Slide 1: Responsible Investment Annual Briefing
Responsible Investment Annual Briefing Royal Dutch Shell plc April 11, 2019 #makethefuture Royal Dutch Shell April 11, 2019
Slide 2: Definitions and cautionary note
This presentation contains data and analysis from Shell’s new Sky scenario. Unlike Shell’s previously published Mountains and Oceans exploratory scenarios, the Sky scenario is based on the assumption that society reaches the Paris Agreement’s goal of holding Definitions and the rise in global averag
Slide 3: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 4: Strategic ambitions
Strategic 2018 ambitions ◼ Portfolio reshaped, positioned for long-term resiliency Thrive in the energy ◼ Focus on asset resilience and longevity through the energy transition transition ◼ Growth in areas that will be essential in the energy transition World-class ◼ Strong financial delivery and str
Slide 5: ESG programme
ESG programme Key events ◼ Responsible Investment Annual Briefing (since 2006) ◼ Board Engagement Day (2018) ◼ Chair roadshows ◼ Remuneration Committee (REMCO) roadshows ◼ Engagements with IIGCC1 (CA100+2) www.shell.com/esg Gerard Kleisterlee, Chair of the REMCO, meeting shareholders in London 1 The
Slide 6: Sir Nigel Sheinwald, Chair of the CSRC
Sir Nigel Sheinwald Chair of the CSRC Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 7: Corporate and Social Responsibility Committee (CSRC)
Corporate and Social Responsibility Committee (CSRC) Sir Nigel Catherine J. Linda Stuntz Sheinwald Hughes Chair Responsibilities ◼ Assist and advise Board on: Culture ◼ Safety – HSSE & SP Control Framework & Conduct ◼ Environment, including climate change and social impact of projects ◼ Ethics: Shel
Slide 8: CSRC areas of focus
CSRC areas of 2018 2019 focus Port Harcourt, Nigeria Skyline of Singapore Safety Safety ◼ Process safety ◼ Process safety, road transport Environment & greenhouse gas Environment & greenhouse gas ◼ Net Carbon Footprint ◼ Net Carbon Footprint ◼ Nature-based solutions ◼ Methane emissions and plastics
Slide 9: Industry Associations Climate Review
Industry Associations Climate Selection Assessment Findings Actions Review ◼ Selected 19 industry ◼ Alignment assessed ◼ Alignment with 9 ◼ Published review associations because against public support industry associations, report on 2 April their climate-related of 4 policy positions: some misalign
Slide 10: GHG metrics in remuneration
GHG metrics in ◼ CSRC advises REMCO on sustainable development-related measures remuneration ◼ Greenhouse gas (GHG) metrics in the 2018 and 2019 scorecard cover close to 90% of the operated direct and indirect emissions ◼ The Group annual bonus scorecard is aligned for Directors and staff 2018 Annua
Slide 11: Remuneration developments – energy transition
Remuneration Evolution of GHG and energy transition-related metrics developments – energy transition 2017 2018 2019 2020 Policy Review ◼ GHG management in ◼ Evolved GHG ◼ Energy transition in Group annual bonus management LTIP1: scorecard: in Group annual ◼ 3-year NCF target ◼ Measures are (energy p
Slide 12: Remuneration developments – energy transition
Remuneration Energy transition LTIP metrics developments – ◼ The energy transition condition will contain a mix of measures that set the foundation to contribute to Shell’s energy transition strategic ambitions in the longer run: ◼ NCF: a target for reducing the NCF of the energy products Shell sell
Slide 13: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 14: Shell cares
Shell cares Care Safety Engagement Diversity Care for Worker welfare leadership and performance and inclusion communities No harm, no leaks Setting the Enable people to A diverse and Care for #Iamgoalzero standards on be at their best inclusive work communities and worker welfare through environment
Slide 15: Strong societal licence to operate
