AGM 2023: oil and gas company shareholders fail to vote for climate action

Despite the climate emergency, the 2023 AGM season came to an end without seeing any progress from large oil and gas companies in moving forward with the transition. Shareholder votes failed to push companies to adopt effective climate strategies. Say on Climate resolutions on inadequate climate plans were all widely approved, while more climate-ambitious shareholder resolutions were rejected. In addition, investors did not manage to integrate climate issues into routine votes. This outcome totally contradicts the scientific recommendations and projections made by the International Energy Agency (IEA) to limit global warming to 1.5°C. Reclaim Finance calls on investors to strengthen their shareholder engagement practices by adopting meaningful sanctions against companies pursuing oil and gas expansion, notably by refusing to grant them new investments. 

Reclaim Finance analyzed the AGM voting results of 9 oil and gas companies: BP, Chevron, ConocoPhillips, Equinor, Eni, ExxonMobil, Repsol, Shell, and TotalEnergies. 

This year, only Shell, Repsol and TotalEnergies proposed a Say on Climate vote, which allow shareholders to vote on the company’s climate strategy and its implementation. Investors overwhelmingly approved these resolutions: 80% for Shell, 89% for TotalEnergies and 98% for Repsol. Yet none of these companies are currently committed to a transition that stays within 1.5°C of warming. All of them are pursuing the development of new oil and gas projects, and have oil and gas production targets for 2030 that are much higher than those required in the IEA’s Net Zero Emissions by 2050 (NZE) scenario. Furthermore, they plan to allocate less than a third of their investments to renewables over the next few years, whereas the NZE scenario indicates that US$9 should be invested in the energy transition for every dollar invested in fossil fuels by 2030. 

Shareholders’ support to Say on Climate

The support obtained for these resolutions speaks for itself: shareholders prefer to reward companies that  put a Say on Climate on their AGM agenda by voting in their favour, rather than taking a stand on the substance by voting against damaging climate strategies. Yet these votes were an opportunity to sanction inadequate and incomplete climate plans, and to send a strong signal by calling for a halt to oil and gas expansion. 

All of the climate-related resolutions filed by minority shareholder groups have been rejected at the oil and gas company AGMs. Investors failed to demonstrate the credibility of their shareholder engagement approach and send a clear message to these companies about the need to align with a 1.5°C scenario. The scores obtained by these resolutions vary according to their demands: those calling for greater disclosure obtained more support than those asking for the climate strategy to be aligned with scientific recommendations. While disclosure is an essential step in ensuring that a company is on the right track, alignment is the key milestone that really helps to limit global warming, and it should therefore be at the heart of discussions between investors and oil and gas companies. 

A shareholder resolution, coordinated by the NGO Follow This and calling for alignment of scope 3 emissions reduction targets with the Paris Agreement, was filed at 5 European and American oil and gas companies’ AGMs. All of these companies called on investors to vote against the resolution, claiming that they were not responsible for the emissions related to the consumption of their products, even though they do have a responsibility to reduce their scope 3 emissions. On average, the resolution won the support of 17.5% of investors, and failed to make any headway compared with last year [1]. Support for this resolution was weak and less than last year in US company votes (10.5% for ExxonMobil vs 27.1% in 2022, 9.6% for Chevron vs 32.6% in 2022) and stagnated for the UK companies (16.7% for BP, 20.2% for Shell). These results are catastrophic given the urgent need to take action to fight against global warming. 

Shareholders’ support to a shareholder resolution asking for an alignment of the company’s scope 3 emissions reduction target with Paris Agreement

In contrast, at the TotalEnergies AGM, the resolution was approved by over 30% of shareholders. This result demonstrates a growing lack of confidence in the credibility of TotalEnergies’ climate plan. However, many of these shareholders, including BNP Paribas Asset Management [2], are inconsistent in their voting, supporting both the shareholder resolution and the Say on Climate. It is urgent that these investors change their approach and adopt a consistent position in favour of a 1.5°C trajectory in their votes.  

It is imperative that investors seize all the tools at their disposal to encourage oil and gas companies to transition, including the routine votes that take place at AGMs (renewal of board members, approval of remuneration, validation of financial accounts, setting of dividends, etc.). This year, however, shareholders were almost unanimous in their support for votes relating to the company’s governance and day-to-day management. On average, the renewal of outgoing board members was supported by 91.7%, and the financial statements were approved by 99.5% although they not integrate climate-related risks. These results show that investors are not voting to make climate change a strategic priority for companies. 

Average shareholders’ support to re-appointment of directors

Even though AGMs are a key moment in the year for dialogue between shareholders and companies, investors’ votes demonstrate a flagrant inconsistency between their promises to use shareholder engagement to limit global warming and their actions. By refusing to clearly oppose climate plans that are not aligned with scientific recommendations, shareholders are just as responsible for worsening climate change as oil and gas companies. On the eve of the launch of the second round of Climate Action 100+, which should strengthen shareholder engagement practices, Reclaim Finance calls on investors to implement firmer sanctions against these companies, for example by no longer granting them new bonds.