Shell has produced hundreds of pages explaining its progress towards a lower-carbon future. Unfortunately for the corporate narrative, it has also included the numbers.
By John Donovan
Shell’s latest Annual Report and Accounts 2025, published in 2026 and incorporating extensive sustainability reporting, is an impressive document.
It is large. It is glossy. It is meticulously footnoted. It contains photographs of industrious-looking people in hard hats. And throughout its pages we encounter the familiar Shell formulation:
“More value with less emissions.”
There is just one small difficulty.
When you get past the photographs, aspirations, transition vocabulary, cautionary notes, definitions, methodologies, adjusted measures and corporate prose, Shell has supplied enough hard data to show what sort of company it actually intends to be.
And the answer is not especially mysterious.
It intends to remain one of the world’s largest oil and gas companies.
Shell describes its report as presenting its financial, operational, strategic and sustainability performance for the year ending 31 December 2025. CEO Wael Sawan says he is proud of Shell’s progress with its strategy to deliver “more value with less emissions.” (Shell)
Fair enough.
So let us examine the “less emissions” part.
1,142 million tonnes of inconvenient context
One of the most useful tables appears deep inside Shell’s sustainability disclosures.
Shell reports total gross greenhouse-gas emissions in 2025 of approximately:
1,142 million tonnes of CO₂ equivalent.
That figure includes:
- Scope 1 emissions: 69 million tonnes
- Scope 2 emissions: approximately 8 million tonnes
- Scope 3 emissions: 1,065 million tonnes
The largest component of Scope 3 emissions was the use of products sold by Shell: 836 million tonnes of CO₂e. (Shell)
In other words, the overwhelming climate impact associated with Shell’s business does not come from whether somebody remembered to switch off the lights at Shell Centre.
It comes from selling enormous quantities of hydrocarbons which customers subsequently burn.
This is hardly a revelation to Shell. Shell has helpfully calculated the figure itself.
And that is precisely why context matters whenever Shell tells the public about its renewable electricity, electric-vehicle charging points, biofuels, hydrogen schemes, carbon capture projects or other lower-carbon activities.
All may be perfectly real.
But so are the 1.142 billion tonnes.
Follow the money
Corporate sustainability reports contain many worthy intentions.
Capital expenditure has the advantage of showing where management is actually placing the company’s money.
Shell reports total cash capital expenditure of approximately $20.9 billion in 2025. (MarketScreener)
Its own energy-transition classification breaks that spending into some rather illuminating categories.
Approximately $2.0 billion was classified as spending on “low-carbon energy solutions.”
By comparison, Shell classified approximately $12.3 billion under “oil, oil products and other.”
Another roughly $4.6 billion went into LNG, gas and power marketing and trading. (OTC Markets)
So, amid hundreds of pages about sustainability, transition, decarbonisation and lower-carbon energy, roughly one dollar in every ten dollars of Shell’s 2025 capital expenditure was classified by Shell itself as investment in low-carbon energy solutions.
There is nothing unlawful about that.
There is nothing hidden about it either.
Shell published the figures.
The only trick is to read them.
Welcome to the energy transition: Shell plans to sell more LNG
Anyone expecting Shell’s transition strategy to involve rapidly retreating from hydrocarbons may find another passage particularly educational.
Shell says:
LNG sales are intended to grow by 4–5% a year through to 2030.
Shell also says that production across Integrated Gas and Upstream is expected to grow by about 1% annually through 2030, while maintaining approximately 1.4 million barrels a day of liquids production.
The report goes further.
Shell tells investors that oil will remain essential for decades and says it plans to bring on projects representing more than one million barrels of oil equivalent per day of new production by 2030.
This produces one of those uniquely Shell interpretations of the phrase “energy transition.”
Apparently the transition away from fossil fuels involves:
selling more LNG, sustaining oil production, developing major new hydrocarbon projects — and transitioning very carefully indeed.
Presumably no sudden movements.
LNG: now apparently climate policy
Perhaps the most extraordinary sentence in the report is Shell’s assertion that supplying LNG will be:
“the biggest contribution we will make to the energy transition over the next decade.”
There we have it.
For anyone still labouring under the quaint impression that the central purpose of an energy transition is to move away from fossil fuels, Shell has helpfully modernised the definition.
The largest contribution Shell expects to make to the transition over the next decade is selling a fossil fuel.
Natural gas can, under certain circumstances, generate lower CO₂ emissions than coal when combusted for electricity. Methane leakage and the full lifecycle emissions of LNG, however, remain important elements of its climate impact.
But Shell’s corporate strategy is unambiguous.
LNG is not being managed as some reluctantly tolerated bridge business destined for rapid contraction.
Shell intends to grow it.
And then there are the shareholders
If anyone wonders which stakeholder occupies the most prominent position in Shell’s strategic thinking, another collection of numbers helps.
In 2025 Shell returned:
$8.5 billion through dividends
and
$13.9 billion through share buybacks.
Total distributions to shareholders therefore amounted to approximately $22.4 billion, equivalent, Shell says, to 52% of cash flow from operations.
Compare that $22.4 billion returned to shareholders with the approximately $2 billion Shell classified as capital expenditure on low-carbon energy solutions.
Again, Shell has done nothing to conceal these numbers.
Indeed, investors are rather supposed to notice them.
That is the point.
Shell’s principal strategic proposition under Wael Sawan is not difficult to understand: capital discipline, competitive returns, strong shareholder distributions and investment concentrated where Shell believes it has an advantage.
The ambiguity arises only when this fundamentally hydrocarbon-centred commercial strategy is simultaneously presented to wider society through the softer vocabulary of sustainability and transition.
“Energy transition” even appears in executive pay
There is another delightful detail.
Shell’s executive remuneration arrangements actually contain an energy-transition component.
