Managing climate risk: Voting intentions for oil and gas majors

Posted on May 16th, 2024

Managing climate risk is essential to Border to Coast as a long-term investor representing the best interests of our 11 local government pension funds.

Critical to our ability to manage this risk is the reduction of portfolio emissions and we have adopted robust climate targets and policies to support this, including strengthening our stewardship approach to the oil and gas sector.

As part of our engagement escalation with the oil and gas sector, we further strengthened our climate voting policy for the 2024 AGM season and increased the number of companies we publicly pre-declared our climate votes for ahead their AGMs.

We vote against the Chair of the Board of oil and gas companies which fail to fully meet the first five indicators of the Climate Action 100+ net zero benchmark, which includes short, medium, and long-term emission reduction targets, and decarbonisation strategy.

We also vote against the Chair if the company is scored 3 or lower by the Transition Pathway Initiative, meaning they have not yet developed a strategic understanding of climate risks and opportunities or integrated this into business strategy and capital expenditure decisions.

Chevron and Glencore

We voted against the Chair of the Board at Chevron and Glencore at their respective AGMs. We also voted against a management resolution at Glencore, which is seeking support for its Climate Action Transition Plan.

Both companies have been subject to CA100+ collaborative engagement and have not yet adopted adequate net zero targets and decarbonisation plans.

• We voted against Chevron because it does not have a net zero target by 2050 or sooner, and whilst it does have a medium-term target that covers at least 95% of its Scope 1 and 2 emissions and its most relevant Scope 3 emissions, it is not aligned with limiting global warming to 1.5C. Chevron also fails to meet CA100+ net zero benchmark indicators for its decarbonisation strategy.
• We voted against Glencore because it lacks an adequate phase out plan for thermal coal revenues.
• We voted against the management resolution at Glencore in adherence to our voting policy to oppose ‘Say on Climate’ resolutions if, following our analysis, we believe it is not aligned with the Paris Agreement.

Shell and TotalEnergies

We voted against the Chair of the Board at oil majors Shell and TotalEnergies. We also voted for a shareholder proposal at Shell calling for a medium-term target that covers Scope 3 emissions and is aligned with the Paris Agreement.

We have been directly engaging with both companies covering transition plans, medium-term targets, and capital expenditure alignment over the last year as an active steward of our Partner Fund assets. Yet while we have seen important improvements in some areas, our expectations for medium term targets are yet to be met. Both companies have also been subject to Climate Action 100+ collaborative engagement but have not yet adopted adequate net zero targets and decarbonisation plans.

• We voted against Shell because its short, medium, and long-term targets are not aligned with limiting global warming to 1.5C, and it fails to meet CA100+ net zero benchmark indicators for its decarbonisation strategy.
• We voted for the shareholder proposal at Shell in adherence to our voting policy to generally vote in favour of shareholder resolutions that are aligned with the Paris Agreement, taking a ‘comply or explain’ approach.
• We voted against TotalEnergies because its short, medium, and long-term targets are not aligned with limiting global warming to 1.5C, and it fails to meet CA100+ net zero benchmark indicators for its decarbonisation strategy.

Conoco Phillips and Phillips 66

We voted against the Chair of the Board at ConocoPhillips and Phillips 66 at their respective AGMs. These companies have been subject to CA100+ collaborative engagement since its inception and have not yet adopted adequate net zero targets and decarbonisation plans.

• Conoco Phillips has a net zero target by 2050 or sooner but it does not include relevant Scope 3 emissions, its medium-term target also does not include relevant Scope 3 emissions and the target is not aligned with limiting global warming to 1.5C. ConocoPhillips also fails to meet every CA100+ net zero benchmark indicator for decarbonisation strategy.
• Phillips 66 does not have a net zero target by 2050 or sooner, and whilst it does have a medium-term target that covers at least 95% of its Scope 1 and 2 emissions and its most relevant Scope 3 emissions, it is not aligned with limiting global warming to 1.5C. Phillips 66 also fails to meet every CA100+ net zero benchmark indicator for decarbonisation strategy.

For more on our voting approach, see our Responsible Investment policies HERE.

 

NB. This page was updated ahead of the respective AGMs throughout May 2024.

 

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