Ethos calls on investors to vote FOR the shareholder proposal submitted by the Dutch shareholder association "Follow this" at the Annual General Meeting of Royal Dutch Shell on 22 May 2018 (agenda item 19). The shareholder proposal calls on Shell to set targets to reduce greenhouse gas (GHG) emissions that are compatible with the objectives of the Paris Agreement to limit global warming to a maximum of 2 degrees Celsius compared to the pre-industrial era. The board of directors has advised its shareholders to vote against the resolution on the grounds of the resolution not being in the best interests of the company and its shareholders.

Shell has recently announced its ambition to cut the net carbon footprint of its energy products by around half by 2050 and as an interim step to aim for a 20% reduction by 2035. This announcement is laudable but remains a utopia if not accompanied by concrete and challenging GHG emissions reduction targets. Since most GHG emissions are not generated in the company’s own operations, but by the use of its products (scope 3 emissions), the oil and gas industry must set strict reduction targets of these emissions in order to mitigate their worst impacts on climate. The ‘Follow this’ resolution asks Shell to introduce targets that are compatible with a 2 degrees’ future and to publicly disclose them in order to foster accountability and convince investors that capital is spent on projects aligned with a low-carbon future and not on assets at risk of being stranded in a few years’ time.

Ethos believes that it is of utmost importance that companies, especially those active in fossil fuels, and their shareholders take decisive action to combat climate change now. If investors are opting to engage GHG-intensive companies rather than divesting them, ambitious actions like those demanded by the ‘Follow this’ resolution are crucial. Thus, Ethos strongly urges all shareholders to support the ‘Follow this’ shareholder resolution and to instruct their custodian to vote for item 19.

Ethos voting positions for the Royal Dutch Shell annual general meeting