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Investor Comment On Agreement Reached With Shell On Lobbying Practices

Stephanie Pfeifer, Chief Executive, Institutional Investors Group on Climate Change (IIGCC) and a member of the Climate Action 100+ global Steering Committee, explains: “IIGCC welcomes and is glad to have supported this first of its kind statement between investors and an oil and gas major. Short- and long-term climate targets, linked to remuneration and a clear commitment on lobbying practices, provide a model for others across the sector to follow.”

Royal Dutch Shell Lobbying Practices

“As UN climate talks get underway in Poland this week, the importance of the oil and gas sector working to a well below 2°C future couldn’t be clearer. It is now down to the sector to demonstrate they understand this, as the investors with $32 trillion in assets involved in Climate Action 100+ will continue to make clear their expectations.”

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“A key objective of Climate Action 100+ is for companies to set long-term emission reduction targets in line with the goals of the Paris Agreement. The framework laid out in the joint statement provides a robust system to track progress over time, including on short-term targets, annual reporting and plans to report within financial filings. Investors working through IIGCC will continue to evaluate Shell’s progress closely to ensure that it continues to increase ambition. We also commend Shell for agreeing to review its lobbying practices in line with IIGCC’s members’ expectations.”

Anne Simpson, the inaugural chair of the Climate Action 100+ steering committee and CalPERS director of board governance and strategy, explains: “We applaud the joint statement by Shell and lead investors for Climate Action 100+ The commitment by Shell to fully respond to the engagement shows the value of dialogue and global partnership to deliver on the goals of the Paris agreement on climate change. Shell is setting the pace, and we look forward to other major companies following their lead.”

Peter Ferket, Chief Investment Officer of Robeco, said: “When it comes to meeting the demands of the Paris Agreement on climate change, we believe it is necessary to strengthen partnerships between investors and their investee companies to accelerate progress towards reaching such an ambitious common goal. This joint statement is an example of such a partnership. As institutional investors in Shell we continue to support Shell on its journey in the energy transition, aiming for other companies to follow suit.”

Speaking as the Co-lead of the Climate Action 100+ dialogue with Shell, Adam Matthews, Director of Ethics and Engagement of the Church of England Pensions Board, and Board Member of the Institutional Investors Group on Climate Change, said: “Investors like ourselves will be able to track Shell's performance through the Transition Pathway Initiative (TPI), an independent academic tool at the London School of Economics which is supported by funds with $11 trillion in assets.

“This joint statement is the first of its kind, sets a benchmark for the rest of the oil and gas sector and shows the benefit of engagement - aligning institutional investors’ long-term interests with Shell’s desire to be at the forefront of the energy transition.”

Sacha Sadan, Director of Corporate Governance at Legal & General Investment Management (LGIM), said: “LGIM very much welcomes this positive result from an open dialogue between Shell and its shareholders in setting a target that’s in line with the global Paris goal. The need to finance an orderly and successful transition to a low-carbon economy is paramount and this shows our mutual commitment to make it a reality.”

Bill Galvin, Chief Executive Officer of the Universities Superannuation Scheme (USS), said: “We are delighted that Shell has taken the lead and committed to the process to steer the company’s transition to a low-carbon future. This outcome clearly demonstrates the effectiveness of shareholders working together to engage constructively with companies to achieve meaningful change. We look forward to continuing to work with Shell to maintain this momentum, which is in the collective interest of all of us.”

Emma Howard Boyd, Chair of the Environment Agency and Chair of the Environment Agency Pension Fund Investment Committee, said: “The recent IPCC report has shown that we have 12 years to step up and take action. As the world gathers at COP 24 in Poland, we hope that this unique joint statement between institutional investors and an oil and gas major, will inspire other leaders to take bold action. We would encourage the rest of the sector to follow Shell’s lead.”

Corien Wortmann, Chair of pension fund ABP, said: “This is an important step, as Shell's management is making further progress towards contributing to meeting the Paris climate goals. That Shell has now embedded its ambition in its remuneration policy offers confidence that Shell is really committed to it. As long-term responsible investors and shareholders in Shell, we will stay in discussion with the company and follow the progress with interest. We hope that other companies will follow Shell.”

The Archbishop of Canterbury, Justin Welby, said: “As Governments meet at the United Nations climate negotiations in Poland, I am delighted to see a unique announcement on climate change between investors and one of the largest companies in the world - Royal Dutch Shell. This sets Shell on a path to reducing the Net Carbon Footprint of its energy products. The reduction is supported by a clear framework of targets and transparent reporting.

“I am pleased that the Church of England Pensions Board has worked in collaboration with other investors Robeco, APG, the Environment Agency Pension Fund and USS, and with the management of Shell. Together they have demonstrated to the world what is possible when we focus our combined energy and creativity in dealing with one of the most pressing issues facing humanity today.”