SHELL PLC | Align 2030 target including scope 3 with Paris agreement at ROYAL DUTCH SHELL PLC

Status
20.19% votes in favour
AGM date
Previous AGM date
Proposal number
26
Resolution details
Company ticker
RDSB
Lead filer
Follow This
Resolution ask
Set targets or plans
ESG theme
  • Environment
ESG sub-theme
  • Net Zero / Paris aligned
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Energy
Company HQ country
United Kingdom
Supporting materials
Resolved clause
Shareholders support the company to align its existing 2030 reduction target covering the greenhouse gas (GHG) emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate Agreement: to limit global warming to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C.
The strategy for how to achieve this target is entirely up to the board.
You have our support.
Whereas clause
Whereas the world has declared to drive down greenhouse gas (GHG) emissions this decade, the energy transition from fossil fuels to renewables presents great opportunities for an integrated energy multinational.
Supporting statement
We believe that Shell could lead and thrive in the energy transition by meeting the increasing demand for energy services while reducing GHG emissions to levels consistent with the global intergovernmental consensus specified by the Paris Accord.
Because the company’s existing 2030 target covering Scope 3 is not Paris-aligned, we support the company to advance this target.
We, the shareholders, understand this support to be part of our fiduciary duty to secure the long-term interest of the company and to protect all our assets in the global economy from devastating climate change; limiting global warming is essential to risk management and responsible stewardship of the economy.
Backing from investors who are determined to achieve the goal of Paris gained momentum since 2016, when 2.7% voted in favour of the Follow This climate targets resolution. In 2022, 20% voted in favour at Shell, and up to 39% at other oil majors; this includes the support of the ten largest investors in the Netherlands who voted in favour of Follow This climate resolutions.1
Energy and climate crises
The current energy crisis and the climate crisis can be addressed simultaneously by investing the windfall profits from high oil and gas prices in other energy sources.2 Diversification of the energy supply would foster energy security by reducing dependency on oil and gas fields tied up in geo-political conflict and reduce emissions to address the climate crisis simultaneously.
Shell
Shell has the engineering prowess, financial muscle, and global market-making capabilities to rapidly scale the transition to renewables.
Shell demonstrated leadership as the first oil major to take responsibility for Scope 3: in 2017, Shell promised to cut its Net Carbon Footprint (NCF), which covers the GHG emissions of the company’s operations and the use of its energy products (Scope 1, 2, and 3) by around half by 2050 and 20% by 2035.3 Shell has improved its targets several times, thanks to the increasing votes of institutional investors for climate resolutions; among others: absolute Scope 1 and 2 target of 50% by 2030, net-zero by 2050, and NCF reduction of 20% by 2030 (current target at the time of filing this resolution).4,5,6
Scope 3 in 2030
Setting Paris-aligned targets covering Scope 3 is paramount, because they account for over 90% of Shell’s total Scope 1, 2, and 3 emissions.7 A target for 2030 is also paramount; the Intergovernmental Panel on Climate Change (IPCC) stated that “unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach.”8
Therefore, policy makers and institutional investors insist on emissions reductions by 2030.
Changes in demand are as critical as changes in supply, but customers can only change sufficiently when key system players like Shell offer alternatives at scale.9
For Shell, 2030 is particularly pertinent as it is within Shell's ten-year planning period; Shell states in the legal disclaimer of its Climate Target: “Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCF target, as these targets are currently outside our planning period.”10
Large-scale reductions in absolute emissions by 2030
The company’s current intensity target covering Scope 3 for 2030 is not yet Paris-aligned; it will not lead to large-scale (net) reductions in absolute emissions in this crucial decade.
Shell itself anticipates no change in absolute Scope 3 emissions by 2030 as a consequence of its intensity target; Shell’s CDP (Carbon Disclosure Project) Climate Change response states that the “Carbon Intensity (NCI) target 2030” will lead to a “% change anticipated in absolute Scope 3 emissions” of “0”.11
Therefore, this resolution supports Shell to advance its 2030 target covering Scope 3 to align with the Paris Climate Agreement.
The company may use whatever target(s) and metric(s) it deems best, as long as they lead to large-scale reductions in (net) absolute GHG emissions in line with the Paris Climate Agreement by 2030.
Best interest of company and investors
A global integrated energy company like Shell can decrease emissions without ultimately shrinking business. It is in the company's best interest to pursue the opportunities the energy transition presents; this will also pre-empt risks of abrupt policy interventions, litigation, liability for the costs of climate change, disruptive innovation, and stranded assets. According to Carbon Tracker, two thirds of fossil fuel reserves must remain in the ground to stay within 1.5°C. 12
Therefore, it’s in the best interest of investors to support Shell to align its 2030 Scope 3 target with Paris. Advancing this target will allow Shell to invest accordingly to drive down emissions, thereby safeguarding the long-term future of the company and the global economy.
You have our support.
All sources available at www.follow-this.org/Shell-resolution-2023-sources/

