Shell is latest to pledge net-zero greenhouse emissions by 2050
Oil company's step follows letter from BlackRock CEO urging corporate climate action. Congress, meanwhile, has been unable to act
Royal Dutch Shell PLC has become the latest global corporation to commit to a plan to reach net-zero greenhouse gas emissions by 2050, even as the global pandemic saps demand and President Donald Trump rolls back environmental regulations in the U.S.
The Netherlands-based, U.K.-incorporated company raised goals for reducing the carbon footprint of the products it sells such as gasoline and jet fuel by 30 percent by 2035 and 65 percent by 2050. The targets align with the Paris climate agreement’s goal of limiting global average temperature rise to 1.5 degrees Celsius, Shell said in a statement.
“With the COVID-19 pandemic having a serious impact on people’s health and our economies, these are extraordinary times,” said Shell CEO Ben van Beurden in a statement. “Yet even at this time of immediate challenge, we must also maintain the focus on the long term.”
Shell’s plan is the latest in a series that companies to release such plans since Larry Fink, CEO of the world’s largest asset manager, BlackRock Inc., focused his annual letter to corporate leaders on addressing climate change. Bank JPMorgan Chase & Co., oil and gas company BP PLC, air carrier Delta Air Lines Inc., and software maker Microsoft Corp. were among large companies that released plans to reduce or offset emissions in the wake of Fink’s Jan. 14 letter.
[Top money manager has companies scrambling to act on climate]
Some urged Fink to go further, including Sen. Elizabeth Warren, D-Mass., and three other Senate Democrats. They wrote a letter to Fink pressing him to support a bill (S 2075) that would require companies to report physical and transition risks related to climate change and climate risk management efforts while directing regulators to set standards for corporate disclosure of greenhouse gas emissions and owned fossil fuel assets.
Van Beurden said that Shell has to be more ambitious to meet quickly shifting societal and customer expectations related to climate change action. The plan includes achieving a net-zero emissions energy business by 2050 or sooner, which would involve offsetting or reducing both direct and indirect emissions related to oil and gas production.
In its April 16 statement, Shell said it will pivot to sell to businesses and sectors that have also achieved net-zero emissions by 2050, develop a way to track and report customers’ emissions reductions, and work with customers to offset emissions while promising to track and report on progress toward its own goals.
The Trump administration, meanwhile, moved to weaken environmental regulations in recent weeks with most focus on the coronavirus pandemic. The changes have included loosening of rules related to auto emissions, toxic metal release from oil and coal-fired power plants, and corporate actions that incidentally kill birds.
While Shell’s scale may allow for more long-term planning, oil and gas stocks are reeling. Shell’s class A stock price fell 37 percent since the beginning of February. Still, even amid market turmoil, the environmental advocates said the pandemic underscores the need to address systemic risks like climate change, and that they expect companies to adhere to long-term climate plans and take new actions.
In a statement, the Climate Action 100+, a coalition of investors managing more than $40 trillion and targeting the largest emitters, applauded Shell’s announcement and described it as an agreement with the group. The company also touted their support. BlackRock recently joined the coalition, adding its more than $7 trillion in assets under management.
Some members said they’d continue monitoring Shell as it carries out its plan, including to make sure its business is fully aligned with Paris accord goals. Principles for Responsible Investment CEO Fiona Reynolds said in the statement that the current crisis shows the health of people, the planet and the economy are inseparable.
“Timely investor action to address the devastating social and economic effects of COVID-19 is essential, and we welcome Shell’s significant commitment today to become a net zero emissions energy business by 2050,” she said. “It’s imperative that companies continue to focus on the long-term impacts of investments on the climate.”