In 2021, shareholders overwhelmingly supported Shell’s energy transition strategy, reflected through an advisory vote at the Annual General Meeting. In 2022, 80% of Shell’s shareholders voted in support of the progress it had made in 2021 in implementing its energy transition strategy. Shell continues to implement that strategy, and this year is asking shareholders to vote on its progress in 2022. Shell’s Directors believe that the Company has made good progress. In 2024, Shell’s updated energy transition strategy will be put to shareholders for an advisory vote, and the Company will be engaging with investors ahead of its publication. Shell’s energy transition strategy centres on its target to become a net-zero emissions energy business by 2050. The Company has set climate targets that it believes are aligned with the more ambitious goal of the UN Paris Agreement on climate change: to limit the increase in the average global temperature this century to 1.5°C above pre-industrial levels (see page 12 of Shell’s Energy Transition Progress Report 2022). Shell’s short-, medium-, and long-term targets cover greenhouse gas emissions from its own operations and customers’ emissions from the use of its energy products (Scope 1, 2, and 3).

In 2021, Shell set an ambitious new target to reduce absolute emissions from its operations (Scope 1 and 2) by 50% by 2030, compared with 2016 levels on a net basis. By the end of 2022, Shell had made good progress with a 30% reduction on a net basis. Global energy-related carbon emissions increased by around 4% in the same period. [A] As an energy provider, Shell has set a target to reduce the net carbon intensity of the energy products it sells by 20% by 2030. It has achieved its 2022 short-term target of a 3-4% reduction in net carbon intensity with a reduction of 3.8% since 2016. Our analysis, using data from the International Energy Agency, shows the net carbon intensity of the global energy system fell by around 2% over that time. [B] Shell has taken significant investment decisions in the production of low-carbon fuels, solar and wind power and renewable hydrogen.
In 2022, this included the $1.6 billion investment in Indian renewable power developer Sprng Energy. Shell also announced the acquisition of Denmark’s Nature Energy, which produces renewable natural gas from agricultural, industrial and household waste, for around $2 billion. This deal completed in February 2023. In parallel, Shell continued to make significant changes to its Upstream and Refinery portfolios. Shell believes that for the world to decarbonise, a dramatic change in demand for energy is just as critical as changes to supply. That is why an essential part of Shell’s strategy is working with its customers across different sectors to help reduce their emissions. Last year, Shell continued to work with some of the world’s biggest companies in sectors including aviation, road transport and technology. Shell was the first major energy company to measure progress in transforming its businesses for a lower-carbon future within long-term pay frameworks. Shell’s Remuneration Committee determined in the first quarter of 2023 that the element of the 2020 Long-term Incentive Plan weighted to the energy transition should vest at 180%. Another resolution, proposed by Follow This, is considered to be against shareholders’ financial interests and would not help to mitigate global warming. It is therefore also not in line with the Company’s strategy, which is intended to promote the success of the Company and accelerate the energy transition.
Conclusion: The Company has set ambitious targets that it believes are in line with the 1.5°C goal of the Paris Agreement. Shell’s strategy supports a balanced transition, one that maintains the supply of oil and gas where it is still needed, while moving to net-zero emissions.