Shell to Link Executive Bonuses to Emissions Targets, CEO Says


by | Dec 1, 2016

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ShellShell plans to link executive bonuses to greenhouse gas emissions and take other actions to reduce its carbon footprint.

In an interview with Reuters, Shell CEO CEO Ben van Beurden said the oil and gas company has “to be at the forefront of the transition” to a low-carbon economy and that means focusing on renewable energy, especially wind and solar, as well as low-carbon biofuels and hydrogen as key growth areas beyond 2020.

“If you make new investment decisions that you have to live with for the next 30 or 40 years, why don’t we screen these for long-term carbon intensity?” Van Beurden said. “In the past we didn’t do this. The only thing we did was put a shadow price for carbon in them … now we have to take it one step further.”

One step further includes linking 10 percent of executives’ bonuses to “greenhouse gas management,” although Shell has yet to set specific targets. Van Beurden, whose salary was $6.4 million last year including a $4.4 million bonus, said Shell will seek shareholder approval for a three-year program at its next general meeting.

Van Beurden’s announcement comes as investors are putting increasing pressure on oil and gas companies to better manage their climate risk.

The oil and gas industry, and the use of its products, account for about half of global CO2 emissions. And yet executive remuneration packages remain heavily weighted to reward company performance on hydrocarbon production levels and reserve replacement indicators, according to a CDP report published last week. The report says only five companies currently have detailed climate-linked performance metrics.

A different CDP report published earlier this month found that only 29 percent of energy companies requested to disclose water risk provided information to their investors via CDP this year. ExxonMobil, Chevron and Shell are the three largest energy companies that, since 2012, have failed to respond to investor requests for disclosure.


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