Three UK pension providers, alongside the Australasian Centre for Corporate Responsibility (ACCR), have filed a shareholder resolution with oil and gas supermajor Shell challenging its liquefied natural gas (LNG) strategy.
The resolution was submitted by Brunel Pension Partnership, Greater Manchester Pension Fund and Merseyside Pension Fund, which collectively manage assets totalling $86bn. ACCR also co-filed the resolution, with the non-governmental organisation ShareAction lending support, alongside 100 individual shareholders.
The shareholder resolution calls on Shell to justify the assumptions behind its LNG growth strategy and explain how it aligns with the company’s climate commitments.
This comes as Shell plans to grow its LNG business by 20-30% by 2030, with LNG expected to account for nearly a third of the company’s upstream hydrocarbon production by the end of the decade.
Vaishnavi Ravishankar, head of stewardship at Brunel Pension Partnership, said: “Brunel is deeply concerned about the apparent disconnect between Shell's LNG growth strategy and its stated climate targets and Paris-aligned pathway. We need to see further transparency to assess Shell's alignment with climate goals, particularly in the context of the recent removal of its interim 2035 climate target.”
According to the investors, the resolution is prompted by Shell’s financial exposure to LNG, with the company holding more uncontracted LNG than any other independent oil and gas firm.
Additionally, the investors question Shell’s demand outlook for LNG, suggesting that its growth strategy is based on demand forecasts higher than any scenario predicted by the International Energy Agency, and that these forecasts have not been updated in response to shifts in the global energy market.
Owen Thorne, responsible investment manager at Merseyside Pension Fund, said: “Given the direction of travel, investors urgently require enhanced disclosure to reconcile the high demand forecasts set out by Shell with the fundamentals of energy markets and the views put forward by independent energy forecasters.”
Shell's expansion of LNG was part of its Energy Transition Strategy which received a majority of shareholder votes at its 2024 AGM.
The IEA predicted in its latest Annual Report a global supply glut of LNG, from 2026 on, supply of the gas is set to outstrip demand, leading to oversupply and declining prices of LNG for the next decade.
