Shell: Assembly is in turmoil against energy transition – 05/23/2023 – Market

Shell suffered a shareholder backlash against its energy transition strategy for the second year in a row when its general shareholders meeting was disrupted by climate activists.

Twenty percent of shareholders voted against Shell’s transition strategy and its progress over the last 12 months – the same proportion as last year – after the annual meeting opened with a cascade of protests.

Ten seconds after Andrew Mackenzie, the chairman of the council, began his opening remarks, he was interrupted by the first protester, who was evacuated from the east London assembly site, prompting only a second protester to continue their protest. Every time a protester was removed, another one rose.

At one point, after almost an hour of consecutive interruptions, two activists tried to invade the stage, where the council members were sitting. Shell’s security team struggled to stop them, forming a human shield around Chief Executive Wael Sawan and the other members of the company’s board.

Tuesday’s shareholder meeting was the first under Sawan, who was appointed to the post in January.

The new CEO faced a succession of hostile questions from shareholders, who challenged the board about the pace at which the company planned to reduce its emissions.

The Church of England Pensions Board said it had supported the company when Shell “pioneered the oil and natural gas sector in 2021 by launching an energy transition strategy that included a commitment to reduce emissions.

“Today, I’m sorry to say we see a different path being taken,” said Laura Hillis, the fund’s chief investment officer, pointing to comments from Sawan that the company may consider investing in oil and natural gas production for longer.

Despite criticism from shareholders in the room, Sawan noted that 80% of shareholders, including Shell’s largest institutional investors, returned to support the company’s transition plans.

“I think the silent majority have been very clear with us about their expectations, and their expectations are ‘please find a balanced transition,’ which is what we are trying to do,” Sawan said, speaking after the close of the assembly.

“The worst thing we can do is just put money [na transição energética]the best thing we can do is create profitable, growable business models.”

Sawan said that Shell remains committed to its energy transition strategy announced in 2021 and that it is meeting the targets of the plan. But he also emphasized, as he has before, that Shell would continue to invest in oil and natural gas, while increasing spending on low-carbon forms of energy.

“The direction remains unchanged, it’s more a matter of how we execute to be able to pull this off and, more importantly, how do we stay competitive because… the stock price performance is not where it needs to be.”

A vote on a rival resolution by Dutch shareholder activist group Follow This, which says Shell’s plan doesn’t go far enough and isn’t in line with the 2015 Paris climate deal, was also unchanged from to 2022, with just over 20% of shareholders supporting the resolution.

“Your board does not want to reduce emissions in this decade,” Mark van Baal, founder of Follow This, said during the meeting, urging shareholders to “decouple short-term and long-term profits” in support of his call for a more aggressive reduction of emissions.

Mackenzie remained calm throughout the challenging assembly, encouraging protesters to remain seated and make their statements during the question-and-answer session. “We want to keep a civil debate,” he said.

At the beginning of the assembly, another group of protesters, who needed to own Shell shares to gain access to the site, started chanting “Go to Hell Shell” (Go to Hell, Shell) to the sound of the song “Hit the Road Jack”, by Ray Charles.

Mackenzie told the Financial Times that he had instructed security to let all shareholders in, rather than trying to filter out potential troublemakers. “It’s all part of the dialogue,” he said.

Also this Tuesday (23), a group of students claiming to be from an “anti-greenwashing committee of HEC Paris [Escola de Altos Estudos Comerciais]” interrupted the start of a “climate day” organized by the university to which representatives of Shell and TotalEnergies were invited.

Translated by Paulo Migliacci