2030 Finance | December 4, 2018

Shell to link short-term carbon emission reductions with executive pay

Dennis Price
ImpactAlpha Editor

Dennis Price

When the world’s biggest investors say jump…

Royal Dutch Shell committed to reduce its Net Carbon Footprint – the total emissions associated with its energy products – by 20% by 2035 and around half by 2050. By 2020, the British-Dutch oil and gas company will link executive pay to three- to five-year carbon reduction targets.

The announcement follows pressure from Climate Action 100+, a group of more than 300 institutional investors with $32 trillion in assets that is pressuring key greenhouse gas emitters to support the goals of the Paris climate agreement.

We’ll always have Paris, but is that enough to avert climate catastrophe?

Shell acknowledged that its “future success is contingent on its ability to effectively navigate the risks and the opportunities presented by climate change.”

  • What it signals: Oil and gas majors will play ball with big pension funds and others that increasingly see climate change as a systemic risk to their portfolios. As climate leaders and laggards increasingly diverge, Shell is keen to be seen at the forefront of the energy transition.

  • European leaders. Europe’s oil companies, including Shell, are better prepared than North American producers in navigating risks, opportunities and climate governance, according to a ranking by Climate Disclosure Project.

European oil and gas majors hedge climate risks with low-carbon investments

  • New benchmark. The commitment by Shell is “a critically important benchmark against which the other oil and gas majors will be assessed,” said Ceres’ Mindy Lubber. Climate Action 100+, she says, “will now use this commitment to raise the bar for the oil and gas industry as a whole.”