ESG activists target fossil fuel giant Shell

Environmental, social and governance (ESG) issues have seen the fossil fuel giant Shell come under fire before and during its annual meeting in May 2022.

Shell’s AGM in London was delayed by almost three hours as activists protested against the firm’s continued development of fossil fuels.

The protesters, who held Shell shares to gain access to the AGM, chanted at chair Andrew MacKenzie as he tried to open proceedings.

“Shell must fall”, and “your profits will only drown us out for so long”, the group of about 50 shareholders yelled. They also sang “we will stop you” to the tune of Queen’s 1977 hit “We Will Rock You”.

MacKenzie then asked non-protesting shareholders to vacate the room for police to remove the activists, some of whom were glued to their chairs.

When the meeting finally restarted, two hours and 40 minutes late, 80 per cent of Shell’s shareholders supported the firm’s transition strategy and its progress over the past year.

However, this is lower than the 89 per cent that backed the plan last year.

ESG and Shell

Shell CEO Ben van Beurden told shareholders [not evicted] that the company had made significant progress in its restructuring efforts.

As of the end of 2021, the company had reduced its emissions by 18%, compared with 2016, and was committed to a 50% reduction by 2030.

Senior safety consultant quits

Another high-profile complaint against Shell emerged on the eve of the AGM when a senior safety consultant quit Shell, accusing the fossil fuel producer of causing “extreme harms” to the environment in a very public video.

Caroline Dennett, who works for the independent agency Clout, ended her working relationship with Shell in an open letter to its executives and 1,400 employees. On LinkedIn, she said she quit because of Shell’s alleged “double-talk on climate change”.

“Shell’s disregard for climate change risks means they are completely failing on their Goal Zero safety ambition to ‘do no harm’.

“Shell is fully aware that its continued oil and gas extraction and expansion projects are causing extreme harm to our climate, environment, nature, and people.

“I can no longer work for a company that ignores all the alarms and dismisses the risks of climate change and ecological collapse,” she said.

Ben van Beurden, Shell’s chief executive, was also subject to investor discontent at the AGM after investment adviser Pirc urged shareholders to vote against his £13.5m pay package.

Is ESG activism on the rise?

Yes. ESG is a significant issue for boards and their directors.

ESG activism has long been common in many markets, and 2021 marked an increase in a willingness on the part of large institutional investors to take action against corporate boards where they perceive a lack of progress on ESG issues.

Even boards that appear to lead the market in terms of climate response and other ESG issues will need to ensure that robust governance systems back up their commitments and disclosures.