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
PGGM Investments For Although Shell is a front-runner among oil and gas companies, there is insufficient evidence that the company’s current strategy is aligned with a 1.5°C warming pathway, which requires a significant decrease in oil and gas production and increase in the supply of low carbon solutions. No independent, third-party source shows that Shell is Paris aligned in 2030.

Regarding Shell’s methodology to prove its Paris alignment (Energy Transition Progress Report 2023, p. 12), the company does not disclose which scenarios it has filtered out or its method for eliminating outlying values.

This makes it challenging to confirm validity of the approach.
Shell provides insufficient disclosure to show that its strategy will lead to a global reduction in emissions in line with 1.5°C. For example, it is unclear how its oil and gas production will develop by 2030 or if its low carbon activities will grow to represent a significant part of their 2030 energy mix. The company does not provide a breakdown of capital expenditure per low carbon activity beyond 2023.
MN For
Degroof Petercam Asset Management (DPAM) For
Anima Sgr For As the alignment of the existing 2030 reduction target covering the greenhouse gas (GHG) emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate Agreement would aid shareholders in understanding the company's assessment of how it could reduce its carbon footprint to limit global warming well below 2 degrees Celsius above pre-industrial levels and to limit the temperature increase to 1.5 degrees Celsius.
While Shell has made progress against targets, investors could benefit from the alignment of the existing 2030 reduction target covering the greenhouse gas (GHG) emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate Agreement, This will further ensure the shareholders that the company is managing its GHG emissions that is sufficiently aligned with Paris goals. Further, as noted in the discussion of Shell's management of ESG risks, the company is reportedly implicated in a number of climate-related controversies. In light of these alleged controversies and deficiencies within its proposed climate transition plan, adoption of the proposal would be beneficial to concerned shareholders.
VidaCaixa For
EFG Asset Management For A vote FOR this proposal is warranted as the alignment of the existing 2030 reduction target covering the
greenhouse gas (GHG) emissions of the use of its energy products (Scope 3) with the goal of the Paris Climate
Agreement would aid shareholders in understanding the company's assessment of how it could reduce its
carbon footprint to limit global warming well below 2 degrees Celsius above pre-industrial levels and to limit
the temperature increase to 1.5 degrees Celsius.
Pensioenfonds Rail & Openbaar Vervoer For
Aktia Bank p.l.c. For
Rathbones Group Plc For
Rothschild & co Asset Management For

DISCLAIMER: By including a shareholder resolution or management proposal in this database, neither the PRI nor the sponsor of the resolution or proposal is seeking authority to act as proxy for any shareholder; shareholders should vote their proxies in accordance with their own policies and requirements.

Any voting recommendations set forth in the descriptions of the resolutions and management proposals included in this database are made by the sponsors of those resolutions and proposals, and do not represent the views of the PRI.

Information on the shareholder resolutions, management proposals and votes in this database have been obtained from sources that are believed to be reliable, but the PRI does not represent that it is accurate, complete, or up-to-date, including information relating to resolutions and management proposals, other signatories’ vote pre-declarations (including voting rationales), or the current status of a resolution or proposal. You should consult companies’ proxy statements for complete information on all matters to be voted on at a meeting.