A major oil company, Royal Dutch Shell, has announced plans to cut the carbon footprint of its energy products, joining a climate coalition that includes large pension plans.
Members of the Climate Action 100+ initiative, such as AustralianSuper ($109 billion), the California Public Employees’ Retirement System ($362 billion), and HSBC Global Asset Management ($470.2 billion), collectively manage more than $32 trillion in assets.
To meet the goals of the Paris Agreement to stem climate change, Shell wants to reduce about half of its energy products’ carbon output by 2050, with an intermediate goal of about 20% by 2035.
To help meet its objectives, Shell says it seeks to meet a series of targets over the next three decades. Shell will name its targets each year for the next three- and five-year intervals from 2020 to 2050. These targets and other measures will be tied to Shell’s executive remuneration policy, which will be subject to approval by shareholders at the company’s 2020 annual general meeting.
Shell’s announcement came in the form of a joint statement with investors, some of which are members of the group.
The Church of England Pensions Board and Dutch asset manager Robeco led Climate Action’s engagement with Shell.
Adam Matthews, director of ethics and engagement for the Church of England Pensions Board, said fellow investors will be able to “track Shell’s performance through the Transition Pathway Initiative (TPI),” an independent tool developed by London School of Economics, which Matthews said is backed by funds with $11 trillion in assets.
He added that the joint statement with the oil giant “sets a benchmark for the rest of the oil and gas sector and shows the benefit of engagement—aligning institutional investors’ long-term interests with Shell’s desire to be at the forefront of the energy transition.”
Additional assistance came from representatives of Dutch institutional platform Eumedion, the European Institutional Investors Group on Climate Change, financial services provider APG (which represented Dutch pension plan ABP), the Environment Agency Pension Fund, and the Universities Superannuation Scheme.
Shell will also publish an annual update of its carbon-diminishing progress, third-party assessments of its net carbon footprint, and a five-year review of its “nationally determined contributions” and proceedings to measure its change compared to society. Shell will also publish a review of its memberships of trade associations to determine its alignment with its stated positions, in the first quarter of 2019.
Ben van Beurden, Shell’s chief executive officer, said meeting the climate change challenge requires “unprecedented collaboration and this is demonstrated by our engagements with investors,” and reassessed the company’s target-shortening plans. “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,” he said.
Tags: Church of England Pensions Board, Climate Action 100+, Climate Change, ESG, Paris agreement, Royal Dutch Shell