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 3 December said it would begin establishing carbon-output targets each year for the following 3 to 5 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 Chief Executive Officer 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 chief 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 cosigned 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.
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