Royal Dutch Shell is becoming the first colossal fossil to link executive pay with greenhouse gas emission reductions, after major shareholders including the Church of England and Robeco demanded the Anglo-Dutch company do more to address the climate crisis.
On Monday, the first full day of this year’s United Nations climate conference in Katowice, Poland, Shell announced that it “will establish short-term carbon emissions targets starting in 2020,” CNN Business reports. “In an industry first, it plans to link executive pay to hitting the targets.” The targets will be set on an annual basis, cover three- to five-year time spans, run through 2050, and apply to Shell’s end products as well as its operations.
“Climate Action 100+, a group of 310 investors with more than US$32 trillion in assets under management, said in a joint statement with Shell that it strongly supported the company in taking ‘these important steps’.” CNN notes. “The oil company did not set out specific carbon benchmarks on Monday. And it said shareholders would not vote on changes to executive remuneration until 2020.”
In that same statement, Shell said its future success “is contingent on its ability to effectively navigate the risk and the opportunities presented by climate change.”
Ceres President and CEO Mindy Lubber called the announcement a “critically important benchmark against which the other oil and gas majors will be assessed.” In a prepared statement, she added that “the agreement to address the full scope of its emissions, including emissions related to product use, clearly sets Shell apart from its peers and demonstrates the power of collective investor engagement.”
“That Shell has now embedded its ambition in its remuneration policy offers confidence that Shell is really committed to it,” said ABP pension fund chair Corien Wortmann.
“We hope this unique joint statement between institutional investors and an oil and gas major will inspire other leaders to take bold action,” added UK Environment Agency chair Emma Howard Boyd. “We would encourage the rest of the sector to follow Shell’s lead.”
Shell’s new commitment “is another indication of shifting tides in the fossil fuel industry,” Greentech Media comments. “Shell also announced it would assess its membership in trade organizations, to ensure climate lobbying doesn’t ‘undermine its support for the objectives of the Paris Agreement’.”