The pension scheme, which last year established a bespoke investment fund to manage the risks of climate change within its members’ portfolios, has nearly £7million invested in Shell on behalf of UK workers.
The resolution was filed by Dutch investor group Follow This and the UK responsible investment charity ShareAction. NEST is pre-announcing its support for the resolution to encourage other investors to follow suit.
NEST will also vote against the company’s pay report for the second year running. It voted against management in 2017 for failing to link executive pay to targets to move towards a low carbon economy. Shell announced ‘ambitions’ to reduce greenhouse gas emissions following shareholder pressure last year, but executives’ incentives still do not support the company’s public commitments. In spite of this, the company is proposing to pay its chief executive Ben van Beurden €9m, in a year when there are also investor concerns about safety issues in its supply chain.
Commenting on its voting decisions, NEST chief investment officer Mark Fawcett said, ‘We commend Shell’s ambition to reduce its carbon footprint but believe it can and should go further in the interests of all shareholders, including 6 million UK workers who invest in the company via their NEST pension.
‘Climate change is driving one of the biggest economic trends of our generation and the oil and gas industry are particularly vulnerable to change. We want to see companies successfully navigating the transition to a low carbon economy and that means them being part of the solution rather than the problem.
‘We think that concrete targets, against which executive incentives can be set, are a sensible way to measure progress and enable investors to assess ongoing risks. We hope to see investors joining together on this vital issue to signal not just to Shell but to the wider oil and gas industry that setting long-term and intermediate targets provides, rather than hinders, the flexibility to adapt and change in line with the internationally agreed Paris goals in a staged and progressive manner.’
In 2017 NEST established, in partnership with global fund manager UBS, a climate aware fund that aims to align its members’ investments with the 2015 Paris agreement. It underweights companies in the highest emitting sectors that are not making the necessary changes to meet the Paris commitments and overweights companies that are showing leadership or working on solutions such as renewable energy and green technologies. The fund also has a voting and engagement strategy to help encourage companies that are not making sufficient progress to do more to future-proof their business models.
NEST sees this resolution as aligned with the objectives of its climate aware fund.
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