Shell boss: we have no plans to change strategy despite emissions ruling
Royal Dutch Shell has no plans to change its strategy despite a landmark Netherlands court ruling calling for the company to make a 45% cut to its carbon emissions by the end of the decade, according to the oil giant’s chief executive.
Ben van Beurden denied the company would need to change its plans to meet the tougher court-ordered climate targets on Thursday, as he revealed a multibillion-dollar shareholder windfall for investors and better-thanexpected quarterly profits.
Shell plans to appeal against the court’s ruling, which was handed down shortly after 30% of its shareholders, including some of its biggest investors, rebelled against the board’s strategy. They voted in favour of activist investors who want Shell to set firm targets to wind down fossil fuel production.
“I don’t think we’ll come up with a new strategy,” Van Beurden said. “Our strategy is very much aligned with what the plaintiffs would want us to do, which is working on our own emissions reduction, and also helping customers reduce emissions.”
Shell plans to reduce the average carbon intensity of the energy it produces by 20% by 2030, well short of the court’s ruling. But Van Beurden said asking “one company” to reduce emissions by 45% when oil industry rivals and EU states plan to achieve only half these reductions over the same period is “not only unreasonable but doubly ineffective”.
The oil boss also dismissed concerns over Shell’s plan to help privateequity backed Siccar Point to explore for new UK oil reserves in the Cambo oilfield near Shetland, despite warnings from the International Energy Agency that the world cannot afford any new fossil fuel developments if it hopes to prevent catastrophic global heating.
“For as long as the UK still needs oil and gas in its [energy] consumption, it’s better to produce in its own backyard,” he said. “To import oil and gas, which would be the alternative, would obviously not serve the climate at all. Symbolically, it’s not what people would like to hear. But symbolism won’t help us with climate change.”
The Cambo oilfield expansion could ignite a legal challenge by Greenpeace against the government on the grounds that the new exploration would undermine the UK’s climate targets, and the government’s recent pledge to allow new oil exploration only if it aligns with climate targets.
Van Beurden mounted his defence of Shell’s ongoing fossil fuel production as the company raised its dividend by almost 40% and kickstarted share buybacks worth $2bn (£1.4bn) and soaring global oil prices helped to fuel a sharp rise in quarterly profits.
It reported its highest profits in two years for the three months to the end of June after a steady rise in global energy prices. Its second-quarter profits climbed to $5.5bn from $3.2bn in the same period last year, about 9% higher than forecast by City analysts.
Van Beurden said the company was “stepping up” shareholder distributions by increasing dividends and kickstarting share buybacks “while we continue to invest for the future of energy”. “We wanted to be really clear and signal to the market the confidence that we have in our prospects and our cashflows,” he said.
Despite the shareholder sweetener, Shell’s share price remains well below where it traded before the outbreak of Covid-19, even as oil prices have recovered to pre-pandemic levels. Despite rising on Thursday morning, the shares were up to only 1,432p, compared with 2,298p in January 2020.