Royal Dutch Shell Plc asks shareholders to support energy transition

Plc () has released details of its energy transition strategy, and it is putting its proposed ‘net zero by 2050’ plan to an advisory shareholder vote.

The company, which was previously criticised for the focus on ‘consumer demand’ in its approach to decarbonisation, today highlighted that it will be the first energy company to submit its transition strategy to a shareholder vote.

It is a purely advisory vote, however, and as such management won’t be bound by the result. Shell added that it will seek to hold a similar vote every three years until 2050.

Chad Holliday, Shell chairman, in a statement, said that shareholder support is critical for the company to achieve its aim to be a ‘net-zero emissions energy business by 2050’, and, he recommended shareholders vote in support of the transition strategy.

“While the energy transition brings risks to the company, it also brings opportunities for us to prosper and to build on our positive contribution to society,” Holliday said.

“Our strategy is designed to minimise those risks while enhancing our ability to profitably lead as the world transitions to an energy system that is aligned with the goal of the Paris Agreement.”

The announcement, ahead of May’s AGM, is Shell’s latest attempt to manoeuvre between the rock of its shareholder base which requires some degree of ‘business as usual’ including healthy dividends, and the hard place of fast-growing momentum behind climate action in the broader zeitgeist.

Even amongst hardened capitalists, the ESG movement is increasingly unavoidable and undeniable as large scale asset management groups and financial institutions put greater emphasis on climate and equality issues into their investment criteria.

Emphasis on consumer demand

“To be clear, the best way for Shell to contribute to the energy transition is to work with our customers to help shape demand for low-carbon energy products and services,” said chief executive Ben van Beurden.

“In turn, the increasing need to supply low-carbon energy products and services will accelerate Shell’s transition to net zero.

“Ending our activities in oil and gas too early when they are vital to meeting today’s energy demand would not help our customers, or our shareholders.”

He added: “Our target to become a net-zero emissions energy business by 2050, in step with society’s progress towards the goal of the Paris Agreement on climate change, is at the heart of our energy transition strategy.

“That means continuing to reduce our total absolute emissions to net-zero by 2050.

“We have set our net-zero target, and our short- and medium-term carbon intensity targets, so that they are fully consistent with the more ambitious goal of the Paris Agreement: to limit the increase in the average global temperature to 1.5°C above pre-industrial levels.”

What’s in the strategy?

Shell told shareholders that it will invest in and scale up low-carbon energy solutions for its customers.

It intends to reduce and limit its own emissions as much as possible.

The strategy aims to mitigate by capturing and offsetting any residual emissions.

Setting milestones for the coming years, out to 2030, it said it plans to eliminate routine gas flaring and aims to maintain methane emissions intensity to below 0.2% by 2025.

The strategy anticipates a 1-2% decline in crude oil production per year and it pledges that there will be no ‘new frontier’ exploration entries after 2025.

Gas volumes are planned to rise up to 55% of all hydrocarbon production.

Shell wants to double the volume of renewable electricity it sells, targeting supply equating to 50mln households. It also plans to install 2.5mln electric vehicle charge points.

It is targeting 25mln tonnes of carbon capture and storage by…