Northern LGPS (NLGPS) has reported that its engagement with the oil and gas supermajor Shell has “improved” following the company’s u-turn on its climate commitments.
In its latest Stewardship report, NLGPS detailed that between April and June 2023 the Local Authority Pension Fund Forum (LAPFF), to which NLGPS funds belong, met with the chair of Shell, Sir Andrew Mackenzie.
Northern funds hold over 1% of Shell’s shares, the oil giant is therefore a large financially material holding for the pool.
The £46bn Local Government Pension Scheme (LGPS) pool stated that after a “difficult” start to the meeting, the “tone and content of the engagement improved”, with an open conversation about the challenges of decarbonisation.
This engagement was after Shell announced earlier this year that it was dropping plans to cut oil production each year for the rest of the decade. It also stated that it would invest $40bn in oil and gas production between 2023 and 2035.
At this year’s Shell annual general meeting (AGM) in May, LAPFF had backed a climate activist resolution put forward by campaign group Follow This.
NLGPS explained that it also had concerns about Shell’s transition plan and annual report as it contained multiple disclaimers, raising doubts about its viability.
The pension pool said that engagement is still ongoing with Shell, but “LAPFF noted at Shell’s AGM that Sir Andrew Mackenzie indicated the company would be presenting a new climate transition plan before the 2024 AGM”.
NLGPS added that it is also engaging with BP, which, like Shell, has backtracked on its climate commitments by reducing its emissions reduction target by 2030 from 40% to 25%.
The stewardship report said that LAPFF had a “cordial meeting” with BP’s [now former] chief executive officer, Bernard Looney, and gained “some explanations of BP’s thinking”, but engagement with the company is still ongoing.
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