For 2026, Shell says 15% of its annual bonus scorecard relates to “Shell’s journey in the energy transition.”
One-third of that component — 5% of the overall scorecard — is based on LNG volumes.
Another 5% concerns reducing operational emissions and 5% supporting customer decarbonisation. (Shell)
Yes, you read that correctly.
At Shell, increasing LNG volumes can contribute towards management’s performance assessment under the heading:
“Shell’s journey in the energy transition.”
Satirists everywhere may now apply for redundancy.
Shell has internalised the profession.
Meanwhile, the CEO did reasonably well
Wael Sawan’s 2025 remuneration disclosures provide some additional context.
His base salary was £1.535 million.
His annual bonus was approximately £2.725 million.
And the value attributed to his 2023–2025 long-term incentive award vesting was approximately £9.112 million. (Shell)
Shell’s remuneration committee described 2025 as another year of “strong and decisive leadership,” citing shareholder distributions, capital discipline, portfolio changes and financial performance alongside climate and safety considerations. (Shell)
From the perspective of Shell shareholders, there is certainly a coherent argument for rewarding management.
That, once again, is precisely the interesting point.
This is a company being managed primarily to produce competitive returns from an enormous global energy business in which oil and gas remain central.
The sustainability narrative does not negate that fact.
The accounts demonstrate it.
Shell has reduced some emissions
A serious examination should acknowledge the other side of the ledger.
Shell’s Scope 1 emissions declined from 73 million tonnes CO₂e in 2024 to 69 million tonnes in 2025. Its reported Scope 2 emissions also declined, and total reported Scope 3 emissions fell from 1,084 million tonnes to 1,065 million tonnes.
Shell attributes lower Scope 1 and 2 emissions partly to portfolio changes and partly to abatement projects, including electrification and efficiency improvements. (Shell)
Those reductions are real according to Shell’s reporting and should not be dismissed.
The question is not whether Shell does anything to reduce emissions.
Clearly it does.
The question is whether selected examples of lower-carbon activity give the public a representative impression of the scale and direction of the company as a whole.
That is a very different question.
The magnificent disappearing-emissions trick
The distinction between operational emissions and emissions resulting from customers using Shell’s products is particularly important.
A company can make substantial progress reducing emissions from operating its own facilities while continuing to sell enormous quantities of fossil fuels.
Indeed, Shell’s figures demonstrate the scale difference perfectly.
Its gross Scope 1 emissions were 69 million tonnes.
Its Scope 3 emissions were 1,065 million tonnes. (Shell)
A communications campaign concentrating on operational improvements can therefore be technically accurate while leaving audiences with a remarkably incomplete impression of Shell’s overall climate footprint.
That is not an accusation that any particular advertisement is unlawful.
It is an observation about arithmetic.
And arithmetic can be terribly uncooperative with marketing departments.
The report provides precisely the context advertising needs
This is especially noteworthy in light of regulatory controversies over Shell advertising.
When advertisements highlight Shell’s renewable or lower-carbon businesses, the obvious question is whether consumers are simultaneously given enough information to understand the relative scale of those businesses within Shell.
Shell’s own annual report provides that missing denominator.
Low-carbon energy solutions: roughly $2 billion of 2025 capital expenditure.
Total reported greenhouse-gas emissions: approximately 1.142 billion tonnes CO₂e.
Scope 3 emissions: approximately 1.065 billion tonnes.
Planned LNG sales growth: 4–5% annually through 2030.
Liquids production: intended to remain around 1.4 million barrels per day through 2030.
Shareholder distributions in 2025: $22.4 billion. (OTC Markets)
None of those numbers comes from Greenpeace.
None comes from Extinction Rebellion.
None comes from Friends of the Earth.
And, regrettably for anyone wishing to dismiss this article as the latest rant from RoyalDutchShellPlc.com, none comes from John Donovan.
They come from Shell.
The world’s most beautifully documented oil company
There is something almost admirable about Shell’s report.
The company has effectively assembled the evidence necessary to critique its own corporate messaging.
Read the glossy introductory material and one encounters a company progressing through the energy transition.
Read the capital-allocation tables and one encounters billions flowing towards oil, gas and LNG.
Read the strategy and Shell is maintaining liquids production and expanding LNG.
Read the emissions statements and more than a billion tonnes of annual greenhouse-gas emissions appear.
Read the remuneration section and even increasing LNG volumes have found a comfortable home inside an executive-pay metric labelled “energy transition.”
Perhaps that is what “integrated reporting” really means.
Everything is integrated.
The oil.
The gas.
The emissions.
The sustainability narrative.
And the shareholder returns.
All under one cover.
Shell’s report deserves to be read
For that reason, critics of Shell should not dismiss this document as corporate propaganda.
Quite the opposite.
Read it.
Shell’s Annual Report and Accounts 2025 is one of the most useful primary-source documents available for understanding the modern company.
It shows a corporation that is reducing certain operational emissions and investing in selected lower-carbon businesses.
It also shows a corporation committed to enormous continuing hydrocarbon operations, growing LNG sales, maintaining liquids output, developing new oil and gas projects and returning vast sums to shareholders.
Both things can be true simultaneously.
The problem begins when only the first half of that sentence reaches the public.
Shell’s marketing department can supply the adjectives.
Shell’s annual report supplies the denominator.
And sometimes the denominator tells the better story.
Source
Shell plc, Annual Report and Accounts 2025, covering the financial year ended 31 December 2025 and published in 2026. Shell describes the report as covering its financial, operational, strategic and sustainability performance. (Shell)
Editorial note: Figures and strategic statements attributed to Shell above are drawn from Shell’s own Annual Report and Accounts 2025. Commentary, interpretation and satire are clearly distinguished from Shell’s statements.
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