Oil major Shell has declared that in future its executive pay will be linked to performance in meeting carbon reduction targets.

The move follows pressure from investors, led by asset manager Robeco and the Church of England Pensions Board. Although the plans are subject to shareholder approval, they are likely to be passed. The revised remuneration policy will be put to shareholders for approval at the company’s AGM in 2020.

The company will set short-term targets as part of a longer-term ambition to reduce the net carbon footprint of its energy products. Shell is announcing the plans in a joint statement developed with institutional investors on behalf of Climate Action 100+, an initiative led by investors with more than $32 trillion in assets under management.

“Meeting the challenge of tackling climate change requires unprecedented collaboration and this is demonstrated by our engagements with investors,” said Shell CEO Ben van Beurden. “We are taking important steps towards turning our net carbon footprint ambition into reality by setting shorter-term targets. This ambition positions the company well for the future and seeks to ensure we thrive as the world works to meet the goals of the Paris Agreement on climate change.”

Shell will publish its progress in a sustainability report, made in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and Shell intends to integrate this disclosure into the annual report as appropriate. The company will seek third-party assurance of the reported net carbon footprint.

Peter Ferket, Chief Investment Officer of Robeco, said: “When it comes to meeting the demands of the Paris Agreement on climate change, we believe it is necessary to strengthen partnerships between investors and their investee companies to accelerate progress towards reaching such an ambitious common goal. This joint statement is an example of such a partnership. As institutional investors in Shell, we continue to support Shell on its journey in the energy transition, aiming for other companies to follow suit.”

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