Analysing Shell’s 2024 AGM Report As Shareholders Have Their Say on Climate
Shareholders will have their Say on Climate at today's AGM. Here's what investors should know.
As a company whose strategic decisions have the power to sway global decarbonisation efforts — and ahead of today’s Say on Climate vote — Shell is under the spotlight this AGM season. Shining said light is Accela Research, an investment advisory firm driving climate outcomes, which has released its latest report dissecting Shell’s 2024 Energy Transition Plan. Amidst growing urgency for climate action, Accela’s findings offer insights into Shell’s approach and its implications for the energy landscape. Here, we unpack those findings.
A closer look at Shell’s strategic shift
Accela’s analysis reveals the progress and, more significantly, the shortcomings of Shell’s 2024 AGM report. Although steps have been taken to align a strategy with increased climate commitments, Accela’s report underscores areas of concern; critically, Shell fails to substantially deliver on decarbonisation.
The report highlights Shell’s revised Net Carbon Intensity (NCI) target for FY30, reflecting a scaled-back ambition from its previous stance. Despite unveiling plans for a diversified portfolio mix, including increased bioenergy and power components, Shell’s reliance on offsets raises questions about the efficacy of its approach. Accela estimates that meeting Shell’s FY30 target would require offsets equivalent to the scale of a mature forest up to three times the size of Denmark, emphasising the magnitude of the challenge ahead.
The report also delves into Shell’s stance on liquefied natural gas (LNG) and its implications for the energy transition. While Shell leads in LNG sales among European peers and has ambitious growth targets for LNG production, its allocation of capital towards low-carbon initiatives lags behind its industry counterparts. Compared to competitors like BP, TotalEnergies, and Equinor, Shell’s commitment to low-carbon investments appears conservative with a narrower focus on EV charging infrastructure, biofuels, and renewable energy solutions.
Investor’s Takes on Shell’s 2024 AGM report
Accela’s report outlines investor sentiments and expectations regarding Shell’s energy transition strategy. With the upcoming Say on Climate vote at its AGM on May 21st, 2024, investors are poised to scrutinise Shell’s plans for addressing climate risks and driving emissions reductions. While acknowledging Shell’s strides in aligning its business strategy with climate goals, Accela emphasises the need for heightened ambition in low-carbon investments to mitigate transition risks effectively.
Accela’s CEO, Shu Ling Liauw, advocates for a more aggressive approach to transition, stressing the importance of increasing low-carbon ambition to navigate the evolving energy landscape effectively. Similarly, analyst Rohan Bowater says, “In FY23, Shell’s reliance on offsets accounted for over a third of its net emission reduction. Woodside relied on offsets for 80% of its reduction. Moving forward, oil and gas companies must justify how offsets generate long-term value, compared to investing in low carbon energy alternatives.”
In an era defined by the ongoing climate crisis, decisions made by energy giants like Shell reverberate far beyond boardroom discussions, shaping the future trajectory of global energy systems. For more details, read the full report by Accela Research here.