A record number of global institutions have co-filed a shareholder resolution at Shell, calling for the UK-headquartered oil giant to align its emissions reduction targets with the Paris Climate Agreement.

The resolution, led by Dutch activist group Follow This, has been backed 27 institutions, including Nest, Rathbones, Brunel Pension Partnership and Amundi.

It proposes that Shell set its medium-term targets for scope three greenhouse gas emissions to be consistent with efforts to limit global warming to 1.5C above pre-industrial levels.

Scope three emissions, or value chain emissions, are those from the use of oil and gas by consumers and make up the bulk of the firm’s impact.

The resolution leaves the strategy for achieving these targets up to the board.

Mark van Baal, founder of Follow This, called the support an “extraordinary step”, showing how dedicated the investors are to tackling the climate crisis at its source.

He said: “This escalation of 27 leading investors puts the call for emissions reductions by energy companies front and centre for all institutional investors.”

Follow This, which files similar resolutions at big oil firms every year, said Shell’s shareholders will be asked to support the resolution as an advisory vote at this year’s annual general meeting, expected to take place in London in spring.

This means that if the resolution passes, the board will only have to consider the request rather than take specific action, a move aimed at lowering the bar for support from other investors and voting proxy advisors.

Shell’s medium-term targets covering scope 3 emissions to decrease its Net Carbon Intensity (NCI), a measure of emissions per unit of energy sold, by 20% by 2030 and 45% by 2035, compared to a 2016 baseline.

The company said that by the end of 2022, it had reduced its NCI by 3.8%, the majority of which was through emissions avoidance and reduction activities.

A Shell spokesperson said the firm believes its climate targets are “aligned with the more ambitious goal of the Paris Agreement”.

But Follow This disputes the claim, citing the Climate Action 100+ benchmark, which says Shell’s medium-term emissions reduction targets are not aligned with the goal of limiting global warming to 1.5C.

The activist group added that the company does not sufficiently demonstrate how it will reach its targets, leaving a lack of clarity over how its approach contributes to a significant reduction in global emissions this decade.

Mr Van Baal said the record number of co-filers could be attributed to Shell seemingly backtracking on some of their climate commitments last year.

At its New York capital markets day in June, the company announced that it had dropped its plan to reduce oil production by between 1% to 2% each year until 2030.

The company declared victory, stating the target was reached eight years early after it sold off oil fields to others, which will extract that oil instead.

While the Follow This resolution faces difficult odds to pass, it will pile pressure on the board and chief executive Wael Sawan.

Mr Van Baal said the support for this year’s resolution is by far the strongest they have seen at any oil major’s AGMs.

It surpasses the 17 institutions which backed Follow This’s resolution at French oil giant TotalEnergies’ AGM last year, helping it to secure 30% of votes, which can be considered a sizeable shareholder revolt.

In terms of Shell, he said: “We expect votes to increase as more investors follow their leading peers by voting for change at Shell, which is the bare minimum they can do.”

“Large shareholders hold the key to tackling the climate crisis with their votes at shareholders’ meetings.

“Shell will only change if more shareholders vote for change.

“The resolution is designed to give Shell a shareholder mandate to drive the energy transition.”

At the firm’s AGM last year, the Follow This resolution sparked a shareholder rebellion when it secure a fifth of the votes, against the board’s recommendation.

The institutions who have co-filed this year’s resolution include Candriam, Group AMA, Edmond de Rothschild Asset Management, AP4, London CIV, Mandarine Gestion, Ethos Foundation, Emmi, Amundi and Greater Manchester Pension Fund.

Matt Crossman, stewardship director at Rathbones Group, said: “With 2023 being the warmest year on record, and COP28 signalling ‘the beginning of the end of the fossil fuel era’ we are more aware than ever that climate change will create winners and losers.

“Through our engagement with Shell and other companies at the forefront of the energy transition, we hope to create incentives for senior management to align business strategies with net-zero scenarios that will help the world thrive.”

Faith Ward, chief responsible investment officer at Brunel Pension Partnership, said: “We are escalating our engagement by co-filing this resolution led by Follow This, as it is essential that companies demonstrate credibility in their climate ambitions in alignment with the Paris Agreement.

“We believe that a reversal of progress on climate at oil and gas majors is misaligned with our and our beneficiaries’ long-term interests.”

A Shell spokesperson said the company will publish its first Energy Transition Strategy update, on which there will be an advisory vote at the AGM.

They said: “We remain committed to constructive engagement with our shareholders, and we believe our climate targets are aligned with the more ambitious goal of the Paris Agreement.”

“The 2024 resolution from Follow This is broadly unchanged from their 2023 submission, which was rejected by shareholders (as its variations have been every year since first being submitted in 2016).

“Shell’s Board has previously advised shareholders that the Follow This resolution was unrealistic and simplistic, that it would have no impact on mitigating climate change, have negative consequences for our customers, and was against the interests of the company and our shareholders.

“Continued, targeted investment in oil and gas will remain necessary to meet global energy demand over the coming decades as the world transitions to a lower carbon future.”