Shell survived its first “say on climate” shareholder vote this week with mixed results. While the 89% vote in favour of the energy giant’s climate action plan looks big enough to stifle dissenting voices, it is still short of the 95% considered overwhelming shareholder support for a management measure.

Shell may be relieved that a high-profile say on climate vote has been won in the full glare of media attention. Others remain to be convinced.

Since Shell asked shareholder to vote on its climate action plan there has been widespread coverage of its climate plan, much of it focused on criticism from campaign groups and some investors. Anticipation had been building of this week’s showdown.

And though the plan was passed, the result was enough to indicate some voters held reservations. There were further blows during the AGM. A separate resolution filed by Dutch shareholder activists Follow This, calling for more ambitious targets in the plan, received 30% of shareholder support. A 20% vote on a resolution at odds with management is officially considered “significant opposition” by the Investment Association’s Public Register of shareholder votes. The vote at Shell narrowly escapes becoming part the Register.

Shell’s commitment to continued exploration for fuel deposits may not have helped. And its cause may have been undermined by publication of a report from the International Energy Agency on voting day which said the route to net zero carbon emissions by 2050 means “no investment in new fossil fuel supply projects” as of now.

A public spotlight on climate details

Taken together though, the votes will ammunition for some to continue arguing that Shell is failing to pull its weight on tackling climate change, despite publishing a detailed action plan.

Campaigners for “say on climate” voting—which is neither mandatory nor binding—may look on with some satisfaction that it not only concentrates management attention on climate change plans but brings a public and investor spotlight to bear on the details. And detail is what investors like.

Tim Bush, head of governance and financial analysis with shareholder advisory firm Pirc, watched the Shell vote closely. He says investors may have to go further in challenging companies on climate.

“We support the principle of say on climate resolutions. More work is required of investors to challenge consistency with Paris 2050 goals and nearer term goals to achieve a credible strategy to survive transition, whether by growth or shrinking.”

He also highlights the particular problems of energy companies. “The statement of the IEA puts the rebuttal presumption on rapid shrinkage of fossil fuel use and extraction.” That looks set to cast a shadow over the climate plans of oil and gas producers like Shell for some time to come.

Pirc says it will vote against all boardroom chairs in companies “where climate change matters aren’t properly addressed”.

Other observers are more emphatic that say on climate itself is unlikely to work. According to Louise Rouse of Rouse Research and Consulting, an advisor on investor engagement to campaign groups, says that say on climate votes are undermined by an assumption that investors have the ability to analyse a climate plan and will then act accordingly.

“Say on climate as currently formulated—and as implemented at Shell—simply asks for companies to present their plan for approval,” she says. “It makes no demands as to what such a plan should be. As such it actually risks, as we’ve seen at Shell, the production and formal shareholder endorsement of utterly inadequate plans.”

‘Sustained shareholder pressure’

Support for say on climate votes has been growing since hedge fund manager Sir Chris Hohn launched the Say on Climate campaign group and forced a vote on Spanish airports operator Aena in October last year. Hohn himself urged a vote against the Shell plan.

In a letter to Forbes magazine as part of a debate with Oxford University’s Robert Eccles over a say on climate, Hohn supported say on pay. “It works because it is a reasonable request by shareholders which can garner widespread support, whilst requiring companies to commit to concrete actions that will deliver the transition to net-zero.”

Eccles had said climate votes could “insulate” directors from accountability and that attention should focus on individual directors. He also said investor efforts would be better focused on a few companies in key sectors to set an example rather than attempting to persuade all companies at the same time. “I believe that banging a few heads hard will lead to more rapid change than gently tapping on many heads at the same time,” he wrote.

Hohn’s view is “ad hoc voting without public explanation against individual directors has so far failed to deliver results.” He adds: “Instead, we need sustained shareholder pressure through systematic engagement and voting, based on evidence, to secure the necessary change.”

Meanwhile, influential investors have thrown their support behind climate votes. In April Legal & General Investment Management said it was in favour of climate votes.

Sacha Sadan, then LGIM’s director of investment stewardship, said: “Say on climate provides us with a complementary opportunity to send a consistent message to companies as a collective body of shareholders.”

Shell’s vote marks an important moment in the effort to tackle climate change, but it will also signal that for many companies these moves are not without pain. While some corporates have embraced say on climate, there is yet to be a widespread movement. That may yet come.