Shareholder group calls on BP and Shell to rethink oil sands projects

Responsible investment campaign group FairPensions, working with a coalition of investors and NGOs, has succeeded in co-ordinating shareholder resolutions on tar sands to be discussed at the 2010 shareholder meetings of both Royal Dutch Shell plc and BP plc.

The resolutions call on the companies to answer questions about their involvement in tar sands (also known as oil sands). Signatories to the resolutions include groups and individuals concerned about environmental and human rights problems and investors who question the financial wisdom of tar sands projects.

Tar sands make up the world's second largest oil reserves, but the damage they can cause to the climate is even worse than that of conventional oil: the greenhouse gas emissions of converting tar sands into fuel is 3 times higher. Roughly three barrels of natural gas are consumed to create one barrel of oil.

Financial concerns include questions about whether future oil prices will be high enough to outweigh the high costs of producing tar sands, installing carbon capture and storage and expected carbon-emissions costs. Investors working with FairPensions think that BP and Shell's financial assumptions may be too optimistic.The resolutions have support from a large coalition of investors, including pension funds, fund managers, foundations, faith groups and individuals.

While shareholder resolutions are usually non-binding, campaigning groups increasingly use them to raise the profile of their cause. In 2008 Hugh Fearnley-Whittingstall, the celebrity chef, used a resolution to campaign for better treatment of chickens by supermarket giant Tesco.

The Church of England has also recently announced that it had sold its stake in mining company Vedanta Resources, over failure of the FTSE-100 company to reassure it about the impact of a controversial aluminium project in India.

- Mark Robertson