This year, investors were offered a chance to steer the world’s largest oil majors towards a low-carbon future by supporting climate resolutions at Shell, BP, ExxonMobil and Chevron asking the companies to set “meaningful” medium-term targets for reducing their indirect scope 3 emissions

Voting results from the 2023 proxy season in Europe and North America show that investors largely declined this opportunity, despite increasingly urgent warnings from climate scientists about the need to dramatically curb global emissions. 

To gauge changing investor sentiment, Energy Monitor has analysed almost-identical resolutions filed by activist group Follow This at these four companies, both this year and in 2022, because they represent a clear demand for decarbonisation at the world’s most significant oil companies, and they are directly comparable between the years.

Voting results, compiled by non-profit Ceres, show that on average, 14% of investors supported these resolutions in 2023 – a fall from 24% last year.

Each of these four companies, apart from ExxonMobil, have set some targets incorporating scope 3 emissions. However, Follow This deems them to be misaligned with the Paris Agreement's ambition to limit global warming to 1.5°C above pre-industrial levels.

As such, the group refiled these (previously failed) resolutions again this year in conjunction with six major institutional investors overseeing $1.3trn in assets, demanding that the four oil majors set medium-term Scope 3 emission reductions, “provid[ing] these companies with a shareholder mandate to lead the energy transition, causing an industry-wide ripple effect”. 

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It was only at British oil major BP, which has already set ambitions covering scope 3 emissions but not yet committed to a firm target, that shareholders (narrowly) increased their supportive vote share compared with last year. In 2023, 17% of BP’s shareholders supported the resolution, compared with 15% in 2022. 

BP had recommended investors vote against the resolution, as did management at Shell, which said at the time of filing, via a spokesperson, that Follow This “has consistently proposed shareholder resolutions that are simplistic, unrealistic and against the best interests of Shell”. 

In a further blow to climate action, Shell announced last week it was abandoning plans to reduce oil production each year until the end of the decade. The move followed a February announcement from BP that it was scaling back its oil and gas emissions reduction target from 35–40% by 2030 to 20–30% within the same time frame.

Climate resolutions: US has a problem 

A significant fall in support for the Follow This climate resolutions across the four oil majors came from investors at US oil majors ExxonMobil and Chevron

The resolution at ExxonMobil received just 11% of the vote compared with 27% in 2022, while at Chevron support plummeted from 33% to 10%.

Read more from this author: Polly Bindman

It will not be revealed until later this year how individual asset managers voted on these resolutions, although recent behaviour indicates that the world’s largest asset managers – BlackRock, Vanguard and State Street Global Advisors – may have further rescinded their support for these goals, with January 2023 analysis by the investment non-profit ShareAction revealing that the ‘Big Three’ investors reduced their support for climate resolutions at energy companies last year in relation to 2021.

Furthermore, US investors, in particular BlackRock, have been caught in the crossfire of an anti-ESG backlash emerging in the US in recent months. In his latest annual letter to shareholders published in March, BlackRock CEO Larry Fink insisted, more robustly than ever before, that BlackRock’s role is as a steward of client interests and not an engineer of change.

Speaking to Energy Monitor in March, Felix Nagrawala, research manager at ShareAction, suggested that oil majors’ bumper profits earned in the wake of Russia’s war in Ukraine, leading to increased dividends and buybacks for shareholders, could disincentive investors from voting against executives. 

Editor's note: This article first appeared on our sister site Energy Monitor.