SHAREHOLDERS will vote on Shell's climate transition plans at the energy giant's annual general meeting (AGM) this week, with the fossil fuel trader facing pressure from activists to ramp up its targets.

The energy giant is calling on shareholders to vote in favour of Resolution 20 - approving its climate targets.

Shell's plans include reducing net carbon intensity across its operations by 20 per cent before the end of the decade, alongside a net zero target of 2050.

However, its plans have faced sustained criticism from activist investors such as Dutch group Follow This, which has filed a competing motion - Resolution 21 - that calls for the group to pledge to more stringent short, medium and long-term emissions targets.

Follow This has warned shareholders that Shell's current transition plans are not aligned with the Paris Agreement, which pledges to limit global temperature rises to below two degrees from pre-industrial levels.

It has also argued that without interim targets it will be cost prohibitive and damaging for the business to meet its climate targets.

City A.M. understands its resolution is backed by multiple Dutch institutional investors.

Meanwhile, Royal London Asset Management (RLAM), which holds a £1.2bn stake, announced last week it will abstain on Shell's motion.

Shell has revealed if more than 20 per cent of shareholders vote against Resolution 20, it will engage with dissenting voices over the plans.

Earlier this month, chief executive Ben van Beurden urged shareholders to vote against Resolution 21.

He argued Follow This goes "much further than even the most progressive pathways to net zero in our sector."

The upcoming AGM comes after Shell unveiled record quarterly profits in its first three months of trading this year.

The record performance was powered by soaring oil and gas prices, reflecting the continued importance of fossil fuels to its business, despite its plans to transition to low carbon energy sources.

(c) 2022 City A.M., source Newspaper