Shell's Climate Crossroads: The LNG Resolution at the 2025 AGM

The 2025 Annual General Meeting of Shell plc (LSE:SHEL) will mark a pivotal moment for the oil giant, as shareholders vote on a resolution demanding transparency around its liquefied natural gas (LNG) strategy and its alignment with climate goals. The meeting, set for May 20 at the Sofitel London Heathrow Hotel, has become a flashpoint in the broader battle over the future of fossil fuel investments amid the energy transition.

At the heart of the debate is a shareholder proposal co-filed by institutional investors and advocacy groups, including the Brunel Pension Partnership and the Australasian Centre for Corporate Responsibility (ACCR). The resolution seeks detailed disclosures on how Shell’s LNG demand assumptions—outlined in its 2024 LNG Outlook—fit with its net-zero targets. The crux of the conflict: Shell’s projections for LNG demand by 2050 exceed the International Energy Agency’s (IEA) Net Zero Emissions scenario by 301%, raising questions about whether the company’s strategy is a bridge to sustainability or a barrier to it.

The LNG Growth Plan Under Scrutiny

The resolution’s proponents argue that Shell’s bullish LNG outlook—projecting a 30% increase in global demand by 2030—is inconsistent with climate science. For instance, Shell’s assumptions exceed even the IEA’s Announced Pledges Scenario (which assumes governments follow through on current climate promises) by 92%. This discrepancy has led investors to demand clarity on two fronts:

1. Climate Alignment: How does Shell reconcile its LNG growth with its pledge to become a net-zero emissions business by 2050?
2. Financial Risks: With Shell being the most exposed major oil company to uncontracted LNG, what happens if demand falls short of projections?

The stakes are enormous. LNG is central to Shell’s strategy, accounting for roughly 15% of its operational cash flow. If the market shifts toward renewables faster than expected, stranded assets could weigh heavily on the company’s balance sheet.

A Split Between Strategy and Stakeholders

Shell has defended its LNG push, calling it a “growing role” in its net-zero journey. The company points to its investments in hydrogen and carbon capture, alongside LNG, as part of a diversified energy portfolio. However, critics note that Shell removed its interim 2035 carbon reduction target in 2023—a move seen as weakening its climate commitments.

The shareholder coalition, representing 0.25% of Shell’s shares, argues that the LNG resolution represents a “litmus test” for the company’s credibility. While that may seem like a small stake, institutional support from pensions and advocacy groups amplifies its influence. The resolution also highlights a broader trend: investors are no longer satisfied with vague sustainability pledges. They want data—specific, auditable data—on how companies plan to navigate the energy transition.

What’s at Stake for Investors?

The outcome of the AGM could send ripple effects across the energy sector. If shareholders reject the resolution, it might embolden companies to double down on fossil fuel investments. Conversely, a strong vote in favor could pressure Shell—and its peers—to rethink aggressive LNG expansion.

Financially, the risks are stark. Shell’s 2024 interim report warned of “volatility” in LNG markets due to overcapacity and shifting demand. Meanwhile, renewable energy costs continue to decline, with solar and wind projects now cheaper than new LNG plants in many regions. The IEA estimates that $1.2 trillion in fossil fuel assets could become stranded by 2030 if climate policies tighten, a scenario Shell’s LNG-heavy strategy appears poorly positioned to withstand.

Conclusion: A Crossroads for Climate Accountability

The 2025 AGM is more than a vote on LNG—it’s a referendum on Shell’s ability to balance profit and planetary boundaries. With LNG demand projections 301% above the IEA’s net-zero scenario and shareholder support for transparency growing, the company faces a critical choice.

Investors should watch two key metrics:
1. Voting Results: A majority vote for the resolution would signal heightened demands for climate accountability.
2. LNG Exposure: Shell’s LNG cash flow contributions and exposure to uncontracted volumes (currently ~20 million tonnes annually) will be key indicators of financial risk.

History suggests the outcome could be tight. In 2024, a competing climate resolution was rejected, but the LNG proposal’s institutional backing and data-driven focus may shift the tide. For long-term investors, the AGM underscores a broader truth: the era of unchecked fossil fuel expansion is ending. Companies like Shell must now prove they can adapt—or risk being left behind.

In the words of ShareAction’s Simon Rawson, “Shareholders want to know whether Shell’s LNG strategy is a bridge to net zero or a bridge too far.” The answer could define the company’s—and the sector’s—future.