Days ahead of Shell’s annual general meeting on 19 May, investor group Follow This and a coalition of long-term asset owners have intensified scrutiny of how the company would protect shareholder value if oil and gas demand were to decline. The co-filers have issued a public letter, which coincides with renewed climate litigation in the Netherlands that targets Shell’s future investment plans, bringing governance, strategy and legal risk into sharp focus.

The letter urges investors to support Resolution 23, which asks Shell’s board to explain how resilient its strategy would be in a scenario where the market for oil and gas contracts, rather than merely cycling through price volatility. The resolution lands at a moment when courts, regulators and investors are increasingly examining not past emissions, but forward-looking capital allocation decisions.

A different category of risk

Shell has urged shareholders to vote against the resolution, pointing to its ability to sanction new projects at a breakeven price of around $35 per barrel. Follow This and the co-filers argue that this framing sidesteps the central risk.

Price sensitivity tests exposure to cyclical shocks, whereas declining demand is structural. The co-filers argue that Shell’s current disclosures implicitly assume that produced volumes will always find buyers. Resolution 23 is intended to test that assumption, not to prescribe a transition pathway or constrain management discretion.

The request is narrowly framed as a disclosure ask. For companies with long-cycle assets and multi-decade investment horizons, scenario analysis around demand decline is increasingly expected by capital markets. The question is whether Shell’s board can demonstrate that it is actively overseeing those assumptions.

Why long-term investors are pressing the issue

The resolution is co-filed by European pension funds and asset owners including Bernische Pensionskasse, Swiss Federal Pension Fund PUBLICA, West Yorkshire Pension Fund and Lothian Pension Fund. Their focus is explicitly long term.

They point to repeated projections from the International Energy Agency, governments and regulators that global oil and gas demand is expected to peak and decline. While the timing and pace remain uncertain, the co-filers argue that the direction of travel is no longer speculative. For investors allocating capital over decades, understanding how Shell’s strategy performs under those conditions is material to assessing resilience and long-term value.

The letter also reflects a portfolio perspective. As diversified investors, the signatories argue that unmanaged transition risks in the energy system threaten economy-wide stability, with implications that extend beyond any single holding. On that basis, they view disclosure on declining demand scenarios as relevant to stewardship decisions.

Lessons from past demand shocks

The co-filers draw a pointed comparison with 2020, when a sudden demand collapse led Shell to cut its dividend by 66 percent. That episode illustrated how quickly demand shocks can translate into capital allocation decisions and shareholder outcomes.

Their argument is that a sustained structural decline would pose a challenge of a different order. Resolution 23 is framed as a forward-looking attempt to understand how Shell’s strategy would respond before markets force the issue.

Legal pressure moves upstream

The investor push comes as Shell faces a new climate lawsuit in the Netherlands that shifts legal scrutiny upstream into corporate strategy. Friends of the Earth Netherlands, Milieudefensie, is asking the courts to prevent Shell from developing new oil and gas fields and to require a progressive reduction in emissions between 2030 and 2050.

Unlike earlier cases focused on historic targets, the claim centres on whether Shell’s future investment plans are compatible with a duty of care under Dutch law. It builds on Shell’s own disclosures, including plans to grow liquefied natural gas sales by around 4 to 5 percent a year in the near term and to maintain material oil production beyond 2030.

For investors, the immediate financial impact is uncertain and proceedings may take years. The significance lies in how legal risk intersects with governance. Courts are increasingly being asked to examine forward-looking capital allocation, reinforcing the case for boards to demonstrate robust oversight of long-term demand assumptions.

What the AGM vote signals

Resolution 23 is not a first-time intervention. Variants of the proposal have been filed repeatedly at Shell and other oil and gas majors over recent years, reflecting a view among some long-term investors that existing disclosures have not fully addressed demand-side transition risk.

The persistence of the request has shifted its significance. The question is no longer whether boards have heard the concern, but whether they are prepared to engage with it at the level of strategy and capital allocation.

Shell is one of the few oil and gas majors to put a resolution of this type to a shareholder vote in 2026, particularly as Follow This continues a parallel dispute with BP after it refused to circulate a similar proposal.

The outcome on 19 May will be closely watched. Strong support would reinforce expectations that boards should explicitly address declining demand scenarios in strategy disclosures. A weaker result would suggest that, despite rising legal and regulatory pressure, many shareholders remain comfortable with current reporting.

Either way, the vote will signal how far investors are prepared to press boards on the intersection of demand risk, capital allocation and long-term value, at a time when litigation is making that question harder to avoid.

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