How serious is Shell about helping to tackle the climate crisis?

“We are the first energy company to submit our energy transition strategy to shareholders for an advisory vote and will be publishing an update every three years until 2050,” trumpets Shell.

“Every year, starting in 2022, we will also seek an advisory vote on our progress towards our plans and targets.”

Is this the dawn of the eco-friendly oil major, with Shell leading the charge to a sustainable planet? That’s at least what the company seems to want us to believe.

Next up: changing the corporate colours from red and yellow to green? Hang on a minute, didn’t BP already do that? 

Only the most sycophantic of shills actually claimed to believe the rival oil major’s move meant something. Shell’s approach, however, is more insidious. 

To see why, a bit of background is required.

Shell, like many oil majors, is finally coming under real pressure to clean up its act. 

At its forthcoming virtual AGM – which its energy transition strategy was released ahead of – there’s another motion on the table from Follow This, an activist organisation which advocates changing oil companies from within. 

As such, far from boycotting their shares, it wants people to buy them and to then use the votes this confers upon them to submit and back climate resolutions like the one it has put forward to Shell. 

Activists filing resolutions like this has proven to be an increasingly successful tactic.

They’ve started to secure the backing of some institutional investors, who also argue that share ownership and engagement is a superior way of securing climate related change to boycotts. An example would be Legal & General. 

This is clearly discomfiting the occupants of oil company boards, accustomed to big shareholders tamely granting approval to everything from the choice of the people who sit around the top table with them to their CEOs’ absurd pay packages.

It’s not unknown for them to blow raspberries at their investors when they vote against them, but flipping off the people who pay your salary/fees is on a level with driving a fancy car at high speed around a blind bend on a mountain road.

Shell’s move is both sharper and more creative because big investors don’t, as a rule, like to kick up a fuss.

Fund managers typically move in the same circles as the corporate elite, are frequently paid similarly silly salaries (often without much in the way of justification), are members of the same clubs. 

Voting against investee companies is seen as letting the side down, even spitting in the wine glass of the person buying you lunch. 

Shell’s move gives them a potential out. It says the Follow This motion is unnecessary now it has filed its own climate plan, which it promises to give progress reports on and offer future votes over. Future advisory votes rather than binding ones. Don’t let’s forget that part. 

Follow This says that if Shell’s targets were consistent with the Paris Agreement then “we would only need one resolution”. In that case, it says, it would happily withdraw the one it has filed and support Shell’s.

Unfortunately, it says: “Shell’s medium-term target of a 20 per cent reduction in carbon intensity, will not deliver enough absolute emission reductions to achieve the Paris goals. Moreover, Shell doesn’t plan to shift investments substantially away from fossil fuels to renewables, and plans to increase natural gas production.”

So the answer for those genuinely concerned about the way the planet is heating up is obvious: you should vote in favour of Follow This over Shell. 

But will the big fund managers, the institutions with sufficient voting power to make it count, do that? That’s the big question.

We might just be about to find out just how serious their much ballyhooed conversation to climate friendly investment is.