Shareholders Question Shell's LNG Strategy and Climate Goals
By Virginia Furness
LONDON (Reuters) - Shell's plans to increase sales of liquefied natural gas (LNG) have been called into question by a by major group of shareholders that has filed a resolution asking whether the strategy is compatible with a goal to cut carbon emissions.
Shell is the world's largest LNG trader and CEO Wael Sawan is betting on growing demand, but analysts and climate activists have raised concerns about the implications for climate targets.
Shareholders, including Brunel Pension Partnership, Greater Manchester Pension Fund and Merseyside Pension Fund, with combined assets of $86 billion, have asked Shell to provide more information on how its growth assumptions are compatible with global energy demand and its plans to be net zero by 2050.
Shell's demand outlook is higher than all scenarios published by the International Energy Agency and has not been materially revised despite major changes in the global energy market, the investor group said.
LNG is projected to account for 30% of Shell's upstream hydrocarbon production in 2030, while its demand outlook is 301% higher than the IEA's Net Zero Emissions by 2050 scenario.
This raises governance questions and financial risks for investors, said Sarah Brewin, company strategist at the Australasian Centre for Corporate Responsibility, a co-filer of the resolution.
Vaishnavi Ravishankar, head of stewardship at Brunel Pension Partnership, said the group is "deeply concerned about the apparent disconnect" between Shell's LNG and climate strategies.
"We need to see further transparency to assess Shell's alignment with climate goals, particularly in the context of the recent removal of its interim 2035 climate target," Ravishankar said.
In March, Shell weakened its 2030 carbon reduction target, citing expectations for strong gas demand and retired a previous target to reduce its carbon intensity by 2035, following a similar decision by peer BP.
A Shell spokesperson said the company's shareholders have "strongly backed our strategy to deliver more value with less emissions at successive AGMs, with the growing role of LNG at the heart of this strategy".
"We are confident in the future role of LNG in our strategy," the spokesperson said.
The resolution was also supported by 100 independent shareholders represented by UK-based responsible investment NGO ShareAction.
(Reporting by Virginia Furness; editing by Barbara Lewis)
