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Church of England attacks Shell chief in row over green targets

The Telegraph

Church of England attacks Shell chief in row over green targets

The clergy’s pension fund will vote to oust Wael Sawan after accusing him of backtracking on climate commitments

By Matt Oliver: 9 May 2023 • 6:00am

The Church of England is pushing to oust the chief executive of Shell following a row over green investments.

The clergy’s Pension Board is preparing to vote to oust Wael Sawan and chairman Sir Andrew Mackenzie at Shell’s upcoming shareholder meeting later this month.

It comes amid claims that the oil and gas giant has backtracked on net zero commitments.

The pension board, which manages the clergy’s £3bn retirement pot, is concerned that London-listed Shell has rowed back on promises to switch to clean power after the Ukraine war sent oil and gas prices soaring.

Writing in the Telegraph, Adam Matthews, chief responsible investment officer for the Church of England Pension Board, said it was “with genuine regret” that he was preparing to vote against Mr Sawan and Sir Andrew but claimed closed door talks on climate issues had ground to a halt.

Mr Matthews said: “We have lost confidence in the direction of the company.”

The Church’s retirement fund accused Mr Sawan of downplaying the importance of renewables and prioritising short-term profits since he took over as chief executive in January.

Shell reported an annual profit of $40 billion (£32bn) last year, the biggest in its 116-year history. The Church accused the company of refusing to use the cash windfalls to ramp up investment in renewables and instead handing $12bn to shareholders.

Mr Matthew said this approach “may provide short-term dividends” but risked making the global switch to green energy “less likely and more unstable”.

A spokesman for Shell said it “strongly disagrees with the pension board’s changed position” and said: “Our strategy remains unchanged – to become a net zero energy company by 2050 or sooner.”

Shell argued that it is ramping up production of climate-friendly energy sources faster than the world is adopting them.

The company has set a target of reducing its own emissions by 50pc by 2030 and recently announced that it was already over halfway towards meeting that goal.

Climate targets for oil and gas companies have proved a flash point on both sides of the net zero debate.

Two years ago activist Wall Street investor Daniel Loeb called for Shell to be broken up, claiming its investments in renewable energy were being undermined by its larger oil and gas operations.

The public intervention from the Church of England represents a change of approach. It has until now threatened to sell down investments if management failed to make climate commitments.

The votes against Mr Sawan and Sir Andrew will be largely symbolic given the Church of England Pension Board’s relatively miniscule investment in Shell. It is understood that the pension fund has sold down its stake in Shell from £6.5m to £1.2m since 2018.

However, the activism could prompt other investors to put pressure on the company.

The Church is part of the Climate Action 100+ group, which pressures companies responsible for the most greenhouse gas emissions – including oil companies such as BP and Shell – to gradually switch to renewables. Other members include Blackrock, Legal & General and Aviva.

Shell’s rival BP is also grappling with a backlash for scaling back its climate commitments.

The Church pension board plans to vote against Shell’s proposed green energy strategy and will instead back an alternative proposed by climate campaign group “Follow This”, which led a similar rebellion at BP’s AGM last month.

A Shell spokesman said: “Shell and the Church of England Pensions Board have worked together as partners on the energy transition for almost a decade, with an emphasis on changing the use of energy as much as its supply. We continue to believe that is the right approach and strongly disagree with the pension board’s changed position.

“Our strategy remains unchanged – to become a net zero energy company by 2050 or sooner. And in the last year we’ve made very good progress in reducing emissions and investing in low carbon energy.

“We trust a vast majority of shareholders will agree on the need to collaborate in balancing the supply and use of energy to accelerate the energy transition and minimize the social costs.”

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