Shareholders for Royal Dutch Shell have overwhelmingly voted to back the company's new climate policy despite mounting pressure from activists and some shareholders to set more ambitious goals.
Shell CEO Ben van Beurden delivered the company's climate goals to shareholders on Tuesday. Credit: Jose Cruz / Creative Commons
89% of investors have chosen to back the oil & gas company's new initiative at an investor meeting on Tuesday as part of the company's previously announced plan to be completely net-zero by 2050.
Read more: Shell pins 2050 date for complete carbon-neutrality
Its plan is to slowly lower oil and gas output while simultaneously growing its low-carbon and renewables arms and also subsidising carbon capture technology in a bid to reach its goals and offset emissions.
More traditional carbon-neutral methods such as investing in reforestation are also laid out in the plan, according to CEO Ben van Beurden.
The CEO revealed the plan will be updated every three years and described it as "rigorous".
However, more than a third of the company's shareholders have also agreed with criticisms levied at it from the climate activist investor group Follow This, which has called for a more binding solution to the company's climate woes.
While still a ways off from a majority consensus, the group's pressure continues to mount, seeing more than double the support from company shareholders from last year's vote, with the expectation being that this will continue to increase until companies such as Shell commit to "meaningful decarbonisation" as the group puts it.
The group also offered a similar resolution to BP last week, which received 21% shareholder approval.
The group's primary criticism of the company is that their goals are not in keeping with the plans laid out by the Paris Climate Agreement, keeping in line with a number of analysts who say most climate action from both the public and private sector are currently insufficient to meet even the 2°C goals laid out by the treaty.
Follow This' head Mark van Baal says that Shell's policy's "fall short of what is needed to protect investors from devastating climate change," adding that Shell will have to "revise its targets" owing to mounting shareholder pressure.
Under UK corporate governance law, Shell will now have to consult its shareholders who sided with the activists and report back within six months.
All this comes as the International Energy Agency (IEA) has called for a halt to new oil & gas ventures in a bid to meet the stricter climate goals needed to meet the net-zero targets.
Read more: Radical change needed en route to net-zero, IEA warns
The Paris-based NGO lays out what is necessary in order to reach the 1.5°C targets under the Agreement and how the industry will shift to carbon neutrality.
Many industrial sectors, such as cement, shipping or mining, nearly always require some degree of carbon generation to function, which may prompt greater advances in carbon capture technology or innovations into alternative forms of generation without sacrificing efficiency and throughput.
The EU's carbon price has continued to climb following the bloc ratifying its own net-zero goals. The UK's carbon price also recently hit similar levels as the nation pushes its "level-up" strategy.
There has also been mounting pressure on the bloc to deal with carbon emissions from vans as the global automotive market pushes for increased electrification.
Shell has revealed it will continue to push for greater investment in renewable energy in the coming years, but at least 75% of its budget will still be allocated to oil and gas.
It revealed in the shareholder meeting that it will continue to seek new regions to expand its traditional business until at least 2025.
CEO van Beurden said setting more rigid targets would involve winding down its oil and gas ventures, which would leave a gap to be plugged by other companies.
Read more: Belgium plans North Sea energy storage island for 2025
"If we don't supply the market, someone else would," he said.
He has, however, acknowledged the shareholder resolution and is committed to working on solutions with investors.
However, critics of oil and gas companies continue to mount pressure over a lack of short-term climate goals and not taking drastic enough action to cut emissions.
Shell's short-term goals are generally based on "energy intensity," which has been slated by critics for being inefficient or not dealing directly with the issue.
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