Shell pledges short-term carbon emissions cuts citing investor pressure
Last year, the company set long-term "ambitions" to halve emissions of carbon dioxide by 2050
Royal Dutch Shell, the world's second-largest oil company by market capitalisation, is heeding investor demands and will set short-term targets for reducing its carbon footprint, it said on Monday.
Last year, the company set long-term "ambitions" to halve emissions of carbon dioxide by 2050, which drew ire from stockholders for not making any binding commitments.
After discussions with investors, the Anglo-Dutch oil and gas major said that from 2020 it will set three- to five-year targets every year which will include specific reductions for its net carbon footprint.
"We are taking important steps towards turning our Net Carbon Footprint ambition into reality by setting shorter-term targets," Shell chief executive Ben van Beurden said in a statement.
Shell, with a $228 billion market cap, dubbed the initiative Climate Action 100+, outlined its targets in a signed joint statement with 310 investors. It also said it 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 its annual meeting in 2020.
Shell had already linked 10 per cent of executives' remuneration to reducing carbon emissions from the company's operations, Reuters reported.
The new goals include targets to reduce CO2 emissions from fuel burning by customers, including millions of drivers that use Shell fuels, in what is known as Scope 3 emissions, according to the Shell statement.
Scope 3 emissions for Shell and its peers far exceed those from the company's operations, called Scope 1 and 2.
Investors who engaged with Shell were led by Robeco and the Church of England Pensions Board and included representatives of Eumedion (the Dutch platform for institutional investors) and the European Institutional Investors Group on Climate Change. The Environment Agency Pension Fund and the Universities Superannuation Scheme were also active participants, Shell said.
The move comes as governments meet in Poland for a conference hosted by the United Nations COP24 which will lay out a "rule book" to implement a 2015 climate accord.
Of particular concern to investors were actions by Shell that undermine the Paris agreement goals to phase out fossil fuel use this century, shift towards cleaner energies and help limit a rise in temperatures, the Financial Times reported.
In light of this, the company pledged to review its membership in industry lobbying groups that work against the Paris deal.
Shell will start publishing data on its net carbon footprint, vetted by a third party, in its 2019 sustainability report.
Updated: December 3, 2018 06:56 PM