Dec. 03–Royal Dutch Shell said Monday it will link its carbon emission reduction goals to the pay of its executives starting in 2020, making the Anglo-Dutch energy giant the first of the so-called Big Oil majors to make that leap.
Shell is admittedly bowing to shareholder pressure, announcing the plans with an investor group called Climate Action 100+. Shell said it will set updated three-to-five-year emission reduction goals each year. Details will be made final next year.
“Meeting the challenge of tackling climate change requires unprecedented collaboration, and this is demonstrated by our engagements with investors,” said Shell Chief Executive Officer Ben van Beurden, who had previously resisted linking goals to CEO pay. “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.”
Anne Simpson, the inaugural chair of the Climate Action 100+ steering committee and director of strategy at the California Public Employees’ Retirement System, praised the joint announcement.
“The commitment by Shell to fully respond to the engagement shows the value of dialogue and global partnership to deliver on the goals of the Paris Agreement on climate change,” Simpson said. “Shell is setting the pace, and we look forward to other major companies following its lead.”
Shell previously announced its plans to cut its carbon footprint in half by 2050 — and by 20 percent by 2035. Shell also supports a potential “sky scenario” that envisions the world achieving net-zero carbon emissions by 2070 to keep global temperatures from rising above 2 degrees Celsius, the target set by the Paris accords.
Earlier this year in Houston, van Beurden emphasized that Shell is spending more on natural gas, offshore wind farms, biofuels, carbon capture projects, and the planting of trees and forests, which absorb carbon dioxide. Shell also is rolling out a program in Europe to charge about 1 or 2 cents more for gasoline to fund tree-planting projects worldwide.
“There’s no other issue with the potential to disrupt our industry on such a deep and fundamental level,” van Beurden said of climate change.
But Shell, in a sustainability report released this year, conceded that its greenhouse-gas emissions rose last year as the energy sector rebounded with rising oil prices and Shell added refineries. In a separate report, the company explained how it would reduce — but not eliminate — its oil production.
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