Investors Intensify Pressure on Big Oil Firms to Establish 2030 Climate Targets

By Ron Bousso and Sabrina Valle

LONDON – A coalition of investors has put forth resolutions calling on four of the leading oil and gas companies globally to establish comprehensive climate targets for 2030. This move reinvigorates scrutiny on the industry after a year where the focus shifted towards energy security due to rising geopolitical tensions.

The activist organization Follow This announced it is co-filing these resolutions with six major institutional investors that collectively manage $1.3 trillion in assets. These resolutions are timed ahead of the annual general meetings of notable companies including BP, Chevron, Exxon Mobil, and Shell next year.

The resolutions urge these companies to commit to reducing greenhouse gas emissions by 2030, specifically addressing Scope 3 emissions – emissions linked to fuel sold to customers, which constitute a significant portion of overall pollution from the sector.

In recent years, there has been escalating pressure on the oil and gas industry to take action against climate change, with Follow This’s climate-related resolutions gaining traction among shareholders. However, such efforts faced challenges last year as investor attention shifted to the implications of rising energy prices and the need for energy security in light of Russia’s invasion of Ukraine.

While BP, Shell, and Chevron have all set some targets for greenhouse gas reduction by 2030, including Scope 3 emissions, Follow This argues these targets do not align with the United Nations’ objectives to limit global warming to 1.5 degrees Celsius above pre-industrial levels. Exxon, which does not set Scope 3 targets, claims the methodology used to calculate them is flawed, arguing that it inadvertently shifts the carbon footprint responsibility elsewhere.

Chevron has indicated it values shareholder input and will consider any proposals received, whereas BP has not responded to requests for comments. Shell maintains its targets are in accordance with U.N. climate goals, but a spokesperson criticized Follow This for proposing resolutions they consider overly simplistic and not in the best interests of the company. They expressed commitment to engaging constructively with investors.

The group of investors supporting the resolutions includes Edmond de Rothschild Asset Management, Degroof Petercam Asset Management, and Achmea Asset Management, though Follow This did not disclose the names of additional backers. Jean-Philippe Desmartin, head of Responsible Investment at Edmond de Rothschild Asset Management, acknowledged Shell’s progress on climate targets but noted the absence of an absolute 2030 emissions reduction target.

Shell, BP, and other European counterparts, such as TotalEnergies and Eni, have outlined strategies aiming for net-zero emissions by 2050, intending to decrease fossil fuel output while expanding renewable energy initiatives.

Mark van Baal, the founder of Follow This, emphasized that focusing on Scope 3 emissions by 2030 leaves no room for the oil majors to misrepresent their commitments regarding net-zero emissions by 2050.

In the United States, 2022 also witnessed a surge of initiatives driven by Republican politicians and conservative investors aimed at steering executives away from environmental, social, and governance (ESG) issues.

Activist investor Strive Asset Management, for example, is advocating for a shareholder vote at Chevron’s spring meeting to overturn a requirement for Scope 3 emissions reductions. Additionally, Exxon and Chevron have previously been successful in blocking attempts to file climate-related resolutions with regulatory authorities.