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Exxon Mobil Corp NYSE:XOM NYSE Common Stock
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Shell to Let Shareholders Vote on Shift to Cleaner Energy

15/04/2021 2:35pm

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By Sarah McFarlane 

LONDON -- Royal Dutch Shell PLC detailed a first-of-a-kind shareholder vote over its pivot away from oil, asking investors to endorse its energy transition strategy in a nonbinding vote next month.

While environmental groups have long put forward climate-related resolutions at annual shareholder meetings, Shell's move is the first by an oil major to set up a regular review of its progress in moving away from oil.

The decision to offer shareholders a vote comes as energy companies face increasing investor pressure to map out their future in a lower-carbon economy, where oil and gas demand is forecast to fall, with the rollout of technologies such as electric cars and wind and solar power.

Earlier this year, Exxon Mobil Corp. outlined plans for a low-carbon business unit after some shareholders argued it should focus more on investments in clean energy, while BP PLC has pledged to cut oil output by around 40% over the coming decade and invest more in renewable energy.

Shell laid out plans in February to reduce its dependence on oil, saying it would cut output by 1%-2% a year, while boosting spending on low-carbon energy.

On Thursday, the company published its first transition strategy report for which it will seek shareholder approval. The document sets out Shell's ambition to expand in electricity and biofuels, while reducing the carbon intensity of the energy products it sells by 20% by 2030 and 100% by 2050. Shell said its plans were aligned with the global aim to limit global temperature rises to two degrees Celsius, as set out in the Paris Climate Accord in 2015.

Some investors are skeptical of Shell's focus on reducing carbon intensity -- the amount of carbon in any unit of energy -- instead of absolute emissions.

"The big issue we have with Shell's current targets is that it's fantastic for 2050, but it doesn't deliver enough absolute emissions reduction in the next decade, which is critical," said Mark van Baal from Follow This, a group of more than 6,000 shareholders in oil companies including Shell.

Follow This was among a group of shareholder and environmental groups to earlier this year write to Climate Action 100+, an investor group representing $54 trillion in assets, urging them "to engage with Shell and refrain from endorsing their plans" until the company strengthens its carbon-reduction targets.

The investor group plans to engage with Shell to ensure the company also targets reductions in absolute emissions, said Adam Matthews, chief responsible investment officer at the Church of England Pensions Board, the investor that has led talks with Shell on behalf of CA100+.

The Church of England Pensions Board is likely to vote in support of Shell's energy transition plan, Mr. Matthews said.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com

 

(END) Dow Jones Newswires

April 15, 2021 09:20 ET (13:20 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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