Shell will set short-term climate change goals linked to executive pay. It is announcing the plans in a joint statement developed with institutional investors on behalf of Climate Action 100+, an initiative led by investors with more than $32trn in assets under management.
“Meeting the challenge of tackling climate change requires unprecedented collaboration and this is demonstrated by our engagements with investors,” said Shell CEO Ben van Beurden. “We are taking important steps towards turning our net carbon footprint ambition into reality by setting shorter-term targets. This ambition positions the company well for the future and seeks to ensure we thrive as the world works to meet the goals of the Paris Agreement on climate change.”
In 2017, Shell was the first international oil and gas company to set the ambition to reduce the net carbon footprint of the energy products it sells, expressed as a measure of carbon intensity, taking into account their full life-cycle emissions. Shell aims to reduce the net carbon footprint of its energy products by around half by 2050, and by around 20% by 2035, in step with society’s drive to meet the goals of the Paris Agreement.
Shell says it will set specific net carbon footprint targets for shorter periods, of three or five years. Shell will set the target each year, for the following three- or five-year period. The target setting process will start from 2020 and will run to 2050.
Shell plans to link these targets and other measures to its executive remuneration policy. The revised remuneration policy will be put to shareholders for approval at the company’s annual general meeting in 2020.
The announcement is part of a drive to increase transparency around the topic of climate change, and to create clear benchmarks for performance.
Shell will publish its progress towards lowering the net carbon footprint of its energy products initially in the sustainability report. In line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), Shell intends to integrate this disclosure into its annual report and Form 20-F as appropriate. The company will seek third-party assurance of the reported net carbon footprint.
“We applaud the joint statement by Shell and lead investors for Climate Action 100+,” said Anne Simpson, the inaugural chair of the Climate Action 100+ Steering Committee and Director of Board Governance and Strategy at the California Public Employees’ Retirement System (CalPERS). “The commitment by Shell to fully respond to the engagement shows the value of dialogue and global partnership to deliver on the goals of the Paris Agreement on climate change. Shell is setting the pace, and we look forward to other major companies following its lead.”
“When it comes to meeting the demands of the Paris Agreement on climate change, we believe it is necessary to strengthen partnerships between investors and their investee companies to accelerate progress towards reaching such an ambitious common goal,” Peter Ferket, chief investment officer of Robeco. “This joint statement is an example of such a partnership. As institutional investors in Shell we continue to support Shell on its journey in the energy transition, aiming for other companies to follow suit.”
