Pressure from investors over climate change has forced Royal Dutch Shell to set out plans for industry-leading CO2 emissions targets which will be linked to executive pay.  

Shell CO2 emissions targets will be introduced in 2020

On Monday, Royal Dutch Shell announced plans to introduce industry-leading carbon emissions targets that will be linked to executive pay, according to a Reuters report.

Shell joins BP and Total which have already set their own short-term targets for cutting CO2 emissions, but the Total and BP cuts are limited to their own operations.

According to Shell, its targets will be more extensive and will include so-called Scope 3 emissions from the burning of fuels sold to millions of customers worldwide.  The targets will be introduced in 2020.

CarbonTrust.com says Scope 1 and 2 cover direct emissions sources, including fuel used in company vehicles and purchased electricity, while Scope 3 emissions cover all indirect emissions resulting from the activities of an organization.

In the past, Shell’s Chief Executive Ben van Beurden resisted setting such hard goals, arguing that it would be “foolhardy” to expose Shell to legal challenges.  The company has been criticized by shareholders for setting long-term “ambitions” to cut CO2 emissions by 2050.  Investors say the plans lacked binding targets for implementation.

But, recent discussions with shareholders have led the company to agree to setting three-year to five-year targets each year beginning in 2020.

“It is a very strong message from the world’s second-largest oil company,” Sacha Sadan, director of corporate governance at Shell investor Legal and General told Reuters.  “As investors, we will go to other companies about what they can do. Shell are showing that it is hard but doable.”

Shell says the targets and other measures will be linked to its executives’ remuneration policy and the revised policy will be put to shareholders for approval at the Shell annual general meeting in 2020.

The Anglo-Dutch oil major already links 1o per cent of executives remuneration to cutting CO2 emissions from the company’s global operations.

“We are taking important steps towards turning our Net Carbon Footprint ambition into reality by setting shorter-term targets,” CEO Van Beurden said in a statement.