Shell produces a <2C scenario

| 11 May 2016
Blog & Articles

Commenting on Shell’s ‘below 2C’ climate change scenario, Preventable Surprises CEO Raj Thamotheram said: 

Preventable Surprises strongly welcomes Shell’s ‘below 2C’ climate change scenario.  This recent statement is in stark contrast to determined attempts by Chevron and Exxon to downplay the impact of Paris. Why this difference? Although they share essentially the same investor base, the European climate of opinion leads major investors to be much more attuned to the theory of change outlined by Preventable Surprises – climate change is leading to systemic risks, which require large investors – for whom divestment is impractical – to engage robustly with the companies they own.

On this logic, it’s only a matter of time before investors begin posting resolutions asking for <2C transition plans. Shell has decided to pre-empt – by producing a hypothetical plan.  It is clearly work in progress – there is no commitment to put it into practice.  And arguably until the other O&G majors do the same, Shell has reason to be cautious.  Companies are not yet convinced about how solid investor support really is: NRG being a case in point.  It is for these reasons that we say that the key climate actors today are not the fossil fuel companies per se but rather the owners of these companies, especially the mega (and mainly US) fund managers.  

Individual as well as institutional investors need to require the fund managers they employ to vote in favour of  climate risk disclosure initiatives at the Chevron, ExxonMobil and the Southern Company AGMs on May 25th. Keep in mind that institutional investors have supported essentially similar resolutions at European companies from 2015 and Canadian companies this year. The “business as usual” approach among these U.S. based fossil fuel companies suppliers and users should no longer be acceptable anywhere and contrasts with the approach of other O&G majors.

This is also an opportunity to begin to reconcile differences between the UK/European and U.S. fund management communities and indeed, inconsistent voting by the same fund manager in different parts of the world. There’s no time to waste. All investors need to have a commitment to requiring climate risk disclosure and <2C transition plans today. We can make a more certain and desirable future now. Shell is moving in the right direction.