Shell Promises Climate Risk Disclosure to Shareholders, but What About Its Political Spending?

, Research Director, Center for Science and Democracy | January 30, 2015, 2:11 pm EST
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UPDATE, May 15, 2015:

At Shell’s Annual General Meeting on May 19, investors will consider a shareholder resolution calling for greater disclosure of the risks climate change poses to the company’s bottom line. Shell’s call for shareholders to unanimously approve this resolution is noteworthy for its strong endorsement of investors’ demands for greater transparency around the company’s political activities on climate change.

More than 130,000 people have now called on Shell to sever ties with the American Legislative Exchange Council, a political group that disseminates climate denial and cut-and-paste legislation obstructing clean energy policies among policymakers in the U.S. Shell’s response thus far has to been to make excuses that fail to address the core issue. But there is no denying ALEC’s role in climate denial.

shells-gameMoreover, the external reviewers of Shell’s annual Sustainability Report recently found the company’s excuses for associating with groups like ALEC unconvincing, “especially given that Shell remains in associations perceived by many to be blocking climate change action.”

As I’ve written below, Shell’s endorsement of the shareholder resolution leaves no room for ALEC. Their investors’ statement of support for the resolution highlights clear expectations for oil and gas companies on climate change. Shell’s funding of ALEC is out of line with investors expectation that oil and gas companies “engage with public policy makers and other stakeholders in support of cost-effective policy measures to mitigate climate change risks and support low carbon investments.” ALEC opposes putting a price on carbon, a policy Shell claims elsewhere to robustly support.

With BP leaving ALEC last month, Shell is under enormous pressure to join the corporate exodus. If they do, Shell can begin to demonstrate its new commitment to transparency is more than just talk.


 

Yesterday, Royal Dutch Shell made headlines when it announced it would respond to shareholder demands for better consideration and disclosure of the company’s risks from climate change. The move was welcomed by shareholders and activists looking to see Shell better incorporate climate change and its impacts into its business model.

The announcement signals that Shell—more so than other oil and gas companies—may be willing to accept the science of climate change and incorporate its risks into its business. But even if Shell follows up with the climate risk report it promises, there will still be one glaring point where the company fails to accept the science.

The incompatibility of Shell’s ALEC membership

As Shell considers and discloses its climate risk, it should also reevaluate its association with anti-science groups like ALEC. Photo: Flickr/Richard Masoner/Cyclelicious

As Shell assesses and discloses its climate risk in response to shareholder demands, it should also reevaluate its association with anti-science groups like ALEC. Photo: Flickr/Richard Masoner/Cyclelicious

A few weeks ago, I wrote about why Shell should leave the American Legislative Exchange Council (ALEC). Leading among these reasons is the inconsistency between Shell’s science-supporting public statements on climate change and its membership in ALEC, a group that spreads climate misinformation to influence decision makers and the public. ALEC’s extreme and non-science-based position on climate change does a disservice to lawmakers who should be focused on how to address climate change, rather than hearing misrepresentations of the science. Since that post, more than 100,000 people have joined me in urging Shell to dispel ALEC’s climate disinformation.

Shell’s announcement this week is an important step. It creates a pathway for Shell to seriously consider its risks from and position on climate change, and it provides a mechanism for shareholders and the public to get better information about how Shell manages risks around climate change. However, this move won’t necessarily include a major piece of Shell’s activities around climate change—its indirect political activities through third party groups like ALEC and the American Petroleum Institute. As we’ve seen, many companies including Shell do much of their climate policy advocacy through these groups rather than through direct lobbying. So if we are talking about a company’s actions around climate change, the conversation needs to include company affiliations with these groups.

Aligning Shell’s position on climate change

As Shell responds to shareholders on this resolution, I ask the company to consider re-assessing and disclosing its political spending. As a company moving toward greater integration of climate science into its business plans, Shell should recognize the incompatibility of this science-accepting position with its affiliations with groups like ALEC. I know Shell can do better to align its position and activities with science.

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