Fossil banks under fire
Last Wednesday, Barclays faced a second climate resolution, coordinated by Market Forces, reacting to the bank’s US$27 billions of financing to the fossil fuel sector in 2020 alone. 14% of the vote supported the resolution, with an additional 12% of voters that preferred to abstain rather than align themselves with Barclays’ management views. This includes the world giant Blackrock which abstained, explaining that it was “supportive of the broad ask of the resolution”.
While Market Forces already warned Standard Chartered of a potential resolution in 2022, all eyes are turned towards MUFG’s AGM which will take place on the 29th of June. The Japanese bank, which is the biggest Asian financer of fossil fuels, with more than $147 billion of financing to oil, gas and coal between 2016 and 2020, is facing calls for short-, medium- and long-term targets to align its financing and investments to the Paris Agreement goals. Investors are called to support it and the world giant BlackRock must do better than abstaining.
Oil and gas majors on the spot
On Wednesday, 20.65% of investors supported a Follow This resolution requiring BP to adopt Paris-aligned scope 3 emissions reduction target, against the Board’s recommendation. Last year, BP committed to file a joint resolution with Follow This but both parties weren’t able to agree on the text. Certainly, BP would have liked a resolution similar to the ones Total and Shell’s boards submitted to an advisory vote of their shareholders: a resolution with “climate” written in its title but with no real Paris aligned climate plan inside. Thus, both companies might flatten then reduce reduce their oil production but they will increase their gas production. A tiger doesn’t change its stripes.
Total’s production forecasts indicate a 50% growth of its fossil fuels production by 2030 compared to 2015, including a 30% gas production increase from 2019 to 2030, and 65% of Shell’s capex are going towards oil & gas. Both bet on uncertain technological gimmicks to make their future oil and gas-related GHG emissions disappear.
Investors divided over climate votes at European companies
Investors can’t ignore physics: managing carbon budget to limit global warming to 1.5°C require immediate absolute emissions reduction. They must vote for Follow This’s resolution at Shell AGM and against both Shell and Total’s so-called climate plans. To vote against the renewal of directors at companies failing to adopt Paris-aligned 1.5°C alignment plans would also be a sign of consistency: the fund Engigne n°1 is calling investors to vote against Exxon Mobil’s directors to sanction the company’s $20-25 billion per year capex oil and gas spending plan for 2022-25. Many investors, including CalPERS, CalSTRS, L&GIM as well the voting agency ISS expressed their support to Engine n°1’s resolution.
Unfortunately, while a small but increasing number of investors are now aligning their voting practices with their climate pledges, the majority are expected to vote with the management of European polluters. If the resolution asking ConocoPhilipps to set scope 3 emissions target was supported by a strong majority of shareholders, more than 20% of BP’s shareholders voted for the Follow This climate resolution, meaning that the majority voted against. This includes CalPERS which has voted against Follow This’s resolution at BP, after having recently stated that voting is “the point in which you move from talk to action”.
Contray to Aegon which stated it will support the Follow This’ resolution at Shell, The Church of England Pensions Board is also expected to support Shell’s bogus climate plan, after defending it publicly. When an investor leading the CA100+ engagement towards a major polluter is becoming its PR representative, it brings not just their own credibility on these matters into question, but that of the CA100+ itself.
Total’s AGM – the litmus test for CA100+ credibility
One vote will be revealing: Total’s AGM on the 28th of May. Three investors are leading the engagement on behalf of CA100+: Hermes EOS, Meeschaert and MN. Total has made crystal clear that it does not intend to ask its shareholders for an annual opinion on the group’s climate plan and that it will go back to the drawing board to review its climate targets only if shareholders vote against its current plan.
However, Hermes EOS, who has been leading the engagement towards Total for some time, opposed an investor-led climate resolution filed at Total’s AGM last year. This resolution was supported by 16% of its shareholders, including La Banque Postale AM, Crédit Mutuel, Aviva, , Schroders, and UBS. Given Total is yet to adopt a precise scope 3 emissions target, disclose its reliance on CCS, NBS and offsets, and decrease its oil and gas production, they must surely vote against the group’s fake climate plan.
It remains to be seen whether Hermes EOS will finally intensify its pressure on the group or hide behind the incremental progress made by Total to vote in favor of its fake climate plan and “give more time” for the company to deliver on empty climate promise. Even more interesting will be the vote of MN, which supported this resolution last year and of Meeschaert which coordinated the filing of the investor-led climate resolution. Will the Dutch and French investors stick to their position and vote against the group’s resolution or will they align with conservative investors and take a cartel position against climate?
Investors’ credibility is not the only thing at stake. We are running out of time to limit global warming at 1.5°C. Investors must lead the charge against polluting companies and demonstrate that their climate pledges are more than words.