Shell shareholders reject investor climate resolution

By Ron Bousso and Deep Kaushik Vakil

LONDON (Reuters) - Shell shareholders on Tuesday overwhelmingly rejected a climate resolution filed by an activist group following a meeting punctuated by protests.

In March, Shell weakened a 2030 carbon reduction target, citing expectations for strong gas demand and uncertainty in the energy transition, while focusing on more profitable operations, mainly in oil and gas.

The resolution was filed by activist shareholder Follow This and backed by a group of 27 investors that collectively have around $4 trillion under management. It urged Shell to align its medium-term carbon emissions reduction targets with the Paris Climate Agreement, including emissions from fuels burnt by consumers.

The resolution received 18.6% support from shareholders, compared with just over 20% last year.

Shell's board had urged investors to oppose the resolution, whose backers included Amundi, Scottish Widows, Rathbones Group and Edmond de Rothschild Asset Management.

At the same time, a separate resolution brought forward by Shell's board on its climate strategy won 78.2% support.

"I'm pleased that we have seen the Follow This resolution get an even lower share of the votes compared to previous years. That's a sign of growing trust and confidence in our ability to navigate the energy transition," CEO Wael Sawan told reporters.

The annual shareholder meeting was disrupted several times by climate protesters chanting "Shell kills". Climate protesters also held a demonstration outside the meeting.

MORE OIL

The meeting was dominated by shareholder questions about Shell's energy transition strategy.

"Your board wants to continue with the business model of turning hydrocarbons into petro-dollars ... They don't want to step out of their comfort zone because they don't know how to make profits with clean energy," Follow This founder Mark van Baal said.

In March, Shell said it would target a 15-20% reduction in net carbon intensity of its energy products by 2030 compared with 2016 intensity levels. It had previously aimed for a 20% cut. It also scrapped a 2035 objective, while affirming a plan to cut emissions to net zero by 2050.

The company, however, introduced a new "ambition" to cut overall emissions from oil products such as gasoline and jet fuel sold to customers by 15-20% by 2030 compared with 2021.

End-user emissions, referred to as Scope 3, account for about 95% of the company's greenhouse gas pollution.

"Shell believes continued investment in oil and gas will be needed," Chairman Andrew Mackenzie told the meeting.

The British company also faces a 2021 landmark Dutch court ruling, which it appealed last month, ordering it to reduce its greenhouse gas emissions by 45% by 2030 from 2019 levels.

Scientists say the world must cut greenhouse gas emissions by around 43% by 2030 from 2019 levels to stand any chance of meeting the 2015 Paris Agreement goal of keeping warming well below 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels.

(Reporting by Ron Bousso in London and Deep Vakil in Bengaluru; Editing by David Goodman, Mark Potter and David Gregorio)