Climate activist shareholder group pushes BP, Shell on plans for declining oil demand

Climate activist shareholder group Follow This and more than 20 other investors have filed resolutions calling on BP and Shell to disclose how they will create value if global demand for oil and gas declines, the group said on Wednesday. 

The resolutions reflect a strategic shift on the part of the Dutch activist group, after it said in April that a lack of investor appetite had forced it to suspend its nearly decade-long campaign of seeking stronger commitments from major oil and gas producers to emissions cuts. 

Follow This started filing climate resolutions at shareholder meetings in 2016 and attracted peak shareholder votes in subsequent years of 80% at Phillips 66, 60% at Chevron, around a third at Exxon and Shell and a fifth at BP. 

The group will concentrate on demanding that BP and Shell disclose longer-term strategies under scenarios of declining oil and gas demand, the group said. 

COMPANIES SCALING BACK RENEWABLE ENERGY PLEDGES

Along with other producers, the two companies have cut back their renewable energy pledges to focus investment on oil and gas projects. 

The resolutions request BP and Shell to publish reports covering at least 10 years, detailing capital expenditure, production plans, and free cash flow projections under declining demand scenarios, including from the International Energy Agency. 

“As with any resolution that meets the procedural requirements, the Board will consider it and respond with a recommendation to shareholders in our Notice of Meeting for the AGM (Annual General Meeting)," a Shell spokesperson said. Shell's annual meeting will take place in mid-May. 

BP did not immediately respond to a request for comment. 

The resolutions' co-filing investors, who manage about 1.5 trillion euros ($1.75 trillion) in assets, include Achmea Investment Management and the Ethos Foundation, as well as a number of European local pension funds.

The IEA said in November it expected oil demand to peak around 2030, under a scenario that takes account of policies that have been put forward but not necessarily adopted.

However, under a different scenario based on existing government policies and excluding aspirations to achieve climate goals, the IEA predicted that global oil and gas demand could grow until 2050, a departure from previous expectations.

($1 = 0.8557 euros)