Shell to pay executives in line with decarbonisation achievements
Oil and gas giant Royal Dutch Shell has today (3 December) pledged to link progress made towards its carbon reduction aims to the amount of pay awarded to members of its executive board, in a move to engage senior stakeholders with sustainability.
Building on its commitment to reduce the carbon footprint of its energy products by 20% by 2035, rising to 50% by 2050, Shell has pledged to set shorter-term targets every three to five years, starting in 2020.
In order to ensure progress against these targets is tracked accurately and made visible to stakeholders, Shell will use a third-party carbon auditor and include information regarding the net annual carbon footprint of its energy products in its annual sustainability report from next year.
The company has also unveiled plans to link progress towards these short-term goals with its renumeration policy for executives, with board members set to receive pay cuts if sufficient action is not taken to achieve the aims. This move will be put to shareholders at the company’s 2020 annual general meeting, where a consultation on the specific proposed changes will be undertaken.
Additionally, Shell has committed to report in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), completing scenario analysis mapping and promoting senior management engagement on climate-related issues.
The announcements come shortly after Shell co-developed a joint statement on the importance of limiting global temperature increase below 2C – as outlined in the Paris Agreement – with investor group Climate Action 100+.
Published today, the statement confirms that the investor group, which represents companies with more than $32 trillion in assets under management (AUM) collectively, will support Shell as it strives to set a science-based target in line with a 2C trajectory.
It also urges other oil, gas and energy firms to take equally ambitious action to reduce their emissions, after recent CDP research warned that the sector’s largest firms are failing to invest in low-carbon projects.
“Meeting the challenge of tackling climate change requires unprecedented collaboration and this is demonstrated by our engagements with investors,” Shell’s chief executive Ben van Beurden said.
“We are taking important steps towards turning our Net Carbon Footprint ambition into reality by setting shorter-term targets. This ambition positions the company well for the future and seeks to ensure we thrive as the world works to meet the goals of the Paris Agreement on climate change.”
The announcements from Shell come on the same day as a report from climate action group Unfriend Coal revealed that 24 of the world’s largest investors have collectively excluded coal from $6trn in assets, as the trend towards divestment from carbon-heavy projects and products continues.
The organisation’s second annual scorecard report states that companies accounting for a fifth of global AUM have divested in coal, up from 13% last year.
It also notes that Europe’s four biggest investment firms – Zurich, Allianz, AXA and Generali – have moved to restrict insurance for coal projects since November 2017, while a third of reinsurers have taken similar action in the same timeframe.
“Some of the world’s biggest and most trusted insurers are now exiting the coal sector, sending a strong message to governments and investors that the dirtiest fossil fuel has no future,” Unfriend Coal’s coordinator Peter Bosshard said.
The findings come at a time when banking and insurance giants are increasingly announcing plans to make their portfolios more sustainable by divesting from coal companies and those in other carbon-intensive sectors.
Legal and General Investment Management, for example, this year announced that it would divest from a host of companies it believes are showing “persistent inaction” on addressing climate risks. Elsewhere, 70 corporates recently pledged to act to prevent deforestation in Brazil’s tropical savanna.
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