The Church Commissioners, which manage the Church of England’s £10bn endowment fund, will vote against all directors at the upcoming annual general meetings of oil and gas firms Exxon, Occidental Petroleum, Shell and Total, citing a “failure to meet climate change objectives”. Similarly, the Church of England Pensions Board has said it plans to vote against the chair of Shell. 

 

Olga Hancock, acting head of responsible investment at the Church Commissioners, said high energy prices produced huge profits at oil and gas companies last year.  

 

This was “a golden opportunity to invest very significantly in the transition to a low carbon economy, and one that was comprehensively missed,” Hancock said. “So we will be supporting all the relevant climate resolutions and voting against all of their directors.”  

 

Oil and gas companies are under increased scrutiny as institutional investors worry about long-term returns. BP recently came under fire for backtracking on some of its climate commitments. The Universities Superannuation Scheme, Brunel Pension Partnership, Border to Coast, LGPS Central and Nest all voted against the reappointment of BP’s chair Helge Lund at the firm’s last AGM. 

 

At the Church of England Pensions Board, Adam Matthews, chief responsible investment officer, said investor engagement with the oil and gas sector is at a crossroads.
 
The Pensions Board will be voting against the chair and directors of Shell and for the ‘Follow This | Shareholders change the world’ shareholder resolution at this year's AGM on 23 May, Matthews said, which demands that Shell align its scope 3 emissions with the Paris Agreement.

“A disorderly climate transition caused by delayed action, when instead we should be doubling down, will not only miss the goals of the Paris climate agreement but directly work against the financial interests of pension funds and other long-term investors and their beneficiaries,” he argued writing in the Telegraph newspaper. 
 
He said some companies have shown genuine leadership, thanks in part to the dialogue with investors, even if their targets are not ambitious enough. 
 
However, “as a fund and along with the rest of the market, we are receiving the signals from Shell’s new chief executive of a return to the pursuit of maximising short-term returns”, he wrote. 

 

While the war in Ukraine has implications for energy security in the short term, fossil fuels must not become producers’ long-term strategy again, he added. Matthews urged investors to rethink their approach and focus on the demand side rather than just the supply side.  

 

“Informed by the pace at which the demand side can transition, investors should explore with governments how phasing out usage as quickly as possible can be achieved in line with the Paris Agreement and informed by the International Energy Agency. But in a fair way that does not penalise developing and emerging economies,” he added. 

 

In 2018, the Church of England’s General Synod called for the church’s National Investing Bodies to divest from fossil fuel companies not aligned with the goals of the Paris Agreement by 2023.   

 

The Church of England pension fund holds a relatively small number of shares in Shell – around 0.004% of the total, as at the end of March 2023, according to Shell. 

  

A Shell spokesperson said it has worked with the Church of England Pensions Board on the energy transition for almost a decade, with an emphasis on changing the use of energy as much as its supply, arguing that it is the pension fund that has changed its position, rather than Shell. 

  

“Our strategy remains unchanged - to become a net zero energy company by 2050 or sooner. And in the last year we’ve continued to invest in low carbon energy and made very good progress towards our targets to reduce emissions,” the spokesperson said. 

 

Shell bought Denmark-based Nature Energy Biogas at the start of this year for about $2bn and says it has increased the number of EV charge points it owns or operates globally by more than 60% in the past 12 months.  

 

“At the same time, we will continue to invest in producing the energy the world needs today and for the foreseeable future. All of our investments have to provide a rate of return that our investors demand,” the spokesperson added, citing “the need to collaborate in balancing the supply and use of energy to accelerate the energy transition, while reducing the social costs”. 

 

Shell has been in focus as campaign group ClientEarth is trying to bring a claim against its directors to the High Court, with the support of master trust Nest and local authority investment pool the London CIV. LGPS Central has offered to provide evidence in the case. 

 

 

   

Exxon and Occidental have not responded to enquiries; mallowstreet could not reach Total.