Blog from Cliff Weight, Director, ShareSoc. These are my personal views and not necessarily those of ShareSoc.
Support doubles to 30%, for the FollowThis! climate resolution at Shell AGM.
Shareholders tend to vote with Boards. Boards tend to be slow to react to shareholders views. The trend would suggest that the Shell Board now needs to change its stance, so that it moves its thinking alongside its shareholders and hence avoid a defeat in a future year.
This is clearly very important, I think. Without shareholder pressure, boards will not change their stance.
However, for shareholder pressure to be effective, shareholders must have the information they need to be able to hold boards to account. At present, much of the information that is presented is incomplete or seeks to put a ‘gloss’ on companies’ environmental performance that is often unjustified or misleading.
ShareSoc made a response to the recent BEIS consultation on mandatory climate change disclosure. We supported the thrust of the Government’s intent. We did however caution about the potential for greenwashing, partial disclosure, game playing by outsourcing and offshoring emissions in one’s supply chain, etc. On this occasion we were not able to submit a joint ShareSoc/UKSA response.
Just to be clear, UKSA didn’t object to mandatory disclosure of climate-related reporting in its submission to BEIS. What UKSA objected to was the way in which the government appears to be going about it. UKSA considers that the government has a penchant for ambitious targets and grand gestures, but often without any credible plan for their achievement. UKSA considers the haste with which the government is pushing the mandatory-reporting initiative through ahead of COP26 only adds to suspicions that it is being done primarily to put a tick in the box and score some Brownie points.
Apart from high level references to adopting the four pillars of the TCFD in climate-related reporting, the BEIS consultation gave little or no clarity on issues such as assurance of information; consistency, continuity and coherence of the measures against which companies would report; or on meaningful reporting on climate-related risks. These were all points on which we criticised the BEIS proposal in our feedback.
Both the ShareSoc and UKSA policy teams take climate matters very seriously. This being the case, we believe that, if climate-change reporting is to be of value, it must be done right. Serious initiatives on all aspects of climate control by governments or anyone else are welcome.
The FRC working party on the future of the AGM will continue to debate whether it is better to mandate a vote on climate change, whether to nudge Boards to put forward their resolution or to react only to shareholder resolutions. Peter Parry from UKSA and Cliff Weight of ShareSoc are on the FRC working party and will continue to put forward the views of individual investors.
We know that climate change is a contentious issue and for many raises strong views. We will read with interest comments on this post.