The Anglo-Dutch oil major Royal Dutch Shell has suggested furthering its decarbonisation strategy by strengthening the link between climate objectives and executives’ remuneration.
The amount of shares in Shell and cash bonuses that directors are awarded are based on a number of metrics, including the volumes of liquefied natural gas (LNG) production. The proposal would see this removed from consideration, while the energy transition metric’s weighting will increase from 10% to 15% for bonuses and double to 20% for shares awarded as part of the long-term incentive plan for directors. This would put it on a par with financial metrics.
The company is also recommending that its CEO, Ben van Beurden, will not get a pay rise. Last year, van Beurden was also not given a bonus, presumably due to the challenging year that Shell and other oil companies have faced. Shareholders will vote on the proposed plan on May 18.
Shell has committed to becoming a net-zero carbon emitter by 2050. Its carbon emissions peaked at roughly 1.7 billion tonnes in 2018, and although it has declined substantially since, it remains one of the oil companies with the highest carbon emissions. It should be noted, though, that unlike oil companies, Shell includes emissions for all the products it sells, not just those based on hydrocarbons produced itself.
The oil major intends to achieve its net-zero goal through a variety of means, including renewable energy generation and nature-based projects. It also recently launched a range of carbon-neutral lubricant products to help its customers achieve their own sustainability objectives.