Letter from the CEO

In 2023, we made good progress in our goal of creating more value with less emissions.

We achieved our second-best financial results ever, while reducing our carbon emissions on the path towards becoming a net-zero emissions energy business by 2050. By year’s end, we had achieved more than 60% of our target of halving carbon emissions in our own operations by 2030, compared with 2016. We also met our short-term target to reduce the net carbon intensity of the energy products we sell, with a 6.3% reduction against our target of 6–8% compared with 2016.

We work hard to minimise risk throughout our operations. I am deeply saddened that four of our contractor colleagues in Shell-operated ventures died in 2023: one in Malaysia, one in the Philippines and two in an attack on a convoy in Nigeria. Four government security agents also lost their lives in the attack. A fifth contractor colleague, who was injured in a fire in Nigeria in 2023, passed away in February 2024. We are determined to learn from these incidents and take steps to prevent something similar from happening again.

Delivering oil and gas with less emissions

As we continue to deliver the oil and gas that the global energy system relies on, we are reducing the carbon emitted in its production.

We expect liquefied natural gas (LNG) will play a critical role in the energy transition. LNG produces fewer greenhouse gas emissions than coal when used to generate electricity and fewer emissions than petrol or diesel when used as transport fuel. It also offers flexibility to electricity grids as wind and solar power grow.

In 2023, we helped two additional countries reduce their reliance on coal-fired power generation by delivering the first cargoes of LNG to new import terminals in the Philippines and Vietnam.

We are also working to reduce the emissions intensity of our LNG projects. LNG Canada (Shell interest 40%, non-operated), which is expected to start production later this decade, is designed to have the lowest carbon intensity of any large liquefaction facility currently operating anywhere in the world ― about 60% lower than the average facility today and 35% lower than the best-performing facility.

Reducing emissions of methane is one of the most effective near-term actions to keep the goal of the Paris Agreement within reach. We aim to keep methane emissions below 0.2% at Shell-operated oil and gas assets each year, and I am pleased to say we achieved this again in 2023. Our target is to achieve near-zero methane emissions by the end of this decade.

Despite the progress we have made, there is much work still to be done and lessons to be learned, whether from safety incidents or in how to develop new projects that minimise our impact on the environment.

Our latest offshore oil and gas facility in the US Gulf of Mexico, Vito (Shell interest 63.1%), is a compelling example of how we work to embed sustainability and emissions reduction into the life cycle of our projects, from design to decommissioning. Vito, which started production in 2023, is one-third of the size of its original design. It is expected to reduce CO₂ emissions by about 80% over its operating life. We are now repeating the same concept in other new offshore projects.

Investing in the energy transition

We are also investing in low-carbon and non-energy products that reduce emissions for our customers.

In 2023, we invested $5.6 billion in low-carbon energy solutions, including biofuels, hydrogen, charging for electric vehicles and renewable power generation; and $2.3 billion on non-energy products such as chemicals, lubricants and convenience retail, which do not produce emissions when our customers use them. This amounted to around one-third of our total capital spending in 2023.

We also invested 49% of our research and development budget in 2023 on decarbonisation projects. These include testing a new solid sorbent technology to remove CO₂ emissions from the air, and an electrolyser to produce hydrogen from renewable energy at higher efficiency and lower cost than is currently possible.

Respecting nature

Along with generating shareholder value and achieving net-zero emissions, our Powering Progress strategy is about powering lives and respecting nature.

We have already achieved some of the commitments made under our respecting nature goal, which we set in 2021. These include reducing fresh-water consumption by 15% compared with 2018 in areas where water supplies are stressed, which we reached ahead of the target date of 2025.

We are working hard to help develop a viable circular economy for plastics, despite a global lack of feedstock made from plastic waste, slow technology development and regulatory uncertainty. In 2023, we signed several strategic co-operation agreements with partners to increase supplies of feedstock and enable its long-term storage.

We also continued to remove single-use plastics like cups and cutlery from our Shell-owned service stations and to find new ways to reduce, recycle or reuse plastics in our packaging for lubricants and car-care products.

Powering lives

Energy is essential to human life. Yet too many people in the world have no or, at best, unreliable access to electricity. Even more lack clean cooking facilities. For many years, we have worked to bring reliable and affordable electricity and improved cooking conditions to those who do not have them. We invest in businesses that supply energy access in emerging markets and we provide funds and expertise to social investment programmes.

Shell has pledged $200 million as part of a broader initiative to help people in sub-Saharan Africa, India and South-east Asia get access to energy in the near and medium term.

We are making progress in our ambition to become one of the most diverse and inclusive organisations in the world. For instance, in 2023, 32% of our senior leadership positions were held by women, which is close to our target of 35% by 2025. As of January 1, 2024, for the first time in our history we have more women than men on our Executive Committee.

We continue to support the UN Global Compact’s corporate governance principles on human rights, environmental protection, anti-corruption and better labour practices. We respect human rights in our business and work hard to ensure that our joint-venture partners and supply chains do the same.

We recognise the importance of a just transition to a net-zero emissions energy system in which the costs and benefits are distributed fairly. In the UK, for example, we are supporting three Energy Transition Skills Hubs that plan to help 15,000 people into jobs with a focus on the energy transition by 2035.

This is our 27th Shell Sustainability Report, a voluntary publication we have issued each year since 1997. As of 2024, our sustainability reporting will be integrated with the Shell Annual Report and Accounts. I welcome this step, which brings all our reporting into one document. We will continue to be transparent in our reporting and demonstrate that sustainability is embedded in our way of doing business.

Wael Sawan
Chief Executive Officer