Two of the UK’s largest pension funds threatened to vote against the renewal of some directors at Shell Plc [SHEL:US] and BP Plc [BP:LN] at their annual meetings if the two oil giants fail to improve their commitments to reducing carbon emissions, as reported by Financial Times on March 12. The two funds, the UK’s Universities Superannuation Scheme (USS) and Borders to Coast, together manage about GBP130bn (USD158bn) in assets. The USS plans to vote against directors at oil companies that don’t disclose a breakdown of their spending on projects that add to their carbon footprint and against any banks that fail to reveal their climate transition plans. Similarly, Borders to Coast will vote against the chairs of oil companies that fail to establishemission reduction targets, as well as those failing to integrate climate risks into their business strategy and capital expenditure. 

The two UK pension funds are using their voting power to push oil companies and banks to accelerate their efforts toward meeting climate goals. BP and Shell are facing criticism from environmentalists and some shareholders for not overhauling their businesses more quickly, despite their commitments to reaching net-zero emissions by 2050. In February, BP scaled back its industry-leading commitment to reducing oil and gas output by 40% by 2030, turning to a new plan that will lead to only a 25% reduction in oil and gas production. Meanwhile, the comments from Shell’s newly appointed chief executive that the group might produce more oil for longer also raised increased concerns.

Sources:

https://www.ft.com/content/fb180e33-b18d-414d-aa32-3fbba6bc92bb

https://www.bloomberg.com/news/articles/2023-03-12/uk-pension-funds-may-vote-against-shell-bp-directors-ft-says

https://www.ft.com/content/419f137c-3a83-4c9c-9957-34b6609bcdf7

https://www.ft.com/content/7254abf7-fbe9-4c0c-ac16-077d22a1b1c4