As part of a long-term ambition to reduce the Net Carbon Footprint of its energy products, Shell his to set short term targets that are linked to executive remuneration, subject to shareholder approval.
Shell 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 $32tn 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 Chief Executive Officer 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 percent by 2035, in step with society’s drive to meet the goals of the Paris Agreement.
Today, Shell is building on that long-term ambition with the commitment to setting 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 the Annual Report and Form 20-F as appropriate. The company will seek third-party assurance of the reported Net Carbon Footprint.
Speaking as the Co-lead of the Climate Action 100+ dialogue with Shell, Adam Matthews, Director of Ethics and Engagement of the Church of England Pensions Board, and Board Member of the Institutional Investors Group on Climate Change, said: “Investors like ourselves will be able to track Shell’s performance through the Transition Pathway Initiative (TPI), an independent academic tool at the London School of Economics which is supported by funds with $11tn in assets.
“This joint statement is the first of its kind, sets a benchmark for the rest of the oil and gas sector and shows the benefit of engagement – aligning institutional investors’ long-term interests with Shell’s desire to be at the forefront of the energy transition.”
For more information visit www.shell.com
3rd December 2018