The market greeted the oil major’s latest update with a sceptical shrug
Shell CEO Ben van Beurden’s attempt to power up the company’s share price with a much-ballyhooed strategic update didn’t do much to energise the markets.
The oil giant held out the prospect of a gusher of money for investors between 2021 and 2025, promising to return $125bn (£99bn) in dividends and share buybacks, more than double the number of a decade earlier. It also increased its capital investment estimate a bit, to an average of $30bn in the five years to 2025.
A neat looking trick the company says it can pull off with oil at $60 a barrel, with cash expected to flow freely from new projects. But the shares still fell in response.
What’s that? You were waiting to hear about climate change given how much Shell contributes to that and its bold promises to do better, even to the extent of linking its boss’s pay to emission reduction targets?
Well there wasn’t much of that to be found in the statement until about two thirds of the way down where there was a nod to society’s transition to “much greater levels of electrification” and some corporate speak about Shell’s “focus on creating business models to meet evolving customer demands”.
“Natural gas and liquefied natural gas are expected to continue to experience strong demand as the world tackles climate change, poor air quality and population growth,” it went on.
Of course, while natural gas is cleaner than some fossil fuels, it still emits carbon. Just saying.
It’s true that this was an update aimed at investors and the City so cash was naturally at the core of it. But Shell’s critics in the environmental movement have long accused it of green washing, and saying different things to different audiences. This spoke to that.
If a commitment to reducing climate change is at the core of what Shell is doing, as it claims, where was it?
The company has loudly trumpeted a campaign to reduce its net carbon footprint by 50 per cent by 2050. It played a role in Forbes ranking its boss highly on a list of the world’s most reputable CEOs.
However, I think we can be pretty confident that high on his list of priorities will be making good on the $125bn promise he’s just made.
Last year around a quarter of shareholders voted against the company’s remuneration report. This year it was down to just over 10 per cent despite Shell more than doubling can van Beurden’s pay to a colossal €20.1m (£17.8m).
The link to emissions targets has to be welcomed. But that payment was nonetheless rightly described as “warped” by Luke Hildyard, director at the High Pay Centre.
There is no evidence that numbers like it result in improved corporate or economic performance. But despite the City’s sceptical response to the strategic update, if Shell does what van Beurden promises it will do its investors will likely wave through any similar such pay outs regardless of what happens to climate change.royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com