Shareholders sue Shell over “flawed” climate plan
The directors of Shell are being personally sued for failing to manage climate-change risks posed to the business. The lawsuit, which could set a precedent for shareholder-led climate action against corporate boards, was filed by environmental-law charity ClientEarth. It alleges that Shell’s 11 directors have breached their legal duties by implementing a “flawed” climate plan.
ClientEarth’s senior lawyer, Paul Benson, said: “[Shell’s] board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success — despite the Board’s legal duty to manage those risks.”
While ClientEarth is a minor shareholder, the lawsuit has gained support from a number of other Shell investors across Europe. Among the group are UK pension funds Nest and London CIV, Swedish national pension fund AP3, and French asset manager Sanso IS.
The whole supporting group holds 12 million of Shell’s seven billion shares, which amounts to less than 0.2% of its investor base.
But clearly, they have the energy for this case.
Disney proxy fight “is over”
In one of the most public battles for a boardroom seat in recent years, activist investor Nelson Peltz has withdrawn his bid for a seat at Disney’s table.
It comes in the wake of a restructure plan announced by Disney yesterday, that will cut $5.5 billion in costs and roughly 7,000 of its jobs in order to refocus on “creativity”.
“For nearly 100 years, storytelling and creativity have fueled The Walt Disney Company… Our strategic restructuring will return creativity to the center of the company, increase accountability, improve results, and ensure the quality of our content and experiences,” said Disney CEO Bob Iger in the statement.
Clearly this was music to Peltz’s ears. “The proxy fight is over,” announced a representative for Trian Partners, the investment firm led by Peltz. “This is a win for all shareholders.”
Now he can let it go.
Why this proxy season looks prickly
The 2023 proxy season is set to be the most challenging in years, according to a new report by The Conference Board.
There is likely to be a rise in shareholder resolutions appearing on AGM agendas, an increase in “anti-ESG” proposals, and more votes that will challenge governance practices and directors’ compensation.
The report also predicts that shareholder activism will rise, due to the current economic climate but also the implementation of the SEC’s universal proxy rule, which changes how shareholders can vote in contested director elections.
Proxy advisor Glass Lewis explains the rule: “Under the universal proxy card structure, the company and dissident parties will continue to produce their own voting card — but regardless of who produces them, each voting card must list all nominees who are up for election, whether they were nominated by the company or the dissident.”
In other words, going into battle for board seats just got easier.
And it’s started already
The world’s single largest investor, Norway’s sovereign wealth fund (which manages more than £1 trillion on behalf of the Norwegian people), has warned company directors that it will vote against their re-election to the board if they don’t tackle the climate crisis, reports The Guardian.
Carine Smith Ihenacho, chief governance and compliance officer of Norges Bank Investment Management, said: “We all know, we live in a world with a climate crisis, and we have a role to play and then companies have a role to play… So we have stepped up our expectations towards the companies when it comes to setting targets to get to that net zero [emissions] by 2050 target. And we will push the companies more in setting targets and understanding how they’re going to get there.”
Sounds like climate-fighting talk.
