Our approach to climate change and the energy transition

In 2021, Shell reshaped and restructured its organisation to place our energy transition strategy at the heart of everything we do. Our governance is designed to effectively manage our transition to a net-zero emissions energy business by 2050, in step with society’s progress towards achieving the goals of the Paris Agreement. 

Becoming a net-zero emissions energy business means that we are reducing emissions from our operations and from the fuels and other energy products, such as electricity, that we sell to our customers. It also means capturing and storing any remaining emissions using technology, protecting natural carbon sinks and providing high-quality nature-based solutions to our customers to offset unavoidable emissions.

Because emissions resulting from customer use of our energy products make up the greatest percentage of Shell's carbon emissions, this is where we can make the greatest contribution to the energy transition, by increasing sales of low-carbon energy products and services.

We have set short-, medium- and long-term targets to track our performance against our overall climate target over time. These targets are measured using the net carbon intensity metric.

We follow the GHG Protocol’s Corporate Accounting and Reporting Standard, which defines three scopes of greenhouse gas emissions:

• Scope 1: direct greenhouse gas emissions from sources that are owned or controlled by Shell.
• Scope 2: indirect greenhouse gas emissions from generation of purchased energy consumed by Shell.
• Scope 3: other indirect greenhouse gas emissions, including emissions associated with the use of energy products sold by Shell.

In October 2021, in support of our 2050 net-zero emissions target, we set a target to reduce Scope 1 and 2 absolute emissions from assets and activities under our operational control (including divestments) by 50% by 2030, compared with 2016 levels on a net basis. 

We have also established remuneration policies which are designed to support us in achieving our short-term climate targets. 

Read more about our climate target at www.shell.com/energy-and-innovation/the-energy-future/our-climate-target and in our Annual Report.

Read more about our approach to climate change in our Energy Transition Report at www.shell.com/SET.

Assessing climate-related risks

As Shell has operations both onshore and offshore, the potential physical impacts of climate change are important for us to manage. In this respect, we consider the physical risks to our assets and facilities to ensure they can operate and be accessed safely under extreme weather conditions.

Projects under development that are expected to have a material greenhouse gas impact must meet our internal carbon performance standards or industry benchmarks. Our performance standards are used for measuring a project’s average lifetime greenhouse gas intensity or energy efficiency per asset type. Applying these criteria ensures that our projects can compete and prosper in the energy transition. An exception process is in place to manage specific incidental cases.

Read more about climate risk management in our Annual Report.