Strong societal licence to operate Shell has a long Good Trusted history of caring No harm products company Royal Dutch Shell April 11, 2019 15
Slide 16: Donny Ching, Legal Director
Donny Ching Legal Director Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 17: Shell's ethics and compliance programme
2018 Ethics and Knowing our counterparties Shell’s ethics Compliance (E&C) staff Counterparties, existing and potential and compliance ◼ 148 staff, reporting to Chief E&C Officer ~10 million business partners screened on anti-bribery, anti-money laundering and trade programme ◼ Chief E&C Officer com
Slide 18: Board oversight
External Environment Board oversight Shell General Business Principles Board of RDS plc, CEO and Executive Committee Standards and Code of Conduct Statement on Manuals Strategy, Planning Risk Management Controls and and Appraisal Assurance Businesses and Functions Legal Entities ◼ Audit Committee Li
Slide 19: OPL 245
Year Event1 OPL 245 1998 Malabu awarded licence for OPL 245 2001 Shell Nigeria Ultra Deep (“SNUD”) farms in 2001 Federal Government of Nigeria (“FGN”) revokes the Malabu Licence 2002 SNUD bids for and is awarded OPL 245 by FGN and later signs a PSC with Nigerian National Petroleum Corporation (“NNPC
Slide 20: OPL 245
Shell media statement: OPL 245 “Based on our review of the Prosecutor of Milan's file and all of the information and facts available to us from that file, we do not believe that there is a basis to convict Shell or any of its former employees in Italy. If the evidence ultimately proves that improper
Slide 21: Harry Brekelmans, Director Projects & Technology
Harry Brekelmans Director Projects & Technology Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 22: HSSE performance
2018 Goal Zero on safety Operational spills HSSE Injuries – TRCF1 (per million working hours) million working hours Thousand tonnes # performance TRCF Working hours (RHS2) Volume of spills Number of spills (RHS) Upstream flaring Process safety Million tonnes CO2-equivalent Number of incidents Goal Z
Slide 23: Upstream / Projects & Technology
Case studies Bonga, offshore Nigeria SSAGS Project, onshore Nigeria Upstream / Projects & Technology Southern Swamp Associated Gas Solution Project (SSAGS), A Bonga ‘family unit’ on the deck of Bonga, Nigeria Nigeria Key project facts Key project facts ◼ Major maintenance project ◼ Facility scope co
Slide 24: Downstream / Projects & Technology
Solvent de-asphalter (SDA) Pernis, Case studies the Netherlands Geismar A04, US Gulf Coast Downstream / Projects & Technology Pernis refinery, The Netherlands Geismar chemical plant, USA Key project facts Key project facts ◼ SDA unit in largest integrated refinery in Europe ◼ Expansion to become lar
Slide 25: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 26: Shell's Sky scenario – a pathway to keep in pace with Paris
Components of CO2 reduction to meet World primary Shell’s Sky the goals of the Paris Agreement energy by source scenario – a Gigatonne CO2 / year Exajoule/year 1,200 Oil pathway to Biofuels Natural Gas keep in pace 1,000 Biomass Coal with Paris Nuclear Solar Wind 800 Other Renewables 600 400 ◼ Asses
Slide 27: Scope of our Net Carbon Footprint ambition
Scope of our Net Carbon Footprint ambition ◼ Full lifecycle of energy products, including consumption ◼ Link to NCF ambition The Net Carbon Footprint is not a mathematical derivation of total emissions divided by total energy, neither is it an inventory of absolute emissions. It is a weighted averag
Slide 28: Net Carbon Footprint ambition
Net Carbon Footprint ambition Ambitions: ◼ Reduce Net Carbon Footprint of our energy products by ~20% by 2035 ◼ Be in line with society Net Carbon Footprint by 2050 Royal Dutch Shell April 11, 2019 28
Slide 29: Shareholder resolution – response
