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

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.

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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.

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  • 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.”