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Two large investment firms have increased pressure on Australian oil and gas company Santos to set climate targets in line with the Paris Agreement to keep global warming below 2°C.

At Santos’ AGM on Friday, 43% of investors voted for a resolution to have the company set harder emissions targets. The targets would include Scope One, Two and Three emissions. This would mean Santos would need to offset emissions from use of purchased and sold products.

The Santos board insists its existing target of reducing emissions by 5% by 2025 achieving net-zero emissions by 2050 are “demonstrably consistent” with the Paris Agreement.

Climate advocacy investor group Follow This said the vote was “a warning” for other companies. The group currently has similar resolutions planned for the AGMs of Royal Dutch Shell and Norway’s  Equinor.

Investment firms ISS and Glass Lewis both advised investors to vote for the resolution. According to Follow This, they advise two-thirds of all “Big Oil” investors.

In its advice guidelines, ISS said it would not support resolutions that are “unduly burdensome” where “the company has already responded in an appropriate or sufficient manner”. Its advice on the Santos vote said the company was not aligned with the Paris Agreement, and the resolution would “add additional rigour” to its operations. ISS declined to comment specifically on the Santos AGM.

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By GlobalData

Glass Lewis’s Australian investing guidelines call for ‘case-by-case’ judgement, but also said it does not approve of shareholder “micromanagement”. Offshore Technology has approached Glass Lewis for comment.

Follow This founder Mark van Baal believes Santos is just the first to face pressure on the climate. He said: “This voting outcome is very promising for the AGM season in Europe, where Shell and Equinor face resolutions with the exact same request for Paris-aligned targets for emissions of all scopes.

“Consistent investors will also vote for the same climate targets resolutions at Shell and Equinor this year. This would mean a similar landslide in the voting at their AGMs in May.”

On 27 March, Follow This announced it is working with UK-based BP to draft shareholder resolutions based on the climate for the company’s 2021 AGM.