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In the past weeks, multinationals like Akzo Nobel and Unilever had the proverbial “barbarians at the gate” – aggressive activist shareholders looking for ways to cash in on short-term shareholder value. Next week, Shell will have activist shareholders at the gate; they are pushing for long-term shareholder value and aim to support Shell to adapt and align to a long-term sustainable strategy.

Shareholder resolution #21

The Shell annual general meeting is next Tuesday, May 23rd, and is to be held at a theatre in Scheveningen, the Netherlands. Investors in Shell will decide this week whether they mean business about climate change, as they cast their votes for Resolution #21, which requests Shell to commit to the Paris Climate Agreement. Shell has advised its shareholders to vote against the resolution. As you read this, institutional investors in Shell are debating what is the least uncomfortable option: explaining to Shell why they voted for the resolution, or explaining to the rest of the world why they voted against it?

The resolution was submitted by Follow This, a movement of green shareholders in Shell that was founded two years ago by former energy journalist Mark van Baal. The organization aims to support Shell to speed up the energy transition to a renewable energy supply. The movement is organising this support by becoming shareholders in large numbers (almost 3,000 shareholders bought a green share in Shell at and by uniting existing shareholders such as pension funds behind its mission, formulated in the shareholder resolution “Shareholders support Shell to take leadership in the energy transition” (read the full shareholder resolution at The campaign will continue until Shell feels enough support to change course. Follow This hopes that the other oil majors will follow.

“Serious issue” and a solution for it on the agenda


‘Trust [in the oil industry] has been eroded to the point that it is becoming a serious issue for our future,” said Shell CEO Ben van Beurden in March to an audience of his colleagues in Texas (during CERAWeek). Van Beurden has already been wrestling for some time with the reticence of society to see his company as a force for good, as he himself prefers to see Shell. In interviews he names this as the greatest problem in his entire career. Resolution #21 might be seen as a solution for this problem. It is on the agenda of Shell’s next shareholders’ meeting on May 23rd, at which the shareholders vote for resolution #21 that asks Shell to set goals that are compatible with the Paris Climate Agreement to limit the warming of the earth to a maximum of 2 degrees Celsius. The resolution is agnostic concerning business models and technology.

In layperson’s language: Shell will set its entire weight behind the energy transition to a renewable energy supply, for example by building wind farms instead of drilling more oil and gas wells. It is up to Shell to determine in detail how this goal will be met. This goal is good for Shell’s future, good for its shareholders, and good for the world. It is the chance to become a ‘force for good’.

Board of Shell advised shareholders to vote against the resolution

On April 20th, Shell published its voting advice to its shareholders. The board advised the shareholders to vote against the resolution. Shell’s most important objection was that the resolution deprives the company of flexibility, so writes the board in its response to the resolution in the agenda for the upcoming shareholders’ meeting. Had Shell recommended voting for the resolution, the company would have bound itself unambiguously to the Paris Climate Agreement. Shell’s CEO Ben van Beurden wants Shell to be seen once again as a “force for good,” a company that makes a positive contribution to society. “We believe that Shell can be a force for good,” says Mark van Baal, founder of Follow This in response. “Shell needs the support of its shareholders in order to take on that role. That support is what we are organizing.” A sustainable, friendly activist so it seems.

In the shareholder resolution, Follow This is not prescriptive, leaving Shell’s management total flexibility to establish a robust strategy in line with the Paris Agreement. The movement has no intention to sit in the driver’s seat; instead shareholders give support for a direction towards a net-zero emission energy system.

Even for a fossil energy company, aligning with the Paris Agreement makes good business sense. And this is what we can expect of a company that is a proud member of the Dutch Sustainable Growth Business Coalition (DSGBC) together with sustainable front runners like Unilever, Akzo, and Philips.

$2 trillion in stranded assets

Risk profiles have reversed. The risk is no longer with renewable energy companies, but rather fossil fuel firms risk destroying investor returns. These are well-known facts by now, and also facts that Carbon Tracker points out time after time. According to the think tank of British bankers, fossil fuel companies risk wasting up to $2.2 trillion in the next decade, threatening substantially lower investor returns, by pursuing projects that could be uneconomic. The increasing influence of international action to limit climate change to 2˚C and rapid advances in clean technologies could exacerbate this crisis.

“If the industry misreads future demand by underestimating technology and policy advances, this can lead to an excess of supply and create stranded assets,” warns the Carbon Tracker Initiative in the report The $2 trillion stranded assets danger zone (2015). “This is where shareholders should be concerned – if companies are committing to future production which may never generate the returns expected.” he US has the greatest financial exposure with $412 billion of unneeded fossil fuel projects to 2025 at risk of becoming stranded assets, followed by Canada ($220bn), China ($179bn), Russia ($147bn), and Australia ($103bn).

The companies that represent the biggest risk in a demand misread to the climate and shareholders alike in the next decade are for example oil majors Royal Dutch Shell, Pemex, and Exxon Mobil, warns Carbon Tracker. Around 20-25% of oil and gas majors’ potential investment is on projects that will not be needed in a 2˚C scenario, and cancelling them would mean going ex-growth.

Growing support for the resolution

So, it is actually strange that activist shareholders are needed to stir up the rest of the shareholder crowd and the company itself to aim for long-term shareholder value at lower risk. And thus support is growing as we move towards the 23rd. ECGS, the main independent proxy firm in continental Europe as a joint-venture of several independent proxy firms, has decided to recommend investors to vote for Follow This’s shareholder proposal at Shell.

By now, investors with total assets of €200bn have publicly signaled support for the Resolution. Actiam (€56bn), Blue Sky Group (€20.5bn), and Ecofi Investissements (€9.5bn) have already expressed their support. Blue Sky Group explains its vote for the resolution by referring to the Principles for Responsible Investment (PRI, the world’s leading proponent of responsible investment). The Dutch institutional investor MN (€114bn) called the resolution a “fair ask.” Other investors are expressing support behind the scenes in their dialogs with Follow This.

Institutional investors who are members of Eumedion, the representative of Dutch institutional investors whose clientele includes an estimated quarter of Shell shareholders, are likely to vote for the resolution as well, because the wording of the shareholder resolution conforms seamlessly to the most recent position statement of Eumedion concerning the Paris Agreement. The Dutch Association of Investors for Sustainable Development (VBDO) and the investors’ association (private and institutional investors) VEB also expressed support for the green Shell resolution of Follow This. The Ethos Foundation, composed of more than 220 Swiss pension funds and other institutions, urges Shell’s shareholders to vote for item 21 on the agenda of the AGM of Royal Dutch Shell.

My support is there. And actually, it is surprising that we need activist shareholders to guard long-term shareholder value. But this is a fight for the future, not one where we grasp at ever-declining straws to profit from short-term shareholder value, to the expense of the shareholders, the company, and its employees – and most importantly our planet. So let’s get this done and support Van Beurden so that he can practice what he preaches: taking on that greatest challenge and transforming Shell into a force for good. As an entrepreneur, I believe in deeds, not words.