It has been an eventful few days for Royal Dutch Shell. On Thursday, the company unveiled plans to invest up to $6bn in clean energy some time in the the foreseeable future, but the following day its past came back to haunt the Anglo-Dutch multinational when the Supreme Court in London ruled that around 50,000 people in two Nigerian communities could bring a lawsuit over alleged oil spills in the Niger Delta.
Both developments came just one week after the Shell board reported losses of $21.7bn for 2020. This compared to a net profit of $15.8 billion in the previous year when it calculates that its oil production peaked. It also claimed that Shell’s total carbon emission had spiked in 2018.
“Shell today set out its strategy to accelerate its transformation into a provider of net-zero emissions energy products and services,” it said, adding that the company’s new emissions-reduction strategy will see it change its focus from power generation to electricity sales. It plans to be operating as many as 2.5 million electric vehicle charging points globally by 2030 and to direct much of its future investment into biofuels, renewables and tree planting.
“Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society,” Shell chief executive Ben van Beurden said. “We must give our customers the products and services they want and need – products that have the lowest environmental impact. At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society,” he added.
This pivot from a 100-year-old prioritization on oil and gas production will entail the biggest reorganization in Shell’s future and it will come at a cost. As many as 9,000 job losses are expected over the next two years and the cull has already begin in The Netherlands, the UK and Malaysia. Staff bonuses have also been frozen. Shares in Royal Dutch Shell immediately fell amid general market sentiment that the company was not moving fast enough. Although its plan provides for an immediate annual investment of $2-$3bn in renewables and energy solutions and $4-$5bn in chemicals and associated products, a further $8bn is still earmarked for Shell’s upstream exploration, drilling and extracting activities.