How activist investors plan to take on Big Oil at the 2026 AGM season

Dutch group Follow This on Wednesday launched a newly revised strategy to take on Big Oil at the upcoming proxy season, seeking to increase shareholder pressure on the financial sustainability of fossil fuel business models.

The prominent climate activist group, which paused filing shareholder resolutions last year due to a lack of investor appetite, said it will change tack to focus on the financial risks associated with declining oil and gas demand — rather than requesting emission reduction targets.

The pivot comes as oil and gas majors double down on hydrocarbons and scale back green energy investments as part of a push to boost profit.

Alongside 23 institutional investors with 1.5 trillion euros ($1.75 trillion) in assets under management, Follow This said it has co-filed new shareholder resolutions for the Annual General Meetings (AGMs) of Britain’s Shell and BP.

The resolutions request that both London-listed companies disclose strategies for creating shareholder value under scenarios of falling oil and gas demand, including under the International Energy Agency’s Stated Policies Scenario (STEPS) and Announced Pledges Scenario (APS).

“Every investor in his right mind knows — even BlackRock knows — that climate change is threatening their entire portfolio. They all know it, but they don’t dare to take action,” Mark van Baal, founder of Follow This, told CNBC by video call.

“We concluded that OK, if we want to increase the pressure on the oil companies to change, we need to raise the votes, and we need to raise an extra talking point into the discussion,” Van Baal said.

“They are only going to change if their business model is not profitable anymore, if their license to operate is gone, or if their shareholders steer them in a different direction. We have always been working on the shareholder lever.”

In response, a spokesperson for Shell said: “As with any resolution that meets the procedural requirements, the Board will consider it and respond with a recommendation to shareholders in our Notice of Meeting for the AGM.”

BP did not immediately respond to a CNBC request for comment.

Follow This, which has previously achieved majority investor backing, has seen support plateau at around 20% in recent years, partly due to concerns about legal risks, particularly in the U.S.

It says a change of approach is necessary, given that many investors remain wary about supporting climate-labelled resolutions. Financial risk, by contrast, is an issue boards cannot dismiss as non-financial, Follow This said.

“Everybody is hesitant. Politicians are hesitating because we have a climate denying president in the U.S., while in Europe, right-wing politicians are just repeating that message, and the politicians in the middle don’t dare to talk about climate much anymore,” Van Baal said.

Climate scientists have repeatedly warned that a substantial reduction in fossil fuel use will be necessary to curb global heating, with the burning of coal, oil, and gas identified as the chief driver of the climate crisis.

For Shell, which plans to become a net zero company by 2050, Follow This said the shareholder resolution had been co-filed by current and former Shell employees for the first time. It said the resolution includes five current and 19 former Shell employees.

“The board should be transparent about how Shell plans to create value as fossil fuel demand declines,” said Arjan Keizer, one of the former Shell employees supporting the resolution. He held various roles at the company, including working as the chief strategy officer of Shell’s unit formerly called NewMotion.

“Shareholders and employees need this information to make informed decisions about whether to stay or to go.”

Shell and BP have both watered down their plans to invest in green energy projects in recent years, favoring a renewed focus on their core hydrocarbon businesses.

Speaking to CNBC last year, Shell CEO Wael Sawan said gas and liquified natural gas (LNG) will be critical to the energy transition, adding that the biggest contribution the firm can make is through its LNG sales.

The firm expects global demand for LNG to rise by around 60% by 2040, largely driven by economic growth in Asia and emissions reductions in heavy industry, among other factors.

BP, which became the first oil major to announce a commitment to become a net zero company by 2050, recently announced the appointment of its fourth CEO in six years.

The company said Meg O’Neill, who currently serves as CEO of Australian gas giant Woodside Energy, will assume the role as BP chief executive from April 1, taking the reins from Murray Auchincloss.

“Shareholders are rightly requesting vital transparency from BP on its long-term business strategy,” said Sara E. Murphy, director of system-level investing at the Sierra Club Foundation, one of the co-filing investors.

“Multiple trusted analysts, including the IEA’s STEPS and APS scenarios, project a decline in oil and gas demand. BP’s current strategy, which assumes growth, thus warrants serious investor concern,” they added.