Investor initiatives key to driving change, says Director of Ethics and Engagement for Church of England Pensions Board.
Global energy provider Shell has set out its strategy to accelerate its transition to net-zero emissions across all of its products and services, including giving shareholders an advisory vote on its Energy Transition Plan. Shell is the first corporate in the energy sector to do so.
“We will update [the Energy Transition Plan] every three years and seek an advisory vote on the progress made each year,” Shell said.
Shell will be integrating its strategy, ESG ambitions and portfolio under its ‘Powering Progress’ goals, which include generating shareholder value, respecting nature and achieving net-zero emissions. Giving shareholders a vote on its climate ambitions may better allow investors to exert influence – and therefore implement their own ESG targets – over a carbon-intensive company.
This follows ongoing conversations with the Church of England Pensions Board and Robeco – the co-leads engaging with Shell through the Climate Action 100+ investor engagement initiative.
“Engagement is now moving into the complexity of understanding how companies that have set targets intend to deliver them,” said Adam Matthews – Director of Ethics and Engagement for the Church of England Pensions Board – on Twitter.
He added that corporates in carbon-intensive sectors like oil and gas need to have a credible transition to net-zero emissions plan that can be independently assessed by investors. “That is why Shell’s announcement […] is a big step in climate governance and accountability,” Matthews said.
Initiatives such as the Transition Pathway Initiative (TPI) need to continue engaging with corporates across sectors and investors need to maintain pressure, as drastic change can’t just be achieved through changes made by the regulators and policymakers, he added.
Previously, global investors issued a public letter via the Institutional Investors Group on Climate Change (IIGCC) to 36 of Europe’s most carbon-intensive corporates, demanding climate-risk disclosures should be included in all financial reporting.
“This move underpins our belief and shows once again that collaborative engagement with companies we invest in works and is a powerful tool. The financial sector can play an important role in the transition to a low-carbon economy to help combat major challenges such as climate change. We welcome Shell’s move, and we encourage other companies to follow suit,” said Carola van Lamoen, Head of Sustainable Investing at Robeco.