Shell investors want small print on emissions bonus

Investors are pushing oil giant Royal Dutch Shell to explain the finer details of its plan to link executives’ bonus pay to lowering carbon emissions, urging more transparency as the world shifts away from fossil fuels.

Shell was hailed by investors as a pioneer among the world’s biggest fossil fuel producers when it announced the policy to tie 10% of executives’ bonuses to cutting greenhouse gas emissions, which will be voted on at a May 23 annual meeting in the Hague.

But scrutinising the small print, some investors want Shell to show how it will calculate the targets for lowering emissions in the new bonus scheme rather than provide the information retrospectively in its annual report.

“This is a good move by the company but we would like to see more,” the director in the stewardship team at Hermes Investment Management, which holds shares in Shell, Bruce Duguid, said.

“We would prefer to see public, pre-set greenhouse gas reduction targets using a methodology appropriate to the type of emission.

“It could be an intensity target rather than an absolute emissions number but ideally set over a long period of time that is part of a long-term efficiency and carbon reduction plan.”

Investors also urged Shell to include 100% of emissions from its operations in its remuneration policy. They note that the calculation does not encompass emissions from oil and gas production and only factors in polluting gases from refineries, chemical plants and gas flaring, accounting for roughly 60% of the total emissions.

A Shell spokeswoman said the company was working hard on reducing carbon intensity. She said it planned to disclose emission reduction targets retrospectively at the end of each year, the same as with annual bonuses.

She declined to comment on why oil and gas production was not included in targets.

Shell, along with several of its peers including BP, have called for a global pricing of carbon which it believes will help the transition to cleaner energy.

Shell is also facing longer-term pressure to increase transparency of its emissions reporting which will allow shareholders to compare it with peers. – Reuters

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