LONDON – Shell has refused to set emissions reduction targets in absolute terms from customers’ use of its products, its chairman said in a report published on Thursday as the energy company faces pressure from activists and investors on climate. End-user emissions, known as Scope 3, account for about 95% of the energy company’s greenhouse gas pollution, and some investors have urged Shell to introduce medium-term targets to reduce them in absolute terms. “The board considered setting a Scope 3 full emissions target but found that it would be against the financial interests of our shareholders and would not help mitigate global warming,” Shell chairman Andrew McKenzie said in the report. Shell said such Scope 3 targets would force it to cut sales of oil products and natural gas, “effectively handing customers over to competitors”. Shell’s new chief executive, Val Savan, rejected tougher emissions reduction targets after signaling this month that the company was reviewing plans to gradually cut oil production. Shareholders will vote on May 23 on a resolution filed by activist group Follow This, calling on Shell to set 2030 emissions reduction targets in line with the 2015 Paris UN accord. Shell’s board has yet to issue a recommendation, but it has previously recommended that similar resolutions be opposed by investors. Last year’s resolution won 20% of the vote while Shell’s energy transition strategy won 80%.
Intensity measure
Shell aims to reduce planet-warming gases across its portfolio – by 20% by 2030 and 100% by 2050 – depending on the intensity of its fuel emissions. It aims to halve emissions from its own operations from 2016 onwards. 2030 and said it has already reduced them by 30%. Measuring emissions by intensity means that a company can technically increase its fossil fuel production and overall emissions while using renewable energy or biofuels in its production mix. In 2021 a Dutch court ordered Shell to cut its emissions by 45% by 2030. The company has appealed against the verdict. A group of European institutional investors is also backing a London lawsuit targeting Shell’s board over alleged climate mismanagement that could have far-reaching implications for how companies deal with emissions. “We believe that our directors complied with their legal duties and, at all times, acted in the best interests of the company,” Shell said in its report in response to the lawsuit. The world needs to cut greenhouse gas emissions by 43% from 2019 levels by 2030 to have any hope of limiting global warming to 1.5 Celsius (2.7 Fahrenheit), a level scientists say could prevent the most serious consequences.
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