This week, after years of intense shareholder pressure, UK energy giant Shell The carbon emissions metric will be introduced in the form of three and five-year targets focusing on annual net carbon footprint reduction (the reduction of emissions from the company's use of fossil fuels as well as emissions of vehicles that use Shell products) beginning in 2020. Shell also stated that it will incorporate energy transition targets into the company's long-term incentive plan. The changes to the company's executive pay program are aimed at addressing criticisms of previously set, aggressive long-term company goals to reduce Shell’s carbon footprint over the next 15, 30, and 50 years which investors who are part of the Climate Action 100+ coalition said lacked accountability.a plan to incorporate a carbon emissions measure into the company’s executive compensation programs if approved by shareholders at its 2020 annual meeting.
According to the Financial Times, approximately 1,200 of Shell’s employees could see changes to their compensation as a result of the incorporation of the climate change metrics. Details on how the actual integration of the measures in the company’s long-term incentive program are being developed.
The shift in policy comes after months of intense investor engagement and public policy developments in the EU aimed at the energy industry in an attempt to create specific goal measures for climate change and carbon emissions reduction. Shell's decision could result signals to other energy companies and entities in other industries which with business strategies with environmental impacts. Shell issued a press release quoting Anne Simpson, the inaugural Chair of the Climate Action 100+ Steering Committee and Director of Board Governance and Strategy at the California Public Employees’ Retirement System (CalPERS), stating,. “The commitment by Shell to fully respond to the engagement shows the value of dialogue and global partnership to deliver on the goals of the Paris Agreement on climate change. Shell is setting the pace, and we look forward to other major companies following its lead.”