The Anglo-Dutch oil and gas major said it plans to become a net-zero emissions energy business by 2050, or sooner, widening the ambition of earlier goals to cut its significant carbon footprint.
The move follows extensive engagement with investors from Climate Action 100+, led by Robeco and the Church of England Pensions Board, along with other platforms including the Dutch investors group Eumedion and the Institutional Investors Group on Climate Change.
The new agreement builds on Shell’s climate ambition announced in 2017 and its Joint Statement with investors in December 2018, when the company agreed to set short-term targets for cutting carbon emissions, and linked them to executive pay for the first time.
In its latest statement, Shell said it would:
Set an ambition to achieve net zero on all emissions from the manufacture of all its products by 2050 at the latest. This includes both scope 1 emissions (those produced directly by the company) and scope 2 emissions (those produced by the generation of the electricity or heat needed by the company).
Reduce the Net Carbon Footprint of its energy products by around 65% by 2050 (up from around 50%), and by around 30% by 2035 (increased from around 20%).
Pivot towards serving businesses and sectors that by 2050 also have net-zero emissions, thereby also targeting the scope 3 emissions that occur along the value chain.
For Robeco, the dialog with Shell was spearheaded by Senior Engagement Specialists Sylvia van Waveren and Michiel van Esch, who had seen previous success in bringing Shell to the table on commitments to decarbonize, along with other high-carbon companies.
Reducing the world’s carbon footprint is seen as essential in order to meet the goals of the Paris Agreement. This international accord seeks to limit global warming to a maximum of well below 2 degrees Celsius about pre-industrial levels by the end of the century, and ideally to restrict temperature rises to 1.5 degrees, to slow the damage being caused by climate change.
“These new ambitions build on the 2018 joint statement between Shell and Climate Action 100+,” says Peter Ferket, Chief Investment Officer of Robeco. “It proves that the strong and committed engagement of institutional investors with Shell can help accelerate the pace of change to deliver the goals of the Paris Agreement. It raises the bar and sets out an approach for others in the oil and gas sector to follow.”
“This shows once again that engaging with companies we invest in works, and that this a powerful mechanism, and key differentiator in bringing change to help combat major challenges such as climate change,” adds Carola van Lamoen, Head of Active Ownership at Robeco.
“We will continue to engage with companies, to improve the responsible behavior of companies we invest in, as this is in the long-term interest of both the company, our clients and broader society.”
Reporting on progress
Shell also said it will track and report on its progress in cutting its Net Carbon Footprint of the energy products it supplies, as well as progress towards achieving net-zero emissions from its operations. The company will also work to develop a method for tracking and reporting emission reduction by its customers – a more complex task that will require the development of the appropriate accounting methodologies and frameworks.
“With the Covid-19 pandemic having a serious impact on people’s health and our economies, these are extraordinary times. Yet even at this time of immediate challenge, we must also maintain the focus on the long term,” said Ben van Beurden, Chief Executive Officer of Royal Dutch Shell.
“Society’s expectations have shifted quickly in the debate around climate change. Shell now needs to go further with our own ambitions, which is why we aim to be a net-zero emissions energy business by 2050 or sooner. Society, and our customers, expect nothing less.”