Activist investors pressure oil majors for emissions reductions

April 29, 2022

2022 proxy voting season to get underway after 2021 saw some successes for activist investors.

A record number of climate-related shareholder votes are expected to be filed with major oil and gas companies in 2022.

Oil majors face scrutiny from activist investors, which seek to accuse oil giants of delaying efforts to curb global warming.

In 2021, investors at Shell, Exxon Mobil and Chevron afforded activist investors with high-profile successes, by supporting activist-filed climate resolutions.

Now, more than a dozen European and US-based oil and gas companies are getting primed for the 2022 proxy season, with several resolutions targeting more substantial emissions cuts filed by activist investor groups.

Investor support for action against oil giants is on the rise. In 2016, the activist group Follow This filed its first resolution targeting Shell, drawing 2.7% of shareholders’ support. In 2021, a resolution achieved 30% support.

It comes as pressure mounts on companies to bolster their climate rhetoric with achievable medium-term targets. According to investor group Climate Action 100+, no major oil and gas company currently has emissions targets for 2026 to 2035 that align with the Paris climate goals.

Climate-related proposals currently comprise around one-fifth of the 567 shareholder resolutions tracked by three shareholder advocacy groups, spanning a range of issues including environmental, social and governance themes. More specific resolutions include plastic pollution reports and the financial risk of climate change.

The resolutions come at the same time as an SEC mandate for US companies to annually report their Scope 1 and 2 emissions, representing a seismic shift in the quality and quantity of climate reporting in the US.

Activist successes are more likely to be in the US, since US-based companies are lagging their European peers in emission reduction goals.

But some success has already been earned outside of the ballot sheet. Institutional investors redacted a resolution at TotalEnergies in April after the company pledged to produce a more comprehensive energy plan.