Understanding and engaging with our stakeholders
The Board continues to value and recognise the importance of engagement and co-operation with our stakeholders. Time is dedicated to listening to different stakeholder views and our commitment to stakeholder engagement is built upon the understanding that knowledge-sharing, widening of experiences and adopting a learner mindset will help us achieve our commercial, environmental and social objectives.
The Board’s and Shell’s commitment to public collaboration and stakeholder engagement has in the past been easier to demonstrate by looking at the number of physical events and engagements held in a particular year. In recent years, as we continue to be affected by the COVID-19 pandemic, we have had to be more creative and maximise virtual opportunities in order to obtain feedback on stakeholder issues and priorities.
We continue to put the safety and health of our people, customers and other stakeholders first, along with the safe operations of our businesses. With that as our priority, we have endeavoured to engage in ways that are as effective and as safe as possible.
The continued impact of COVID-19 has inevitably limited the engagements we planned for 2021. Many of our events have again been held virtually, with the Board prioritising the health and safety of our shareholders, employees and other stakeholders. Most recently, our General Meeting was held physically in the Netherlands but shareholders were urged to consider whether physically attending was in their and the public’s interest, with the meeting webcast being recommended as an alternative way to follow the proceedings. Any engagements, virtual or physical, always involved considering stakeholder interests, public health and safety, and the advice and law of local governments. The Board was disappointed that there have been relatively few possibilities to engage in person in 2021, having hoped for a significant improvement on the limited opportunities of 2020. We remain grateful for the opportunities that we have had and are thankful for the continued support of our stakeholders. We also look forward to future engagements in the year ahead, when it is safe and appropriate to hold them.
The Directors have continued to consider stakeholders’ views in Board discussions and decision-making, as described in "Section 172(1) Statement".
Engagement with our stakeholders goes beyond the Board and is continuous. Our broader businesses regularly engage with stakeholders throughout the year, and in the build-up to or during many Shell projects or activities. This engagement is often governed by formulated policies, control frameworks, regulation and legislation. It may differ by region.
Site Visits
The Chair, certain Board committees and Non-executive Directors traditionally visit a number of Shell operations and overseas offices. The visits are designed to provide Directors with:
- first-hand insights into portfolio positions; and
- opportunities to engage directly with stakeholders including employees, partners, communities and NGOs.
In previous years, and as part of the Board evaluation process, the Directors have reflected on the use of site visits for improving the Board’s oversight of risk and concluded that the best way to determine if risks are being properly managed is to visit sites and talk to local management. Similarly, some Directors have used site visits as a way to monitor and assess culture first-hand. They have commented on the difficulty of doing that this year. It was also noted that visits to key sites played an important part of the induction process for new Board members and provided good opportunities for Board members to get to know each other better.
Alternative arrangements were made where feasible, and details of these are described below.
Shareholders
The Chair, the Deputy Chair and Senior Independent Director, the Chief Executive Officer, the Chief Financial Officer and the Executive Vice President Investor Relations each meet regularly with major shareholders and report the views of such shareholders to the Board. Committee chairs also seek engagement with shareholders on significant matters related to their areas of responsibility. Over the year and following his appointment as Chair, Sir Andrew Mackenzie met with 93 major shareholders, including at roadshows. Prior to his retirement from the Board and position as Chair, Chad Holliday met with 34 major shareholders, including at roadshows. The Remuneration Committee Chair met with 31 shareholders over the course of the year. A variety of topics were discussed.
Shareholders can contact Shell directly via the “Contact us” section of the Shell website. This allows investors’ questions to be directed to the appropriate Shell team that can assist. Shareholders are also able to make use of our automated question response tool. Investors can also access information via the frequently asked questions section of the Shell website.
The Shell website also provides contact details for our registrar, Equiniti, shareholder queries, our media team, requests for copies of the Annual Report, and general customer enquiries.
The Company’s registrar operates an internet access facility for registered shareholders, providing details of their shareholdings. Facilities are also provided for shareholders to lodge proxy appointments electronically. The Corporate Nominee service, facilitated by Equiniti, provides a facility for investors to hold their shares in the Company in paperless form.
