LGPS Central turns up the heat on Shell

LGPS Central is among the latest investors to offer support to environmental charity ClientEarth following its filing of a legal claim against the board of directors at Shell.

As reported in the last issue of LAPF Investments, the claim states this mismanagement will have a severe and negative impact on the company’s long-term financial viability, and as such the board is breaching its fiduciary duty to shareholders.

LGPS Central has now issued a statement that outlines the pool’s reasons for pushing for more intense engagement.

It stated that the pool has participated in Climate Action 100+ (CA100+) engagement with Shell since 2020 and even applauds Shell for taking “strong steps in target setting and increasing transparency related to the energy transition.”

However, several concerns remained about the transition strategy and the alignment with the Paris Agreement.

“Shell has not provided sufficient assurance of alignment towards the company’s own net zero by 2050 target,” said the statement. “For these reasons, LGPSC voted against Shell’s Energy Transition Strategy at the company’s 2021 AGM and the company’s Energy Transition Progress Update in 2022.

“Considering the significant overlap between the points raised in the ClientEarth claim and our own engagement objectives for dialogue with Shell, the RI&E team has undertaken a thorough assessment of potential risks and benefits of supporting the claim.

“Following meetings with ClientEarth, Shell, our external managers, and several pension fund peers, the decision was taken to offer a copy of a recent engagement with Shell to the court as evidence of our concerns.

“This was submitted in acknowledgement of the alignment between the fundamental objectives of the claim and our own engagement expectations for Shell. This decision was not taken lightly.”

The LGPS Central statement said robust plans are essential if both sides of the supply chain are to achieve transition and that it will “uphold this high bar in all our engagements regardless of sector”.