Sustainable Switch: The Shell shareholder anti-ESG battle

OCI Holdings

09/05/2023 14:00

May 9 - By Sharon Kimathi
Energy and ESG Editor, Reuters Digital
    
          
  
        Hello!
  
        
  
The battle against environmental, social and governance (ESG)
policies carries on this week as proxy advisors for oil giant
Shell fight for shareholder votes on climate proposals. In a
blow for pro-ESG activists, investors at Warren Buffet’s
Berkshire Hathaway overwhelmingly rejected climate and diversity
initiatives.
    
    Shell shareholders should 
    vote against a climate activist resolution seeking faster
emissions cuts, proxy advisory firm Institutional Shareholder
Services (ISS) said, while acknowledging the merits of the
proposal.
    
Shell investors will vote at an annual general meeting on May 23
on a resolution filed by the Follow This activist shareholder
group which asks the energy giant to align with the 2015 Paris
climate deal.
        
  
    Scientists say the world needs to cut greenhouse gas
emissions by around 43% by 2030, from 2019 levels, to have any
hope of meeting the Paris Agreement goal of keeping global
warming well below 2C above pre-industrial levels.
    
    Shell 
    has recommended
     its shareholders vote against the Follow This proposal.
ISS, whose recommendations steer many investors' voting, said
Follow This's "argument that intensity metrics are not a
substitute for absolute metrics is entirely valid" and is echoed
by ISS analysis.
    
It said the merits of the activist resolution are "fully
accepted" but if adopted it would "represent a change in
strategy from the one that Shell has adopted" which is why ISS
recommends a vote against it.
    
But proxy adviser PIRC on Tuesday recommended Shell investors
vote against the energy company's chair and opposed its annual
report for "failing to address climate risks by setting adequate
targets."
        
  
PIRC said it, instead, recommended shareholders vote in favor of
a climate activist group's proposal seeking faster emissions
cuts.
    
Meanwhile, Berkshire Hathaway shareholders overwhelmingly
rejected six proposals for ESG changes at Warren Buffett's
conglomerate, all of which the billionaire investor and his
board opposed.
    
By margins of at least 3-to-1, shareholders voted against three
proposals that Berkshire disclose more about its climate-related
risks or greenhouse gas emissions and efforts to address them,
and its efforts to promote diversity.
        
  
    One of the climate disclosure proposals was co-sponsored by
the California Public Employees Retirement System (CalPERS), the
largest U.S. public pension fund, and was rejected for a third
straight year.
    
But the fight for pro-climate policies is not just limited to
the United States as Australia's 30 biggest pension funds
increased their investments in key coal, oil and gas producers
by 50% in 2022 despite the funds' long-term commitments to net
zero carbon emissions, environmental activist group Market
Forces said.
    
    Superannuation or retirement funds raised their investment
to more than A$34 billion ($23 billion) in companies most
responsible for expanding fossil fuels, Market Forces said.
    
"Super funds are making a mockery of their own commitments to
net zero by buying up wholesale in companies expanding fossil
fuels and letting them get away with trashing our climate,"
Market Forces campaigner Brett Morgan said in a statement.
    
It estimated more than A$140 billion of Australians' retirement
savings are invested in fossil fuel companies through the funds,
which have more than 9% of members' share investments in these
firms on average.
    
    * Talking Points
  
    * Dozens of Democratic lawmakers called on the Biden
administration to consider the climate and environmental justice
impacts of the expansion of the liquefied natural gas (LNG)
industry.
    * Goldman Sachs Group has agreed to pay $215 million to
settle a
long-running class-action lawsuit that alleged widespread bias
against women in both pay and promotions, a joint statement from
the company and the plaintiffs said.
    * That path to success is hard to find in today's Hollywood,
Ronald D. Moore of "Battlestar Galactica" and "Outlander" fame
and other writers say, and is one reason the Writers Guild of
America (WGA) called a strike that began May 2 and has shut down
late-night television and threatens to undermine the crucial
fall TV season.
    * State attorney generals in New York and California
launched a
joint investigation into allegations that female employees of
the National Football League (NFL) have been subjected to sex
discrimination and harassment.
    *         Breakingviews: The Federal Trade Commission wants
to bar
Meta from monetizing young users’ data. But Mark Zuckerberg’s
audience is already among the oldest of social media apps. He
not only has to figure out how to get kids and keep them. He has
to do it in a way that builds trust.

