UK supermajor Shell has advised its shareholders to reject a climate-related resolution filed by activist shareholder group Follow This and a coalition of institutional investors at its upcoming Annual General Meeting. This follows a similar resolution being blocked by competitor BP in March, which led to legal action and investor backlash.

Resolution Details and Investor Coalition

The resolution, co-filed in January by Follow This and 16 institutional investors managing over €1 trillion in assets, calls on Shell to disclose its strategy for preserving shareholder value in the context of declining oil and gas demand. Specifically, it requests Shell publish an analysis covering planned capital expenditure on oil and gas, free cash flow, and production forecasts for the next decade under different International Energy Agency demand scenarios.

Shell's Opposition and Governance Argument

Shell included the resolution in its AGM notice but explicitly urged investors to vote against it. The company argues the proposal does not alter its risk management, does not enhance existing financial resilience disclosures, and represents poor governance. Shell contends that backing the resolution would inappropriately "embed prescriptive IEA scenarios into the company's constitution," noting these scenarios are not forecasts and must adapt to technological, market, and policy changes. Shell maintains that strategy setting is the board's responsibility, not something to be prescribed by shareholders.

Contrast with BP and Investor Reaction

The situation contrasts with BP's approach, which declined to include the Follow This resolution in its AGM materials, prompting legal action from the activist group and concerns from institutional investors about transparency. In response, proxy advisor Glass Lewis recommended shareholders vote against the re-election of BP's chair at its May AGM. Follow This founder welcomed Shell's inclusion of the resolution but criticized the company's advice to shareholders, stating that Shell's reliance on limited stress-testing leaves investors uncertain about its ability to create value in a competitive, declining market.

Voting Threshold

The resolution will be voted on at Shell's AGM on 19 May and requires at least 75% shareholder support to become binding on the company.