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Energy AGM Season Roundup 2018

written by Remo Bebié

This brief summary focuses on the energy sector votes in the US and UK. At Anglo-Dutch oil major Shell, the Follow This resolution calling for more stringent climate action failed to come close to gaining a majority vote. Meanwhile, a quarter of shareholders revolted on pay, while climate change remained a hotly debated issue at the AGM in May (Financial News, Times, Guardian, Financial Times, Reuters). Just ahead of the vote a consortium of investors wrote a statement calling on Shell (and all other oil firms) to do more on climate (WSJ, Financial Times).

In the United States, a total of twenty 2-degree scenario analysis proposals that were filed with various oil majors and utilities firms. Of these, 12 have been withdrawn as companies have committed to conduct the requested analysis voluntarily.

The largest of these companies (by market capitalisation) that faced a climate resolution at their AGM this year were Kinder Morgan and Anadarko. At both companies a majority of investors backed the 2°C scenario analysis demand, voting in favour of the resolutions. This has not gone unnoticed by the companies facing investor pressure and it has also drawn new opposition to the stage. The Wall Street Journalnoted in early April that "bigger is no longer better in the oil patch" and pointed out that firms like ConocoPhillips cut spending and outperformed on the stock market. A few weeks later the Journal followed up with an account on how, despite being awash in cash, Exxon and Chevron have not ramped up capital expenditure dramatically. It appears shareholder pressure on climate issues may have had an effect to discipline big oil on capital expenditure (WSJ). The question now is if that discipline will hold in the current oil price and earnings environment (see section 1).

Some argue that the quiet US AGM season, with many withdrawn resolutions, underscores the power of investors on climate action (Responsible Investor, Ceres). Other commentators argue that asking oil majors to disclose climate risks is like "bringing a knife to a gunfight". Instead of risk disclosure, they call for investors to mandate companies to perform business model transition planning.

Towards the end of the AGM season, an interest group called the "Main Street Investors", made its first appearance. Headed by George David Banks, a former Trump energy advisor, the group aims to limit the way large investors such as BlackRock or Vanguard execute shareholder powers on issues like climate change. They argue that large asset managers concentrate too much power and do not use that power in the interest of small, individual shareholders (Axios). The New York Times recently took a closer look at the group, which is housed inside the National Association of Manufacturers, and finds that it represent industry interests rather than those of small-scale investors.

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