In 2021, amidst a wave of corporate net-zero targets, a campaign group called Investors for Paris Compliance was set up in British Columbia, aiming to use investor pressure to hold Canadian companies to account on their climate promises.
In the five years since, the group has notched up several wins: pressuring National Bank into providing $20 billion of finance to renewable energy, getting Royal Bank of Canada to improve its green finance labels and persuading 20-25% of investors to regularly back climate proposals at annual general meetings (AGMs) for shareholders.
But last month, the group’s then executive director Matt Price put out a statement saying it was shutting down. Despite some progress, Price explained, his organisation had concluded that “investor accountability has reached its limits”.
Companies and their investors often understand that climate change threatens the economic system, Price said. But, he added, they do not respond adequately because they are worried that, if they do, their competitors will not put in as much effort and could therefore gain a financial advantage.
This “tragedy of the commons” situation cannot be fixed by shareholder advocacy, Price said, but instead needs litigation, regulatory action and accountability mechanisms. “Some of our team will take those things on in new initiatives,” he said.
In 2021, amidst a wave of corporate net-zero targets, a campaign group called Investors for Paris Compliance was set up in British Columbia, aiming to use investor pressure to hold Canadian companies to account on their climate promises.
In the five years since, the group has notched up several wins: pressuring National Bank into providing $20 billion of finance to renewable energy, getting Royal Bank of Canada to improve its green finance labels and persuading 20-25% of investors to regularly back climate proposals at annual general meetings (AGMs) for shareholders.
But last month, the group’s then executive director Matt Price put out a statement saying it was shutting down. Despite some progress, Price explained, his organisation had concluded that “investor accountability has reached its limits”.
Companies and their investors often understand that climate change threatens the economic system, Price said. But, he added, they do not respond adequately because they are worried that, if they do, their competitors will not put in as much effort and could therefore gain a financial advantage.
This “tragedy of the commons” situation cannot be fixed by shareholder advocacy, Price said, but instead needs litigation, regulatory action and accountability mechanisms. “Some of our team will take those things on in new initiatives,” he said.
Price’s words echo the findings of a London School of Economics (LSE) report published last month, based on workshops with asset owners and managers in New York, Amsterdam, London and Singapore.
Government policy key
The LSE report noted that “action by investors on climate change is severely constrained by their duties, the limited tools at their disposal and the pathways of technology development”. To be effective, pressure from climate-conscious investors must be coupled with government policy that incentivises green investment and technological innovation, the authors concluded.
An investigation by the Guardian recently found that, despite overwhelming shareholder support for its climate action plan, Australian mining company BHP has carried on buying polluting diesel trucks instead of electric ones. The Australian government subsidises diesel, saving BHP hundreds of millions of dollars a year.
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Lindsey Stewart, director of institutional insights for investment research firm Morningstar, told Climate Home News that investor activism does work but it “doesn’t do everything that people expected it to do towards the beginning of the 2020s”.
“There is a limit to what can be achieved by minority shareholders exercising their votes and engaging with companies. Quite a lot, it does seem, is reliant on the legal and regulatory framework,” he said, adding that the closure of Investors for Paris Compliance shows this “realisation is sinking in a lot more than perhaps it was in 2020, 2021, 2022”.
Decline of investor activism
Stewart said that in the early 2020s, investor activists were pushing companies for “things that were sort of already on the regulatory conveyor belt anyway”, like companies setting targets for their operational (Scope 1 and 2) emissions, disclosing their carbon footprints, and assessing their exposure to risk from climate change.
With this low-hanging fruit picked, green-minded investors have moved on to make demands that are more controversial and have received less support from other investors, he said. He gave examples of just transition reporting, green capital expenditure financing ratios for banks and disclosing emissions from the use of products a company sells, known as Scope 3 emissions.
On top of this, Stewart said, there has been pressure from the “right-wing political establishment in the US” against investors taking climate change into consideration. BlackRock, which manages $9.5 trillion of assets, has walked back its climate commitments after pressure from US Republicans.
More fundamentally, Stewart described the idea that fossil fuel majors would dismantle their oil and gas business and transform into renewables companies as a “pipe dream on the part of environmentalists”. “Why would they have the skill or capability, or even the stakeholder backing, to completely transform a business of that size?” he asked.
Shareholder activism is only possible at privately owned and listed companies, while most investment in oil and gas is now coming from state-owned companies, like Saudi Arabia’s Aramco. In 2025, less than a quarter of investment was from oil majors like BP and Shell.
Business backlash shows power
Yet despite the uphill climb, Mark van Baal defends shareholder activism. He runs an Amsterdam-based campaign group called Follow This, which has tried to get investors to vote for pro-climate resolutions at the AGMs of oil and gas multinationals.
He accepts that success peaked around 2021, but says the effort oil and gas firms are now putting into winning over shareholders and discouraging pro-climate resolutions – which he characterised as “the Empire Strikes Back” – shows the power of shareholder activism, which was previously underestimated.
In January 2024, ExxonMobil sued Follow This, aiming to block the group’s climate resolution. Fearing the case would end up in the Supreme Court, where conservative judges could set an anti-climate precedent, Follow This withdrew the resolution.
But, said van Baal, although the legal battle created a “chilling effect among investors”, it is a “proof point that shareholder pressure works and that they’re really afraid of the shareholders”.
Vote, don’t sell
Stewart and van Baal both agreed that selling, or threatening to sell off shares is not an effective way to change a company’s behaviour.
It allows less climate-conscious investors to buy the shares, they said, adding that there is no evidence that threats to sell shares and therefore lower the valuation over climate concerns have influenced company management.
Van Baal said the share price is set by short-term traders, not long-term shareholders like the pension funds he works with.
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Nonetheless, investors’ engagement should be forceful, van Baal insisted – and not just within their comfort zone of talking to management about sustainability behind closed doors without voting for it at AGMs. “Shareholder democracy is the only democracy where voting is called escalation,” he said.
The Follow This website says that only investors can stop fossil fuel companies destroying the planet. “Marches didn’t change their minds. Lawsuits didn’t stop them. But shareholders can,” it trumpets.
But van Baal told Climate Home News this wording is “too strong” and may have to be revised, adding that shareholder activism just “fits me more than gluing myself to roads” and is a tactic he “stumbled on” 11 years ago.
Legal, political and investor activism can reinforce each other, he added. When Friends of the Earth sued Shell alleging inadequate climate action, for example, the green group’s lawyers cited the company’s rejection of a Follow This resolution as evidence. “The pressure needs to come from all sides,” van Baal said.
