Shell and Third Point: Spinning (Off) the Sector
Carbon Tracker’s new research work stream focuses on “Corporate Research”. Their first document focuses on Shell and how the US activist hedge fund, Triple Point, is pushing for a demerger into a legacy energy business and a low-carbon business.
The Third Point proposal could be seen as an illustration of the polarisation in the asset management industry between: those who support investee companies in their energy transition effort, others becoming “impatient” at the costs involved with this, yet others looking to avoid any exposure to fossil fuel and, lastly, an opportunistic constituency driven by short-term goals.
Carbon Tracker's conclusion: The Third Point proposal represents a useful stimulus to understand better, through the lens of a corporate finance operation, the changes and pressure that oil companies are facing in implementing their energy transition plans. But does not seem to represent, as it stands, the ideal solution for Shell, at this juncture, and certainly not for the climate, given over-reliance on gas as a bridge fuel and failure to align Shell’s business model with a 1.5C pathway.