January 29, 2015 / 6:50 PM / 3 years ago

Shell bows to investor pressure on climate risk

WASHINGTON, Jan 29 (Reuters) - In a rare move, oil major Shell on Thursday backed a resolution proposed by activist investors to force the company to recognize climate change risks by improving its transparency.

Shell’s executive vice president of investor relations JJ Traynor said the company would urge shareholders to vote for the resolution at the annual general meeting in May.

The announcement coincided with Shell saying Thursday that it would cut $15 billion in spending but continue to drill in Alaska’s Arctic.

The resolution was filed by the Aiming for A coalition of UK investors representing close to £200 billion ($300 billion) in assets and calls on Shell to disclose additional information in five areas related to climate change in its annual reporting from 2016.

The group said in the resolution it was concerned about the “longer term success of the company, given the recognized risks and opportunities associated with climate change.”

The resolution requests more information on the company’s operational emissions management, the resilience of its assets to climate change, low-carbon energy research and development and investment strategies, relevant key performance indicators and its public policy positions on climate change.

Shell said the company will provide the additional disclosures in its next annual report.

With global oil prices falling around 60 percent since June, public interest and shareholder groups have been warning energy firms about the financial and climate risks of investment in carbon-intensive fossil fuel projects.

ConocoPhillips, which previously announced plans to cut 2015 spending by 20 percent in December, announced Thursday it would slash a further $2 billion in spending. South Africa’s Sasol also announced it would shelve an $11 billion gulf coast gas-to-liquid plant.

Andrew Logan, an analyst at sustainability-focused investor group Ceres, said such moves by a company to recommend an activist group’s resolution is rare and reflects the pressure placed on Shell to address climate change.

Logan said, however, that Shell is likely to face more investor scrutiny because of its decision to move ahead on drilling in Alaska’s Arctic.

“Investors will be watching closely to see how the company explains that decision in light of the concerns raised in the shareholder proposal that Shell itself now says it supports,” Logan said.

Barrister Elspeth Owens of shareholder group ClientEarth, which assisted with the filing of the resolution, said the Shell decision “throws down the gauntlet for BP,” which received the same resolution by Aiming for A earlier in January.

£1 =$1.50 (Reporting By Valerie Volcovici; Editing by Grant McCool)

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