Activist Spotlight: Breaking Down Loeb's ESG Effort at Shell

Third Point believes a breakup could unleash significantly more investment in renewables, while the oil major’s recent Permian asset sale shows the company may be more focused on shareholders with a buyback interest. 04 November 2021 Activist Spotlight: Breaking Down Loeb's ESG Effort at Shell

Ron Orol of The Deal covers in-depth Third Point LLC’s Dan Loeb newest target, Royal Dutch Shell plc. The activist wants to break the Company into two — or maybe four parts — and argues that the oil giant’s current strategy tries to appeal to too many types of investors but satisfies no one. More specifically, in an 27 October 2021 letter, Third Point suggested that the Company could attract new investors if it were to separate its extraction, refining and chemicals businesses from its renewables, liquified natural gas and service stations operations.

According to Ron Orol’s article, the Company followers contend with Third Point’s arguments, however, that Third Point has a low chance of success — and they question Third Point’s assertion that a separation into two or more businesses would lead to an “acceleration of [carbon emission] reduction” and “increased return for shareholders.”

Ali Saribas commented to Ron Orol that it is more likely Third Point will continue to engage Royal Dutch Shell privately, as it did with its 2017 Nestlé SA campaign. Ali Saribas added that it may not be fair to compare Third Point’s Shell endeavor with Engine No. 1’s Exxon contest because the two energy giants interact with their shareholders so differently. “Shell is not Exxon. They are engaged with their shareholder base and are generally perceived as responsive to their concerns,” Saribas said. “Third Point vs. Shell would fall within the ‘public pressure’ bucket, unless talks between the two parties collapse.”

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