Letter from the CEO
Early 2022 has brought new uncertainties and challenges, and, like so many others, I am horrified by the war in Ukraine. I feel deeply for those suffering no matter where they are. All of us at Shell are concerned about our staff and contractors affected by the conflict and we are doing everything we can to help them. Shell is helping in the relief effort and working with governments to find ways to secure energy supplies for Europe and other markets.
We also took decisive actions in support of global economic measures against Russia and you can read about them in the media release.
As the world faces these new challenges, and even as the COVID-19 pandemic continues, it must not lose sight of the importance of taking action on climate change.
Our Powering Progress strategy, which we launched in 2021, sets out how Shell can play a leading role in helping the world to reduce its carbon emissions. At the heart of our strategy lies our own target to become a net-zero emissions energy business by 2050, in step with society’s progress in achieving the Paris climate goals.
In this, our 25th Sustainability Report, we share how we are working towards our Powering Progress goals.
Safety is essential
One critical area in which we simply must do better is safety, which is essential to our strategy. We have made progress on improving the safety of our operations since the early 2000s.
We have not been able to eliminate all fatal incidents involving Shell employees and contractors. The number of safety incidents increased in 2021. I am saddened by the deaths of eight of our contractor colleagues in Pakistan, Indonesia and Nigeria, and the death of a government security agent in Nigeria. We must strive continuously to improve our efforts to keep people safe.
Accelerating towards net zero
In 2021, we took an important step towards becoming a net-zero emissions business with a new target to reduce our absolute emissions from our operations (Scope 1 and Scope 2) by 50% by 2030, compared with 2016 levels on a net basis. By the end of 2021, Shell had reduced Scope 1 and 2 emissions from our operations, and from the energy we buy to run our operations, by 18% from 83 million tonnes in 2016 to 68 million tonnes.
We also achieved our first short-term target of a 2-3% reduction in net carbon intensity (NCI) by the end of 2021. Shell’s NCI in 2021 was 77 gCO2e/MJ which was a 2.5% reduction from the 2016 reference year.
We are also working with our customers and across sectors to help them find their own pathways to achieve net-zero emissions. This will help grow demand for new low-carbon products.
But Powering Progress goes beyond achieving our net-zero targets. In 2021, we started incorporating new ambitions within our business to respect the environment and to power people’s lives.
We also continued to support the UN Global Compact’s corporate governance principles on human rights, environmental protection, anti-corruption and better labour practices.
In this report, we have set out our commitments on biodiversity, water, and on helping to create a circular economy and reduce waste.
It is also of the utmost importance that we continue to work to prevent oil spills. In 2021, we reduced the number of operational spills of more than 100 kilograms by 40%, compared with 2020. However, in Nigeria, spills caused by oil theft and sabotage of pipelines continued amid heightened security risks. We are dealing with these challenges and the impact they have on the environment, on local communities and on our business.
Contributing to countries and communities
We are working with our suppliers to find ways to reduce greenhouse gas emissions across our supply chains. In 2021, we rolled out a new digital platform which enables our suppliers to track performance on emissions reduction, share best practice and exchange emissions data with their own supply chains.
The supply of affordable, reliable and sustainable energy is crucial for raising living standards and for addressing other global challenges, including inequality. In 2021, we continued to develop social investment programmes to improve access to energy in Ethiopia, Mozambique, Pakistan and South Africa.
In closing, I would like to thank the members of the independent Report Review Panel, who help us provide balanced and relevant reporting. We have made the report more concise this year to make it easier for readers to understand our performance. Each section guides you to our shell.com global website, where updates will keep you informed about our sustainability performance throughout the year. This report sits with the Annual Report and the Energy Transition Report, which also provide information on our sustainability performance.
Sustainability is always a work in progress. Shell has goals to lower our carbon emissions, respect nature and contribute positively to people’s lives. This report shows what we have achieved – and where we need to do better.
Ben van Beurden
Chief Executive Officer