RDSA Shell Plc

By Maitane Sardon

Royal Dutch Shell PLC agreed on Thursday to set bolder carbon-emissions goals after engaging with a group of investors representing $40 trillion in assets under management.

The move comes as the oil sector faces growing pressure from climate-aware investors and headwinds due to the coronavirus pandemic and low oil prices. The International Energy Agency said Wednesday that it expects global oil demand to fall by 9.3 million barrels a day this year as a result of government-imposed lockdowns.

The Anglo-Dutch company said it aims to reduce the carbon footprint of the fuel it sells to its customers by 30% by 2035 and 65% by 2050. It also said it will target net-zero emissions from its own operations by 2050 and prioritize serving businesses and sectors that aim to have net-zero emissions by 2050.

"Society's expectations have shifted quickly in the debate around climate change," Chief Executive Ben van Beurden said. "Shell now needs to go further with our own ambitions, which is why we aim to be a net-zero emissions energy business by 2050 or sooner. Society, and our customers, expect nothing less."

Investors behind the engagement process welcomed the announcement and said they will continue to monitor the steps taken by Shell and engage with other companies in the sector.

"This announcement... is indicative of Shell's confidence in not only navigating the immediate situation but rightly sets the focus on developing net-zero pathways in key sectors that shape the demand for energy," said Adam Matthews, director of ethics and engagement for the Church of England Pensions Board.

However, some investors in the oil-and-gas company said the new targets aren't enough to reach the goals of the Paris Agreement.

"With today's new ambition... Shell's board is still failing in its responsibility to show leadership at a time of devastating climate change," said Mark van Baal from Follow This, a group of more than 4,600 shareholders in oil companies including Shell.

Investors also said the investments the company is making in new energy sources--around $2 to $3 billion a year--falls short of the $180 billion Barclays estimates Shell needs to invest by 2050 in order to meet its target.

The sector is increasingly facing pressure from investors to tackle emissions, especially as governments ready regulations to punish big polluters.

On Wednesday, a group of investors representing 1.35% of French oil major Total SA's capital filed a resolution at the company asking it to set absolute emissions-reduction targets aligned with the Paris Agreement.

In March, British oil-and-gas company BP agreed to draft a shareholder resolution to be voted on next year that would enshrine its pledge to reach carbon neutrality by 2050.

Norwegian energy major Equinor ASA in February announced new climate goals, including its intention to reach carbon neutrality from its operations by 2030, boost renewable energy tenfold by 2026 and cut its carbon intensity by at least half by 2050.

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

April 16, 2020 07:06 ET (11:06 GMT)

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