UK

Investor activists target climate policies more than ever before, report finds

Investors have launched more environmental campaigns than ever before this year (Danny Lawson/PA)
Investors have launched more environmental campaigns than ever before this year (Danny Lawson/PA) Investors have launched more environmental campaigns than ever before this year (Danny Lawson/PA)

Investors have launched more environmental campaigns than ever before this year, as more companies are coming under pressures from a wave of shareholder activism, a new report has found.

The UK is a top target for activist investors as major firms like Shell, BP, HSBC and The Restaurant Group have faced shareholder rebellions this year.

The number of activist campaigns has grown steadily each month since January, resulting in 25 launched across Europe in May, according to professional services firm Alvarez & Marsal (A&M).

The growing momentum bucks the trend of previous years where new campaigns dipped after annual general meeting (AGM) season, typically and March and April.

Environmental campaigns have become more prominent as activists ramp up calls for corporations to commit to stronger climate policies. They accounted for 12% of all activist campaigns in 2023, compared to just 4% in 2019.

Energy giants BP and Shell are among the big UK businesses to have faced shareholder revolts as more ethically-conscious investors used activism to drive change.

Investors and large pension funds demanded that Shell strengthen its goals for reducing greenhouse gas emissions at its AGM in May, while BP faced a rival climate proposal from activist group Follow This.

Meanwhile, a group of investors and pension funds coordinated by ShareAction put pressure on banking giant Barclays to stop financing new oil and gas fields this year.

For the first time, there are more than 100 major funds using activist tactics across the continent, A&M’s analysis found.

Furthermore, while there has been fewer mergers and takeovers this year, activists have turned their attention to corporate transformation campaigns.

Shell’s annual general meeting
Shell’s annual general meeting Energy giant Shell was among the UK firms to face environmental activism campaigns led by investors this year (Yui Mok/PA)

HSBC was embroiled in a dispute with its top shareholder, Ping An Asset Management, over demands to split up the bank and spin off its Asia business, which it wanted to improve performance and growth opportunities in the continent.

The plan to break up the bank was rejected at its AGM, but HSBC has since unveiled plans to bolster revenues in Asia amid the pressure.

Elsewhere this year, Wagamama and Frankie & Benny’s owner The Restaurant Group was hit by a shareholder revolt over the £792,000 pay package handed to chief executive Andy Hornby. Activist fund manager Oasis Management protested against the “unpalatable” pay after four years of deep losses.

The flurry of activism is likely to continue throughout the year and into 2024, A&M said.

The firm said there are at least 140 European companies at higher risk of shareholder revolts unless they urgently address their own performance.

Malcolm McKenzie, a managing director at A&M, said: “As uncertainty in the market eases in the second half of the year and into 2024, we predict that a wave of activism will sweep across Europe.

“Management teams should expect significantly increased levels of shareholder scrutiny in the coming months and, with even more funds taking activist positions, anticipate demands from multiple activists at a time.”