Shell defends environment policy from Pirc attack

Shell, the Anglo-Dutch oil giant, yesterday launched an unusually outspoken defence of its business practices, urging shareholders to reject a special resolution proposed for its annual general meeting by investors critical of its environmental policies.

John Jennings, chairman of the corporation's UK-based arm, Shell Transport and Trading, said he was disappointed with the resolution, which has been drafted by the shareholders' advisory and pressure group, Pirc. The attack is likely to be viewed as another indication of Shell's drive towards greater transparency, shedding its sometimes secretive public image.

Clearly frustrated that Pirc had decided to press on with the assault despite earlier meetings with Shell management, he said: "We rather take exception to the resolution. We believe it demonstrates an incomplete knowledge of what's already being done."

Last night the chances of Pirc withdrawing the resolution seemed remote. Stuart Bell, the organisation's research director, said: "If the company can demonstrate that all the elements are being dealt with then clearly there's no reason to push on with the resolution. But at our last meeting with Shell, which was just two weeks ago, they gave us no indication that this was the case."

The resolution, to be put to the AGM on 14 May, calls on Shell to put a single, named director in charge of environmental and corporate policies, to appoint external auditors to review the policies and to publish a report for shareholders specifically on the company's operations in Nigeria. Pirc said its move had been supported by more than 100 shareholders, speaking for just under 1 per cent of Shell shares.

The resolution follows the worldwide criticism of Shell's reluctance to take a public stand in 1995 against the Nigerian regime's execution of the Ogoni leader, Ken Saro Wiwa. The group also faced controversy over its plans, later abandoned, to dump the Brent Spar oil platform at sea.

In an attempt to head off a wider shareholder revolt, Mr Jennings appeared to offer significant concessions yesterday. He said Shell aimed to publish a group-wide report outlining the conclusions of a long-running environmental review before the AGM. "I don't see the need for the resolution at all," he said. "It's not the right way for ensuring a business is run properly."

He also insisted that most of the criticisms were already being tackled. In particular, he revealed that Shell was experimenting with outside environmental audits in some parts of its empire, which included the Nigerian and British operations. But he declined to say which firms of auditors were taking part or which parts of the group were affected. He also added that few auditors had sufficient expertise of environmental work.

Pirc, which has been backed by the Church-based shareholders' organisation, the Ecumenical Council for Corporate Responsibility, said it was nonsense for Shell to argue that it had received no prior warning that the resolution would be tabled. "If they are doing all the things in the resolution, why aren't they supporting the resolution?" said Mr Bell.

Shell Transport's annual report for shareholders, published today, also revealed that Mr Jennings' total pay package rose last year by more than 9 per cent to pounds 677,703. His basic salary rose from pounds 470,776 to pounds 496,322, while his performance-related bonus went up by pounds 28,000 to pounds 124,000. Mark Moody-Stuart, group managing director, saw his total pay rise by more than 6 per cent to pounds 510,002.