Shell's LNG strategy is a 'disconnect,' according to Shell shareholders' climate resolution

Shell's plans for increasing sales of LNG have been questioned by a major shareholder group that filed a motion asking if the strategy was compatible with a goal of cutting carbon emissions.

Shell is the largest LNG trader in the world. CEO Wael sawan bets on the growing demand. Analysts and climate activists are concerned about the implications of this for climate targets.

Shell shareholders, including Brunel Pension Partnership and Greater Manchester Pension Fund with assets totaling $86 billion have asked Shell for more information about how its growth assumptions and plans to achieve net zero energy by 2050 are compatible with the global energy demand.

Shell's outlook for demand is higher than any scenario published by the International Energy Agency, and it hasn't been materially changed despite major changes on the global energy markets, according to the investor group.

Shell is expected to produce 30% of its upstream hydrocarbons in 2030. Its demand outlook is also 301% greater than the IEA scenario for Net Zero Emissions By 2050.

Sarah Brewin said that this raises questions about governance and financial risk for investors. She is a company strategist with the Australasian Center for Corporate Responsibility.

Vaishnavi Raishankar, Brunel Pension Partnership's head of stewardship, stated that the group was "deeply worried about the apparent disconnect between Shell's LNG strategy and climate change strategies".

Ravishankar stated that "we need to see more transparency in order to assess Shell’s alignment with climate goals. This is particularly true given the recent removal by Shell of its interim climate goal for 2035."

Shell lowered its carbon reduction target for 2030, citing the expectation of strong gas demand, and retired a prior target to reduce carbon intensity by 2035. This decision was made in response to a similar one by BP.

A Shell spokesperson stated that the company's shareholder have "strongly supported our strategy to deliver greater value with lower emissions at successive AGMs with LNG playing a growing role in this strategy".

The spokesperson stated, "We are confident that LNG will play a future role in our strategy."

ShareAction, a UK-based NGO that promotes responsible investments, also reported 100 independent shareholders as supporting the resolution. (Reporting and editing by Barbara Lewis; Virginia Furness)

(source: Reuters)