Royal Dutch Shell has set out details of how it plans to achieve its target of net-zero emissions by 2050, with shareholders given the right to an advisory vote on its transition plan from this year’s annual general meeting (AGM).
In a strategy update published today, the oil and gas major said it was confirming its expectation that total carbon emissions for the company peaked in 2018, and that total oil production peaked in 2019.
Shell said it had set new targets for reducing net carbon intensity: 6-8% by 2030, 20% by 2030, 45% by 2035, and then 100% by 2050, using a baseline of 2016.
And at its 2021 AGM, Shell will become the first company in the energy sector to submit an energy transition plan for an advisory vote to shareholders. The plan will be updated every three years, with Shell seeking an advisory vote on the progress made each year.
The move follows investor engagement with Shell as well as shareholder climate-related resolutions, which the company has in the past recommended voting against. At the 2020 AGM, a resolution calling for the company to set targets aligned with the goals of the Paris Agreement mustered 14.4% of the vote, up from 5.5% on the same resolution the year before.
A month earlier Shell had announced an ambition “to be a net-zero emissions energy business by 2050”, a commitment agreed with investors acting as part of Climate Action 100+, led by the Church of England Pensions Board (CEPB) and Robeco.
Adam Matthews, director of ethics & engagement for CEPB, today said: “As a result of ongoing engagement we welcome today’s announcement that makes explicit Shell’s commitment to achieving net-zero emissions by 2050. Shell have removed any doubt about their long-term target.
“Shell’s net zero target is industry leading and comprehensive as it covers all their carbon emissions. In a major step for climate accountability, shareholders will be given a right to an advisory vote on Shell’s climate transition plan at this year’s AGM, which is a first in the oil and gas sector.”
Matthews added that engagement on behalf of CA100+ would continue around the energy transition plan to be put to the AGM vote.
“A key component will be the need to develop net-zero pathways for their energy customers,” he said. “This requires innovative partnerships and technologies to be created over the course of this transition decade.”
Carola van Lamoen, head of sustainable investing at Robeco, said Shell’s move to offer a continuous say on its climate strategy “underpins our belief and shows once again that collaborative engagement with companies we invest in works and is a powerful tool”.
At Follow This, the shareholder campaign group that has filed resolutions at Shell and other oil and gas majors, founder Mark van Baal said Shell was responding to shareholders’ votes in favour of its resolutions.
“Shell’s new strategy follows record support for our climate resolutions during the last AGM season,” he said. “It shows how effective shareholders’ votes can be as a catalyst for action to curb global heating.”
He said Shell’s move was “a welcome step from previous lower and non-binding climate ’ambitions’”, but said its new targets would not lead to emission levels consistent with the Paris Agreement.
“The company has no plans to significantly cut their emissions this decade, despite an international scientific and political consensus that reducing emissions by 25% to 45% is imperative to achieve the goal of the Paris Climate Agreement to limit global warming to well below 2°C, preferably 1.5°C.”
Shell’s 2021 AGM will be held virtually on 18 May.
Besides voting on the company’s own plans, shareholders will also be asked to vote on a resolution from Follow This, the same as that presented in 2020.