Royal Dutch Shell will face a showdown with shareholders next month amid claims that it is not doing enough to tackle climate change, The Times has learnt.

The Local Authority Pension Fund Forum is concerned that the oil group’s directors can earn too much of their annual bonus by hitting “easy” carbon emission targets.

It has written to Jorma Ollila, the Shell chairman, asking for an explanation, and has threatened to urge investors to vote against Shell’s remuneration report at its annual meeting in May.

The forum is also calling on the group to link executive pay with health and safety issues, repeating a demand to BP, Shell’s rival, a week ago.

Shell has pledged to cut carbon emissions to 5 per cent below 1990 levels by 2010. Progress on the emissions target makes up part of a sustainable development goal that accounts for 20 per cent of a board director’s annual bonus. Jeroen van der Veer, the chief executive, received a bonus of almost £1.4 million last year.

Ebba Schmidt, a spokeswoman for the forum, said that the CO2 target appeared to be too soft for a group that had already managed to cut emissions by 15 per cent by 1999. Emissions were 9 per cent below the 1990 level in 2005.

Ms Schmidt said: “We have yet to receive an explanation about the stringency of this target. It feels to us that a company of Shell’s size could do more and it may be too easy.”

A Shell spokeswoman said that the 5 per cent target was challenging, given that it had to be met while the group grows its business. She said: “Over the last five years, we have invested $1 billion in alternative energy such as wind, solar, bio-fuels and hydrogen.”

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