment away from oil and gas to more affordable renewable energy. This is what the science and public demand; there must be no more delay. Whether it’s the millions of households being pushed into fuel poverty from high energy prices, or the increasingly alarming impacts of the climate crisis, companies like Shell have finally lost their social license to operate. This action by the Church is overdue but welcome.”
Shell has consistently argued that it is ramping up production of climate-friendly energy sources faster than the world is adopting them.
It has also managed to consistently maintain majority support from shareholders for its climate proposals.
Shell has set a target of reducing its own emissions 50 per cent by 2030, and recently announced that it was already over halfway towards meeting that goal.
The votes against Sawan and Sir Andrew are chiefly symbolic given the CofE’s minor stake in the company – which is worth around £1.2m.
However, the activism could prompt other investors to put pressure on the company.
The church is part of the Climate Action 100+ group, which pressures companies responsible for the most greenhouse gas emissions – including oil companies such as BP and Shell – to gradually switch to renewables.
Other members include Blackrock, and Legal and General Investment Management – with both declining to comment.
The expected tussle at the AGM in two weeks followed BP grappling with a backlash for scaling back its climate commitments.
However, it ultimately won over investors – defeating a push from British pension groups to oust its chairman Helge Lund and voting down Follow This’ proposals for more stringent scope three rules.
By Nicholas Earl via CityAM.com
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