Schroders to back climate shareholder proposals at Chevron, Exxon, Shell

Schroders is planning to vote in favour of climate-related shareholder resolutions on the ballot at the upcoming annnual general meetings (AGMs) for Chevron, ExxonMobil and Shell, saying it was pre-declaring its intentions “to encourage a faster shift towards net zero”.

Chevron, ExxonMobil and Shell all have AGMs this week that include a vote on resolutions tabled by Dutch pressure group Follow This, which is calling on major oil companies to set emission reduction targets across all scopes that are consistent with the Paris climate change accord.

Tim Goodman, head of corporate governance at Schroders, said the asset manager’s decision to vote for the shareholder proposals at Chevron and Exxon reflected its “aspiration for these companies to show more ambition and transparency in their transition to net zero”.

“While most of these companies now have an ambition to achieve net zero greenhouse gas emissions by 2050 or sooner, their ambition is limited to their operational (Scope 1 and 2) emissions only,” he said.

“These companies are lagging behind peers in setting net zero targets that take into account the carbon emissions of the oil and gas that they sell.”

The same rationale was behind Schroders voting in favour of climate shareholder resolutions at ConocoPhilipps and Phillips 66, according to Goodman. The Follow This proposals at the latter two companies attracted a 39% and 36% ‘For’ vote, respectively.

With regard to Shell – and BP and Occidental Petroleum, which have already had their AGMs – Schroders’ decision to vote in favour of the Follow This resolution is “a signal of our desire for these companies to continue to demonstrate their focus on reaching net zero”, said Carol Storey, active ownership manager at Schroders.

“All three have an ambition to achieve net zero greenhouse gas emissions by 2050 or sooner across Scope 1, 2 and 3 emissions relating to operations and the use of energy products and are making progress in setting interim climate targets,” she said.

Storey also said Schroders supported the climate reports BP’s and Shell’s management had presented to shareholders, “reflecting the progress they have made in strengthening and broadening their climate targets and developing their decarbonisation strategies”.

Japan action

In other active ownership-related news, investors engaging with JFE Holdings, one of Japan’s leading steelmakers, today welcomed the announcement of enhanced climate commitments by the company following recent engagement on the topic.

According to the investors, measures announced by JFE today announced in its AGM notice included a commitment to an annual consideration of its emissions reduction target, with a focus on exceeding its 30% target and a commitment to link executive remuneration with its target in the company’s medium-term business plan.

The shareholder group, comprising Man Group, Storebrand and the Australasian Centre for Corporate Responsibility (ACCR), has had dialogue with JFE in recent months with a focus on enhancements to climate governance.

“Decarbonisation of the steel industry is a critical global challenge,” said Victoria Liden, senior sustainability analyst at Storebrand Asset Management. ”We are pleased that JFE recognises the need for strong governance structures, and the need for ongoing revision of targets based on technology advancements and investments, to support company decarbonisation.”

Jason Mitchell, head of responsible investment research at Man Group, said the engagement with JFE was an “encouraging counterpoint” to a shareholder resolution Man Group co-filed at Electric Power Development Co., Ltd (J-Power) – Japan’s largest coal plant operator – alongside Amundi and HSBC Asset Management after engaging with the company fell short of objectives. The resolution urges the company to strengthen its decarbonisation strategy.

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