Stakeholder Engagement on AGM Resolution
In September 2021, after the second quarter results and the summer holiday period, the Chair, Chief Executive Officer and Chief Finance Officer hosted meetings with some of our large shareholders. These meetings covered many topics. Shareholders were asked for specific feedback on Shell’s energy transition strategy and the resolution submitted by the Follow This group. Shareholders who had voted for the Follow This resolution were asked about the rationale of supporting it while also voting in favour of Shell’s energy transition strategy. These shareholders were also asked what they would like to change in Shell’s energy transition strategy. In some instances, these discussions also included talk about the outcome of the Dutch court case.
Many investors were complimentary about Shell’s energy transition strategy and the comprehensive targets we had set. Some shareholders said they were merely supporting a “climate-related” resolution, and so they could or probably had supported both Shell’s energy transition strategy and the Follow This resolution. Some investors mentioned that they would like to see targets for cutting absolute emissions rather than just reducing net carbon intensity. But many were understanding of why these had not been set. Some said Shell’s net-zero target needed to be clearer and not so dependent on customers reducing their emissions.
All of the stakeholder feedback was added to the ongoing internal considerations of the Company’s climate targets, along with the outcome of the Dutch court case, the Powering Progress strategy and the commitments that Shell had made within its energy transition strategy. On October 28, 2021, Shell announced a new target to halve Scope 1 and 2 emissions under Shell’s operational control by 2030, compared with 2016 levels on a net basis. This is another strategic milestone on our path to becoming a net-zero emissions energy business by 2050, in step with society.
Board Governance Event
We previously reported our proposal for the next Board Engagement Day to be held in October 2021, circumstances permitting. Unfortunately, after the publication of the 2020 Annual Report and Accounts, and 20-F, the COVID-19 pandemic continued and was still causing concern in the autumn of 2021. The Board had to balance health and safety concerns with the value to Shell of stakeholder engagements, such as Board Engagement Day. As a result, there was no Board Engagement Day in 2021. The Board has sought to obtain feedback and be involved in discussions in other ways, in the absence of this particular event. These ways are described below and elsewhere in this Annual Report.
Engagements in 2021
Information on engagements the Board has held during the year are summarised below. Information on engagement with other stakeholders including the workforce is provided in section "Workforce engagement". The way in which stakeholder interests were considered in principal decision-making by the Board in 2021 (Section 172 statement) can be found in "Section 172 statement". Further insight into our engagement with stakeholders can be found within our Sustainability Report, scheduled for publication in April 2022.
Strategy Day 2021 Presentation
Engagement before event
There was engagement with stakeholders and feedback was sought from them at the bi-annual Chair Roadshows, prior to Strategy Day 2021.
Event/activity
The CEO and CFO hosted 2021 Strategy Day presentation webcasts which on February 11, 2021. The presentations set out Shell’s strategy to accelerate its transformation into a provider of net-zero emissions energy products and services, powered by growth in customer-facing businesses. It was also announced that a disciplined cash allocation framework and thorough approach to driving down carbon emissions would be pursued to deliver value for shareholders, customers and wider society.
After the presentations, the CEO and CFO invited questions from the media and investors. The webcasts separated investor and media questions, enabling answers to be focused on specific stakeholders’ questions.
Director attendance
CEO
CFO
Outcome/insight
Positive feedback was received. This included comments on the logic of the strategy which appeared to use Shell’s existing strengths. It was also noted that the strategy would support focusing on higher-margin elements in the value chain and emphasising capital discipline.
Remuneration Roadshow – Q1 2021 Engagement
Engagement before event
Engagement was undertaken before the meetings so that the Directors were provided with understanding and insight on particular topics of interest.
Event/activity
In March and April 2021, Neil Carson, Chair of the Remuneration Committee, presented 2020 remuneration outcomes and 2021 remuneration plans to investors. The presentation repeated previous comments in support of employees, customers and communities, and resilient financial performance and strategy to accelerate the transition to net zero. A summary of key Remuneration Committee decisions was also provided and included:
- no 2020 annual bonus;
- LTIP vesting outcome of 90% (45% of maximum) based on strong relative performance outcomes;
- CEO single figure down 41% from 2019;
- no salary increases for 2021; and
- reduction of 2021 LTIP share awards to mitigate the risk of windfall gains (equivalent to a reduction of 50% of the fall in share price since the 2020 award). The CEO’s award was also reduced from 300% of base salary to 264.5% and the same approach was applied to the CFO.