    * In Conversation
  
    David Duffy, CEO and co-founder of the Corporate Governance
Institute, a global education institution, shares his thoughts
on the growing ESG backlash:     
    “I’ve been shocked by the backlash, and unfortunately, it
seems that ESG is now firmly caught in the crossfire of the
culture wars.
        “ESG is a crucial tool for investors to evaluate a
company's long-term viability. By considering the company's
environmental impact, social responsibilities, and governance
structure, investors can identify potential risks that may not
be apparent in a company's financial statements.
  
    “For instance, a company with a poor environmental record
may be vulnerable to costly lawsuits, while a company with weak
governance structures may be at greater risk of fraud.
        “ESG isn’t just about the investors; it helps companies
to identify opportunities to improve their operations and become
more sustainable.
  
        “For example, we’ve seen time and again that companies
prioritizing their environmental responsibilities can reduce
their carbon footprint and save on energy costs, while those
that invest in social responsibility can improve their
reputation and attract top talent.
    "To my dismay, banning ESG is regularly framed as a culture
war issue, with some arguing ESG is part of a leftist agenda.
This is all despite ESG not being a political issue; it’s simply
a tool for investors to assess risks and opportunities.
        “Many companies and investors across the political
spectrum recognize the importance of ESG and have been
incorporating it into their investment decisions long before the
culture wars ignited.”
  
    
    * ESG Lens
  
   
India's plans to stop building new coal-fired power plants
beyond those already under construction mark a significant
victory for climate campaigners keen to cap pollution from the
second-largest coal user after China.
    
The new draft policy, which still has to be approved by the
federal cabinet, would signify more aggressive climate targets
by the world's fifth-largest economy, and would leave China as
the only major economy openly adding new coal capacity.
     
    * ESG Spotlight
  
    Funds for eco-friendly farming and Ford testing a new fleet
of hydrogen fuel-cell vans are the focus of today’s ESG
Spotlight.
  
        
  
    A 
    U.S. and United Arab Emirates-led
     initiative to make the world's farming more environmentally
friendly and resilient to climate change has grown to more than
$13 billion, a U.S. official said.
    
The Agriculture Innovation Mission for Climate (AIM for Climate)
was launched in 2021 and had achieved commitments of $8 billion
last November.
    
"Climate change continues to impact longstanding agricultural
practices in every country and a strong global commitment is
necessary to face the challenges of climate change head-on,"
U.S. Agriculture Secretary Tom Vilsack said in a statement.
    
    Meanwhile, 
    Ford Motor said it will test a small fleet of prototype
hydrogen fuel-cell versions of its electric E-Transit model to
see if they are a workable zero-emission option for customers
hauling heavy goods long distance.
    
Ford will lead a consortium in the three-year project that
includes BP, which will focus on hydrogen and infrastructure,
and British online supermarket and technology group Ocado.
    
    * Quote of the Day
  
    “Extreme weather events are having a major impact on
economies, businesses, and communities as manufacturing plants,
buildings, roads, tarmacs, utilities - the foundation of how our
world runs - were not built to withstand today’s climate. We’re
living in a world designed for an environment that no longer
exists.” 
  
    Rich Sorkin, CEO and co-founder of Jupiter Intelligence, a
U.S.-based climate analytics firm
  
        
  
    * Looking Ahead
  
    * May 8-10, Washington D.C, United States: Agriculture
Innovation
Mission for Climate (AIM) conference is hosted by the U.S. and
United Arab Emirates to advance climate-smart agriculture.
Speakers will include Al Gore, Tom Vilsack, John Kerry, and
officials from the UAE, United Kingdom, Canada, Ireland and
more.
    * May 10, Berlin, Germany: German Chancellor Olaf Scholz
speaks to
reporters after hosting a 'migration summit' with the country's
16 state premiers on how to share costs for the influx of
migrants.
    * May 11, United States: Title 42, COVID-19 pandemic-era
restrictions to expel migrants from Nicaragua, Cuba and Haiti
caught crossing the U.S.-Mexico border back to Mexico, is set to
expire on May 11.
    * May 11, Brussels, Belgium: Two committees of EU lawmakers
are
set to vote through their draft Artificial Intelligence Act,
ahead of a vote by the assembly in June as the European Union
races to get a deal on a landmark artificial intelligence
legislation by the end of the year.

    
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