Shell CEO Wael Sawan told attendees at an energy conference this week that shareholders will make the final call on the viability of low-carbon options—weeks after two employees wrote him an open letter expressing “deep concern” about his strategy and urged him not to scale back on renewables investments.
Shell has no plans to change direction, Sawan told the ADIPEC energy conference in Abu Dhabi on Monday, reports Reuters.
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“Ultimately the shareholder needs to make a judgment whether the low-carbon energy options we’re putting in front of them are investable, and we need to be able to cover our cost of capital and make a return for our shareholders,” he said.
Last month, two employees of Shell’s low-carbon division wrote to Sawan and to Shell’s executive committee, stating in an open letter that his recent announcements have given them pause, the news agency previously reported.
“For a long time, it has been Shell’s ambition to be a leader in the energy transition,” wrote Lisette de Heiden and Wouter Drinkwaard in the letter posted on Shell’s internal web and seen by Reuters last week. “It is the reason we work here.”
The letter follows a summertime capital markets day (CMD) for investors where Sawan announced Shell’s plans for a renewed focus on the oil and gas production side of its business. He pledged to stabilize output through 2030 and said Shell was boosting shareholder dividends by 15% per share. The plan to slow investment in renewables and low-carbon business was part of the strategy to boost returns, Reuters explained.
“The recent announcements at and after the capital markets day deeply concern us,” the two employees wrote. “We can only hope the optics of the CMD announcements are deceiving us and that Shell continues its path as a leader in the energy transition.”
But “Shell has in recent months exited offshore wind projects in Ireland and France, sold its United Kingdom power retail business, and said it was seeking to sell stakes in renewable projects in India,” Reuters notes, citing industry sources. “It is also weighing selling all or part of the Sonnen battery storage company it acquired in 2019.”
The open letter has received more than 80,000 views and 1,000 likes and has started a long exchange of comments from readers, including Sawan.
“For an organization at the crux of the energy transition, there are no easy answers and no shortage of dilemmas or challenge,” Sawan wrote in his response. “We might not always agree on the way forward, but I feel good about the role Shell is, and will continue, to play.”
“I am proud of how we provide affordable and secure energy to people every day, while we work hard to provide lower-carbon solutions to our customers, as we transition over time to a net-zero emissions business.”
Shell had made climate pledges in recent years, including a promise to scale back oil production at a rate of 1-2% annually. But Sawan’s June statements—made months after he became CEO in January—mean the UK-based colossal fossil is keeping pace with other oil majors, retreating from climate action as oil profits soar.
“We need to continue to create profitable business models that can be scaled at pace to truly impact the decarbonization of the global energy system,” Sawan told Shell’s CMD. “We will invest in the models that work—those with the highest returns that play to our strengths.”
Shell says it has met its target to wind down fossil production ahead of schedule by selling off its interest in a Texas oilfield, euronews writes. The company also quietly ended its plan to develop an ambitious carbon offsets scheme in August.
Several senior executives have left Shell’s low carbon and renewables division since Sawan’s strategy changes, Reuters said. Colin Crooks, senior vice-president of renewables and energy solutions Europe, will leave at the end of the month.