A coalition of university investment funds has called on institutional investors to rebel against the boards of fossil fuel companies and their backers.
As Shell prepares for its annual shareholder meeting this week, representatives from the Universities of Newcastle, Sussex, Bristol and from Trinity College, Cambridge, have written an open letter to the asset management industry urging “bold action” to stop new fossil fuel projects.
The letter, seen by the Guardian, asks asset managers to vote against directors of companies pursuing or backing new projects. It also asks investors to support all climate-linked shareholder resolutions, particularly those that call for an end to new fossil fuel projects.
A spokesperson for the University of Sussex said: “Our academics have identified new fossil fuel projects as a key threat to meeting critical global climate targets, including limiting global heating to 1.5 degrees. Asset managers, who hold trillions in investments on behalf of their clients, have a key role to play in stewarding the world’s economy away from fossil fuels.”
The latest call for a revolt against the fossil fuel industry has emerged as Shell braces for what is expected to be one of its most hostile annual meetings in London after fierce climate protests in recent weeks that have disrupted the AGMs held by BP, Barclays and Drax.
Leading investment funds, proxy advisers and activist shareholders are preparing to take Shell to task for failing to outline a business strategy that aligns with the Paris climate agreement.
The company’s chair, Sir Andrew Mackenzie, will face calls to be ousted from the board by the Church of England Pensions Board, Britain’s Local Authorities Pension Funds Forum and the UK’s biggest workplace pensions manager, Nest.
Shareholder advisers at PIRC and USS have also recommended that shareholders vote against the reappointment of Mackenzie, or other board members, to protest against what they view as insufficient progress on the energy transition.
The same funds have also backed an activist shareholder resolution from the Dutch climate campaign group Follow This, which is calling for oil companies to set a strategy that aligns with the goal of limiting global heating to within 1.5C of pre-industrialised levels enshrined in the Paris climate agreement.
For the first time, Follow This has won the support of investors that are leading the world’s largest climate-focused investor group Climate Action 100+ in its engagement with Shell. The Dutch funds PGGM and MN are expected to call on the investors within the Climate Action 100+, which represents $68tn (£54.6tn) in assets, to vote in favour of the resolution.
The Follow This campaign has been emboldened by concerns among ethical investors that the oil giant may be preparing to water down its commitments to reduce fossil fuel production in order to take advantage of soaring global energy prices.
A spokesperson for Shell said the company strongly disagreed with the Follow This resolution and with those organisations that had recommended supporting it. The company said there should be an emphasis on “changing the use of energy as much as its supply, and this is reflected in our approach”.
The spokesperson said: “We trust a vast majority of shareholders will agree on the need to collaborate in balancing the supply and use of energy to accelerate the energy transition, while reducing the social costs.”