Amidst growing tensions between traditional and activist investors, oil and gas behemoth Shell is contemplating a significant shift from London to New York. The move stems from a perceived
lack of appreciation from stakeholders in London and escalating pressure from climate activists urging the company to pivot towards renewable energy.
The decision to potentially depart from London has been influenced by a confluence of factors. Heightened criticism from environmental advocates, vehemently opposing Shell's continued emphasis on oil and gas endeavors, has played a pivotal role. Additionally, shareholders have expressed dissatisfaction with the company's perceived inertia in transitioning towards greener energy alternatives.
Compounding Shell's concerns are the perceived anti-business policies in the UK, further exacerbated by impending regulations such as a proposed windfall tax, expected to be more stringent than the existing energy profits tax. Anticipated reforms in employee rights legislation have also contributed to an atmosphere of uncertainty among businesses. Despite this, concerns regarding Corporation Tax appear relatively subdued, with the prevailing 25% rate likely to remain unchanged.
Shell's potential relocation to New York looms as a significant blow to London's financial landscape. As the largest company listed in Britain by market value, valued at approximately £168 billion (€196 billion), Shell's departure could significantly impact the FTSE 100 index, which is heavily reliant on commodity, mining, and oil companies.
Moreover, Shell's prospective move may catalyze a domino effect, prompting other mining and energy firms, such as Glencore, to follow suit and seek refuge in more hospitable markets. Notably, Glencore's coal division has already opted for a New York listing, with secondary listings in Johannesburg and Toronto. Concerns linger that the remainder of Glencore's operations may join Shell in relocating, alongside other industry giants like BP.
Ashley Kelty, Panmure Gordon's head of oil and gas research, underscores the potential ramifications of Shell's relocation. In New York, Shell may encounter less stringent environmental scrutiny and a more supportive tax regime conducive to its operations. Kelty suggests that Shell's potential move signals a desire to retreat even further from renewable energy initiatives, given the perceived leniency towards oil and gas in the American market.
The trend of UK companies seeking listings in the US, exemplified by firms like Smurfit Kappa, CRH, Flutter Entertainment, and Arm Holdings, underscores the allure of deeper investor pools and expanded growth prospects across the Atlantic. Amidst uncertainties surrounding regulatory landscapes and investor sentiment, the prospect of a London exodus looms large, potentially reshaping the UK's corporate landscape. Photo by RamaGaspar, Wikimedia commons.