Royal Dutch Shell is changing its tune on carbon, saying it will tie executive pay to shorter-term reductions in emissions.
The world’s second-largest oil company on Monday said it would begin establishing carbon-output targets each year for the following three to five years in an effort to slash its carbon footprint in half by 2050 and tying those goals to executive compensation. Shareholders will vote on the revisions in 2020.
Shell’s announcement marks a change in stance by CEO Ben van Beurden, who for years rejected investor demands that Shell detail its plans to curtail emissions, saying it would make the company more vulnerable to lawsuits.
“Meeting the challenge of tackling climate change requires unprecedented collaboration and this is demonstrated by our engagements with investors,” the Shell CEO said in a statement. Setting shorter-term targets positions Shell for the future “as the world works to meet the goals of the Paris Agreement on climate change,” van Beurden added.
The Anglo-Dutch oil company’s statement was co-signed by some of Shell’s biggest investors, which is itself unusual, according to Adam Matthews, director of ethics and engagement for the Church of England Pensions Board, which took part in shareholder talks with Shell.
“This joint statement is the first of its kind, 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,” Matthews said.
The announcement was also co-signed by additional members of an investor initiative called Climate Action 100+, a group of more than 300 investors with over $32 trillion in assets under management.
Shareholders have previously disparaged Shell for setting long-term ambitions on cutting emissions without offering binding goals for the reductions to occur.
The latest development came as governments gather in Poland for a U.N.-hosted meeting on devising a playbook to implement the 2015 Paris climate accord that established targets to phase out fossil fuels and curtail global warming. President Donald Trump withdrew the U.S. from the Paris agreement last year, and last week he rejected a report from his own administration that warned of irreparable harm to the U.S. economy from climate change.
Exxon Mobil in October said it would invest $1 million in a lobbying campaign to support a carbon tax, making it the largest U.S. oil company to throw its heft behind an idea that Republican lawmakers so far oppose.
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