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Shell (RDS.A) to Hold Energy Transition Strategy Advisory Vote

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In a recently-issued Energy Transition Strategy publication, Royal Dutch Shell RDS.A management informed that it will ask shareholders to vote on an energy transition plan that will align the company's energy goods, services and investments with the Paris Agreement's target and the global fight against climate change.

Shell CEO Ben van Beurden believes that understanding and endorsing the company's strategy is more important than ever for its shareholders as it is on its way to transform its business. The vote will be solely advisory and will not have any legal consequences. Shell's board of directors and executive committee will continue to be in charge of developing and authorizing the company's energy transformation plan. 

The publication outlines the company's objective of attaining net-zero emissions by 2050, in line with the society's advancement toward the Paris Climate Agreement's set goals. Shell's climate priorities, customer-focused decarbonisation plan, capital allocation, and approach to climate-related policy and advocacy are also defined in the report.

The Anglo-Dutch company, which is assumed to have peaked its total carbon emissions in 2018, foresees its net carbon intensity to decline 6-8% in 2023 from the 2016 baseline. Further, the decrease will expand to 20% in 2030, 45% in 2035 and 100% by 2050.

Shell’s Carbon-Reduction Initiatives

To achieve its environmentally-friendly objectives, Shell plans to boost the proportion of its investments in non-hydrocarbon businesses over time. It continues to work on its green initiatives as it pledged to lower carbon emissions by 50% over the next five decades, concentrating only on renewable and biofuels.

While the company became the first oil entity to link executive pay with carbon emissions for combating climate change, it is consistently on renewable acquisition spree of late, having collaborated with IONITY, New Motion, First Utility and Silicon Ranch in its attempt to diversify its portfolio beyond oil and gas.

Shell's transactions with battery storage supplier sonnen and solar developer Cleantech further emphasize its increasing shift toward lower-carbon fuels.

Also, it formed a partnership with Microsoft Corporation MSFT to develop advanced solutions for achieving net zero-emission. Shell’s aim to create clean and efficient energy with Microsoft’s expertise in high technology, such as AI, cloud computing and the IoT led to a number of resourceful initiatives to minimize carbon footprint as well as develop a safer and cleaner work environment. 

Additionally, last month, management announced that the company will purchase the entire stake in Ubitricity, one of the largest electric vehicle (EV) charger providers in the UK in terms of individual devices in operation.

With this deal, Shell further strengthens its position in the rapidly-increasing on-street EV charging market, providing critical competencies and helping the company better its overall EV charging offer.

Shell’s expansion into the EV chargers business is part of its plans to tap the growing popularity of pure energy resources and lower the company’s carbon footprint. The company expects electricity demand to rise in the coming years with more people opting for electric vehicles and switching to cleaner energy resources.

This apart, Shell is collaborating with the commercial vehicle sector to help ensure decarburization pathways through Shell E-Fluids as the road transport sector emits 8% of global energy-related carbon dioxide. Per Shell, both battery-electric vehicle (BEV) and fuel-cell electric vehicle (FCEV) solutions have a major role to play as the paths and timelines for road freight carbon depletion will differ by geography, sector and duty sector.

Company Profile

Shell is one of the primary oil majors, which constitute a group of U.S. and Europe-based energy giants with global operations. The company is fully integrated as it participates in every aspect related to energy from oil production to refining and marketing.

Zacks Rank & Other Key Picks

Shell Energy currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the energy space include Matador Resources Company MTDR and Devon Energy Corporation DVN, each presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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