Oil companies are preparing for their upcoming annual general meetings (AGMs), an occasion where shareholders gather to scrutinise directors, vote on resolutions, and express their concerns about how these businesses are run. 

Increasingly, these meetings have become an opportunity for activists to push the fossil fuel industry towards more progressive positions on climate change, with resolutions aimed at everything from greater transparency over lobbying and emissions to forcing alignment with the Paris Agreement. 

What Is Shareholder Activism?

Shareholder activism is the other side of the divestment coin. Rather than withdraw investments from companies that profit from extracting fossil fuels, investors seek to leverage their financial stakes to influence companies like Shell, BP, and ExxonMobil to take action on climate change. 

Some non-governmental organisations, like ShareAction, use this tactic to gain access and influence within oil companies by buying shares themselves, which enable them to ask questions at AGMs and even to submit their own shareholder resolutions. Shares are often available for surprisingly little investment, providing a cheap route to influencing the decision makers at the top. Other groups, like Climate Action 100+, organise investors so that they take a consistent stance on climate change.

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“The rules to file a resolution vary from one country to another. But in the UK, you need a group of 100 shareholders with £100 worth of shares, on average, to come together and agree on a wording. Once they’ve done that, everyone in the company will be asked to vote on it, so it’s quite a powerful tool to get your issue on the agenda of the company you’re targeting — but also of their shareholders,” explains Jeanne Martin, campaign manager at ShareAction.

“That’s why we’ve seen an increasing number of resolutions being filed in the UK and other European countries: sometimes a resolution will get a very low voting result, but it will have kickstarted conversations between a company and their investors on, for example, their approach to tackling climate risk,” she adds. 

In the US, the system is different: unlike in the UK, resolutions are only advisory, rather than legally binding, and need the support of only 50% of investors. However, there is an additional hurdle in the shape of the Securities and Exchange Commission (SEC), which decides whether resolutions can go ahead. 

“We have filed a number of proposals with oil and gas companies asking them to report on if and how they intend to become Paris compliant, but unfortunately those were knocked out by the SEC,” says Danielle Fugere, president of As You Sow, a shareholder activist organisation in the US. Instead of forcing oil majors to reduce their emissions, shareholder activists have succeeded only in weaker measures, such as anti-lobbying resolutions. “It’s perhaps an underwhelming year in the US.”

Some activist resolutions are more controversial than others. Certain proposals — for instance, those aimed at greater transparency over the impacts of climate change — have been backed by the companies themselves. Realistically, these proposals are the only ones that end up passing in the UK, where a resolution needs 75% of investors to support it in order to pass. As such, activist resolutions are often defeated, but it is worth bearing in mind that not all shareholders support a more progressive stance on climate change. 

For instance, in 2019, BP shareholders passed a resolution proposed by Climate Action 100+ directing the company to disclose the estimated carbon intensity of its products, but voted against a stronger proposal asking the company to reduce its emissions.

A Timid Approach?

Often, there is no hard line between success and failure: what one investor group sees as a victory, others will interpret as too timid. In a recent example, Climate Action 100+ made a joint statement with Total, where the company pledged to reduce its emissions to net-zero across all its products and production by 2050 in regions where governments had already made a net-zero commitment. 

Many activist groups saw this as a weak response to the climate crisis, with Total merely falling in line with national policies rather than pushing ahead with ambitious actions of its own. Some accused Total of adopting this policy to avoid a more ambitious shareholder resolution, filed by a coalition of 11 institutional investors in April, calling on the company to align its activities with the Paris Agreement’s goal of keeping global average temperature rise to well below 2C. This has led to a schism between various shareholder activism groups.

“Total’s response to a climate targets resolution is classic: announcing a climate ambition with CA100+, and calling the resolution ‘unnecessary’,” says Mark van Baal of Follow This, a Dutch NGO which tables activist resolutions on a regular basis. “Big Oil executives seize every opportunity to cite joint statements with CA100+ as a fig leaf to disguise inaction on emissions.”

Despite its criticisms, Follow This is also not averse to working with oil companies, where they see the opportunity for genuine change. The group withdrew its climate resolution for BP’s AGM this year, instead agreeing to work together with the company to prepare a joint shareholder resolution for 2021. Work will begin on this after BP has set out its near- and medium-term targets for meeting its net-zero ambitions in September.

“Engagement with Follow This and their supporting investors has been immensely valuable. Listening and engaging with stakeholders has been an essential part of defining our net zero ambition and aims. It has helped us better understand their expectations and to develop a path we believe is consistent with the Paris goals,” said BP’s CEO, Bernard Looney, in a statement. 

But not all shareholder engagement has been so successful — and, in some cases, investors are getting tired of attempting to engage when the companies appear to be uninterested in reform. Last year, Bloomberg reported that LGIM, one of Exxon’s top 20 shareholders, dropped around $300 million of its Exxon shares, retaining the rest only to vote against the reappointment of Exxon’s chairman Darren Woods. 

Ultimately, shareholder resolutions are one tool in the toolbox for pressuring corporations to act on climate, and the system is set up to favour those resolutions that are already some way acceptable to the oil companies. Where companies prove reluctant to change, divestment may still be the most effective way forward.

What are shareholders demanding this year?

In Europe:

• Shareholders representing 1.35% of Total’s capital have filed a resolution calling on the company to reduce emissions in line with the goals of the Paris Agreement. (29 May)
• ShareAction is recommending that investors vote against the remuneration policy due to be considered at Shell’s AGM (19 May), on the grounds that it incentivises further extraction and burning of fossil fuels. The group is recommending that shareholders abstain from BP’s pay policy (27 May) because it lacks detail on how performance will be measured in the context of the energy transition.
• Follow This has submitted a resolution to Shell demanding that it set and publish emissions targets that are aligned with the 2C target of the Paris Agreement.

In the US:

• The New York City Comptroller’s Office, which manages the city’s pension fund investments, has submitted a number of resolutions advising energy companies, including Duke Energy, to separate the roles of CEO and board chair on the grounds that an independent chair may help the company better tackle climate change. A similar resolution has been filed at Exxon (27 May) by the Olga Monks Pertzoff Trust 1945.
• United Steelworkers of America have submitted a resolution at Exxon requesting an annual report disclosing payments for lobbying and company policies governing lobbying. A similar resolution has been filed at Duke Energy by Mercy Investments. 
• BNP Paribas Asset Management has submitted a resolution to Chevron (27 May) requesting a report describing if and how Chevron’s lobbying activities are aligned with the Paris Agreement.

Photo credit: Mike Mozart/Flickr/CC BY 2.0