Shareholding policies and large personal shareholdings were discussed, noting that this continued to deliver strong alignment between management and shareholder interests. The Chair also announced that pay measures for management were consistent with the general employee population (except for the reduction to the 2021 share award, which was applied at Executive Director level).
Director attendance
Remuneration Committee Chair
Outcome/insight
Following the event, high levels of support were given to the Remuneration Committee and this was further demonstrated by the favourable voting outcome at the 2021 AGM. The Remuneration Committee was praised for how it had navigated a difficult year due to COVID-19.
Annual ESG Update 2021
Engagement before event
Discussions were held with the Chair of the Safety, Environment and Sustainability Committee ahead of the event to formulate the agenda and ensure that key areas of interest were covered.
Event/activity
Presentations from the Chair of the Safety, Environment and Sustainability Committee and the CEO were given. The CEO and the CFO met the President of Ceres, a non-profit organisation, for discussions focusing on the Shell Energy Transition Strategy report.
Discussions covered matters relating to Nigeria and the Powering Progress goals of respecting nature and powering lives. During these sessions the audience was encouraged to ask questions.
The audience was informed that for any unanswered questions, representative from the Investor Relations team would follow-up after the event.
Director attendance
CEO
Chair of the Safety, Environment and Sustainability Committee
Projects & Technology Director
Legal Director
Upstream Director
Outcome/insight
Any questions requiring follow-up were picked up outside the presentations. In some cases, follow-up meetings were held with stakeholders and the Chair of Safety, Environment and Sustainability Committee.
Plastic Waste – Safety, Environment and Sustainability Committee engagement with external organisation
Engagement before event
Discussion with the Chair of the Safety, Environment and Sustainability Committee on key topics for discussion.
Event/activity
Wide-ranging discussion on the issue of plastic waste reaching the environment and solutions through partnerships to address this societal challenge.
Director attendance
Safety, Environment and Sustainability Committee
Outcome/insight
Greater insights into the role governments and businesses can play in partnership to address the issue of plastic waste.
Shell’s Climate Targets – Safety, Environment and Sustainability Committee engagement with external stakeholders
Engagement before event
Discussion with the Chair of the Safety, Environment and Sustainability Committee and external stakeholders to develop the agenda and agree on the meeting format.
Event/activity
Feedback on how Shell’s climate targets are perceived by external stakeholders and feedback on evolving societal expectations of business.
Director attendance
Safety, Environment and Sustainability Committee
Outcome/insight
Deeper understanding of how Shell is perceived and likely future stakeholder expectations.
Shell Energy Transition Strategy 2021
Engagement before event
Engagement took place with the shareholder organisation Climate Action 100+ and feedback was actively incorporated into the drafted report.
Event/activity
A presentation and question and answer session were held in respect of the Shell Energy Transition Strategy. This particular engagement was provided for in advance of the 2021 Annual General Meeting (AGM), where the Energy Transition Strategy was being put to an advisory shareholder vote.
Director attendance
CEO
Chair
Project & Technology Director
Outcome/insight
Subsequent shareholder engagement sessions were held with CEO and Chair. The voting outcome at 2021 AGM was overwhelmingly supportive, with 88.74% of votes received in favour. Shell also formally commented on the Follow This shareholder resolution outcome and set a net absolute Scope 1 and 2 target by 2030 within its existing strategy.
2021 AGM
Engagement before event
The Board sought feedback from the investor community and other stakeholder groups prior to the AGM.
Event/activity
Safety was prioritised ahead of the 2021 AGM, in the context of the continued COVID-19 pandemic and the ban on public gatherings in both the Netherlands and UK. Physical attendance was limited to the Chair, CEO, CFO and Company Secretary. Other Directors joined the meeting virtually, as did many of our shareholders.
Director attendance
Board (both virtual and physical attendance)
Outcome/insight
Resounding support from shareholders for the resolutions proposed by the Board, including the advisory vote on the Shell Energy Transition Strategy.
Chair Roadshows and SID calls
Engagement before event
Over 100 meetings were held between the Chair of the Board and shareholders during 2021.
