SHELL PLC | Disclosure of LNG forecasts and investment alignment with climate targets at SHELL PLC

Status
Filed
AGM date
Previous AGM date
Proposal number
22
Resolution details
Company ticker
RDSB
Lead filer
Australasian Centre for Corporate Responsibility (ACCR)
Resolution ask
Report on or disclose
ESG theme
  • Environment
ESG sub-theme
  • Climate adaptation
  • Net Zero / Paris aligned
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Energy
Company HQ country
United Kingdom
Resolved clause
Shareholders request that the Company disclose whether and how its:
• demand forecast for liquified natural gas
(LNG);
• LNG production and sales targets; and
• new capital expenditure in natural gas assets;

are consistent with its climate commitments, including its target to reach net zero emissions by 2050. These disclosures shall be made by no later than the 2026 Annual General Meeting and shall include the criteria, data sources, methodologies and assumptions used to underpin these claims with reasonable detail, without disclosing any specific matters which are commercially sensitive.
Supporting statement
The proposal seeks clarity for Shell investors as to how the company arrives at the levels of Liquified Natural Gas (LNG) demand in its
LNG Outlook, and how it reconciles this demand with its broader strategy, including its climate commitments. This in turn should enable investors to better appraise the material risks associated with the LNG portfolio, and how the company is managing those risks. Investors have cause to seek enhanced transparency from the company about its LNG Outlook because:
1. Shell is building its strategy around an anticipated level of demand which is higher
than all scenarios put out by the International Energy Agency (IEA) and appears to have
misinterpreted independent analysis in substantiating its demand projections.
2. Shell’s LNG demand outlook has not been materially revised in response to major changes in the global energy market.
3. Shell has more uncontracted LNG than any other independent oil and gas company, making it highly exposed to value erosion should prices be lower than planned for.

The proposal seeks enhanced disclosure related to the company’s LNG business as it is central to the company’s growth strategy and a major source of revenue. LNG is projected to account for 30% of Shell’s upstream hydrocarbon production in 2030. Shell plans to ‘grow [its] world-leading LNG business by an expected 20-30% by 2030’1 and grow liquefaction capacity by 25 to 30% over this period.

It is currently not clear how to assess alignment between the company’s LNG strategy and its commitment to reach net zero emissions by 2050.2 Shell does not explain the temperature outcome associated with its LNG Outlook, nor how it would meet its net zero commitments if the high levels of LNG demand do materialise, without relying on implausibly high levels of negative emissions technologies.

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
VidaCaixaFor
Brunel Pension Partnership (BPP)ForShareholder proposal promotes enhanced availability of information to assist shareholders in reviewing the company's exposure to transition-related risks and opportunities, including through its LNG expansion plans.
Anima SgrForAdditional disclosure will help shareholders understand the company's financial and climate risk as well as its resilience in the face of potential changes to demand for LNG between now and 2050.
Border to Coast Pensions Partnership LimitedForhttps://www.bordertocoast.org.uk/news-insights/border-to-coast-outlines-votes-against-oil-and-gas-majors/
Rothschild & co Asset ManagementFor

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