Sustainability governance

We have clear and effective governance structures throughout Shell, along with performance standards and other controls. These include the Shell General Business Principles, our Code of Conduct, and our Health, Safety, Security, Environment and Social Performance (HSSE & SP) standards. They influence the decisions made and actions taken across Shell.

Royal Dutch Shell plc’s Chief Executive Officer and the Executive Committee hold overall accountability for sustainability within Shell, supported by the Executive Vice President for Safety and Environment and other senior managers.

Safety, Environment and Sustainability Committee

The Safety, Environment and Sustainability Committee (SESCo) is one of four standing committees of the Board of Directors of Royal Dutch Shell plc. The overall role of SESCo is to review the practices and performance of Shell, primarily with respect to safety, environment including climate change, and broader sustainability.

SESCo meets regularly to review and discuss a wide range of topics. These include the safe and responsible operation of Shell’s facilities, environmental protection and greenhouse gas emissions, significant incidents that impact safety and environmental performance, progress towards Shell’s climate targets, and energy transition. The committee also endorses Shell’s annual HSSE & SP assurance plan and reviews execution of the plan and audit outcomes.

The committee assesses Shell’s overall sustainability performance and provides input to Shell’s annual reporting and disclosures on sustainability. SESCo also advises the Remuneration Committee on metrics relating to sustainable development and energy transition that apply to the Executive Committee scorecard and incentive programme.

SESCo reviews and considers external stakeholder perspectives in relation to Shell’s business, as well as how Shell addresses issues of public concern that could affect its reputation and licence to operate. Examples include plastic waste, methane emissions, human rights, the UN Sustainable Development Goals, and access to energy in low- and middle-income countries.

In 2020, the committee held five meetings, two in person and three by videoconference, due to COVID-19 restrictions. The topics discussed in greater depth included personal and process safety, Shell’s climate targets and the energy transition, and remuneration metrics and targets. SESCo reviewed Shell companies’ operations and the challenges faced in Nigeria and Brazil.

Together with the Audit Committee and Chief Ethics and Compliance Officer, SESCo reviewed the controls and procedures for managing changes to Shell’s portfolio. The SESCo Chair also held several meetings with senior leaders to discuss specific topics including new fuels, carbon emissions reduction and decommissioning.

SESCo postponed its site visits to the Rheinland refinery in Germany and the LNG Canada project in British Columbia due to the COVID-19 pandemic. The committee instead conducted a virtual site visit to Rheinland via videoconference. The visit focused on safety and environmental performance and the planned transformation of the Rheinland site into a chemicals and energy park. It also included an engagement with a government minister of North Rhine-Westphalia.

In 2020, the members of the committee were:

• Sir Nigel Sheinwald – Member since July 2012 and Chair since May 2018;
• Catherine Hughes – Member since November 2017;
• Linda Stuntz – Member since May 2018 and stood down in May 2020;
• Neil Carson OBE – Member since June 2019;
• Ann Godbehere – Member since May 2020; and
• Bram Schot – Member since October 2020

For further details on SESCo and how Shell manages sustainability see www.shell.com/sustainability/our-approach/governance and our Annual Report.

Committee voice

“In 2020, we focused on the areas of most strategic importance to Shell, in line with our updated terms of reference. This allowed the committee to oversee effectively and thoroughly Shell’s practices and performance related to safety, environment including climate change, and broader sustainability.

“We are pleased that there were no fatalities in 2020 at Shell-operated ventures, the first year this has been achieved and a testament to Shell’s relentless focus on safety. We welcomed Shell’s refreshed approach to safety announced in 2020, with its emphasis on the human dimension of safety performance.

“The committee supported and contributed to Shell’s announcement in 2020 that it aims to become a net-zero emissions energy business by 2050, in step with society. We believe this again demonstrates Shell’s determination to play its full role in the energy transition. The committee has discussed in depth with management how Shell’s climate targets are being put into action through portfolio changes, the use of nature-based solutions, the development of carbon capture utilisation and storage, and through carbon reduction programmes at Shell-operated facilities.

“Following our review of remuneration with management, new safety and environment metrics will be introduced for 2021 along with increased weighting for these metrics and energy transition metrics, which should drive further performance improvements.

“The committee closely monitored and strongly supported Shell’s response to the COVID-19 pandemic in terms of care for staff and communities, and the safe management of operations. The committee appreciated Shell’s rapid deployment of virtual working technology from the start of the pandemic to enable business continuity and to support continued HSSE & SP assurance activities across Shell.

“The committee continued to review wider questions of public concern such as plastic waste, methane emissions and human rights. We look forward to resuming direct engagement with stakeholders once the COVID-19 restrictions come to an end.”