A handful of engagements with key institutional investors were also undertaken as part of the appointment of the SID.
Event/activity
The dialogue was typically strategic in nature and included ESG topics as well as energy transition and business outlook.
The discussions predominately focused on the selection process for a new Chair and how to ensure that the new Chair was aligned with Shell’s Powering Progress strategy outlined in February 2021.
Director attendance
Chair
Deputy Chair/SID
Outcome/insight
Investors also had subsequent dialogue with Shell’s Investor Relations team. Access to and availability of management and the Board as well as the open and transparent approach in shareholder engagement was positively recognised by several institutional shareholders.
Feedback from the meetings was positive. Shareholders were provided with insights and assurances associated with the process for selection of a new Chair.
The Institutional Investors Group on Climate Change (IIGCC) meetings
Engagement before event
We have a continuing dialogue with this group throughout the year. Moreover, meetings with the IIGCC are held with the CEO, and another with a member of the Executive Committee twice a year as part of our engagement and collaboration with the IIGCC and Climate Action 100+.
Event/activity
In 2021, the Executive Committee member was Harry Brekelmans. The topics discussed were the energy transition, the Dutch court ruling, Shell’s energy transition strategy, the sectoral approach, and Shell’s industry association climate lobbying.
Director attendance
CEO
Projects and Technology Director
Outcome/insight
We continue to value and appreciate the collaboration with Climate Action 100+ and their large institutional investor base.
Shareholder engagement regarding the simplification
Engagement before event
Feedback was obtained from the investor community and other stakeholder groups about how best and most practically to support the needs of stakeholder engagement.
Event/activity
This engagement provided those in attendance with an opportunity to put questions to the Board, ahead of the 2021 General Meeting. The webcast facilitated enhanced engagement with institutional investors and allowed more of them to participate compared with previous years.
Director attendance
Board
Outcome/insight
Resounding support from shareholders for the resolution proposed by the Board to amend the Articles.
2021 General Meeting
Engagement before event
Feedback was obtained from the investor community and other stakeholder groups about how best and most practically to support the needs of stakeholder engagement.
Event/activity
Outbreaks of COVID-19 variants intensified following the publication of the Company’s Notice of Meeting. The meeting was held as a hybrid meeting meaning shareholders could attend and participate both in person and virtually. However, due to COVID-19 shareholders were encouraged to reflect on whether physical attendance at the meeting was in their best interests. Shareholders supported the amending of the Company’s new Articles and one of the steps required to simplify Shell’s share structure.
Director attendance
Chair
CEO
Deputy Chair/SID
Outcome/insight
Shareholders overwhelmingly supported the resolution proposed.
Audit Committee visits
Engagement before event
Engagement prior to the visits helped to formulate the agenda and refine the areas of focus for the respective visits.
Event/activity
The Audit Committee conducted two site visits to Shell’s Energy Transition Campus in Amsterdam and Shell’s Houston offices. These visits were conducted virtually because of continued COVID-19 travel restrictions. Further details are provided in the Audit Committee Report.
Director attendance
Audit Committee
Outcome/insight
Committee members gained deeper insight into how the Company’s Powering Progress strategy is being implemented. The virtual visits also provided Committee members with opportunities to engage with a diverse range of the workforce.
Director visits
Engagement before event
Discussions were held with the respective Directors ahead of the visit to formulate the agenda and encourage a natural, open dialogue in the group sessions.
Event/activity
In September 2021, two Directors visited the Shell Energy and Chemicals Park Rotterdam (formerly the Pernis refinery) in the Netherlands. They were shown the site, and briefed about safety process measures, including those to protect against COVID-19. They had lunch with employees, allowing them to get staff feedback on businesses in the reorganised, post-Reshape Shell.
The Board met staff virtually from Shell’s Pennsylvania Chemicals complex in the USA. During this session, the Board received an overview of Shell’s Chemicals strategy, industry outlook, plans to achieve goals and to support the customer experience. The Board also engaged in discussions on health, safety, security and the environment.
Director attendance
Directors
Outcome/insight
The Board gained an insight into the development and culture of the operations and maintenance teams. The use and impact of digitalisation tools were highlighted, and the future environmental capabilities of the site were discussed.