Shareholder Shell’s industry-leading approach is Shorter-term targets within a longer- resolution – more progressive term framework ensures resilience and customer focus response ◼ Shell cannot predict society and government ◼ The NCF ambition includes a much wider scope of emissions future actions,
Slide 30: Maarten Wetselaar, Director Integrated Gas & New Energies
Maarten Wetselaar Director Integrated Gas & New Energies Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 31: Potential tools to achieve our Net Carbon Footprint ambition
Potential tools to achieve our Net Carbon Footprint ambition Existing Shell is active in examples all of these areas Flare reduction Increased LNG Wind power Raízen Shell Recharge Quest CCS Nature-based biofuels & New Motion offsets Royal Dutch Shell April 11, 2019 31
Slide 32: Power value chain
Power value chain SUPPLY AND CUSTOMERS OPTIMISATION GENERATION Multiple parties are active on Leverage portfolio flexibility and Not all products are supplied by Shell, the demand side arbitrage opportunities some are purchased from third parties ◼ New Motion ◼ Shell Energy North America ◼ US onshor
Slide 33: Gas and biofuels
Gas and biofuels Gas Biofuels Skyline of Beijing, China Harvesting of sugarcane, Brazil ◼ Cleanest-burning hydrocarbon ◼ We are one of the largest biofuels blenders and ◼ Critical component of energy transition-demand distributors Providing energy from hard-to-decarbonise sectors ◼ Raízen JV some of
Slide 34: NBS and CCS
NBS and CCS Nature-Based Solutions (NBS) Carbon Capture & Storage (CCS) Ranger looking out over Kashigau corridor, Kenya Quest at the Scotford Upgrader, Alberta, Canada ◼ Creation of carbon sinks, like forests and wetlands ◼ CCS is a critical technology to help reduce CO2 ◼ Short-term potential to d
Slide 35: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell April 11, 2019
Slide 36: Access to energy
Access to energy ◼ Mini-grid company ◼ Off-grid solar home ◼ Technology company ◼ Solar debt finance ◼ Hybrid solar and systems company ◼ Universal smart company biomass gasification ◼ Customised and metering platform ◼ Provides financing technology modular systems for mini grids and for solar asset
Slide 37: Strong societal licence to operate
Strong societal licence to operate Shell has a long Good Trusted history of caring No harm products company Royal Dutch Shell April 11, 2019 37
Slide 38: Questions and Answers
Questions and Answers Ben van Beurden Sir Nigel Sheinwald Maarten Wetselaar Harry Brekelmans Donny Ching Chief Executive Officer Chair of the CSRC Integrated Gas & Projects & Technology Legal Director New Energies Director Director Royal Dutch Shell April 11, 2019
Slide 39: Additional information
Additional information Royal Dutch Shell April 11, 2019
Slide 40: Health, Safety, Security & Environment
Health, Safety, ◼ We focus on the three areas of safety with the highest risks associated with our activities: personal, process, and transport Security & ◼ Process safety is central in achieving Shell’s goal of zero harm to people and the environment Environment ◼ Managed by combining asset integri
Slide 41: Driving to resilience and ambition
Thrive in the energy transition TIME HORIZON Driving to 1-3 YEARS 5-10 YEARS >10 YEARS resilience and SHORT TERM MEDIUM TERM LONG TERM ambition GHG Strategic positioning and Net Carbon Footprint management portfolio resilience ◼ Focussed on ◼ Disclosures aligned to TCFD1 ◼ Covers full range of emiss
Slide 42: Leading through the energy transition
Leading through 2018 Highlights Proof points the energy ◼ Net Carbon Footprint – long-term ambition transition operationalised with shorter-term targets; linked to executive remuneration1,2 ◼ Methane – maintain emissions intensity below Bonny, Nigeria Brent Delta, UK 0.2% by 20253 Nigeria Brent Delt
Slide 43: Financial framework
Resilience CFFO1 excluding working capital Capital investment flexibility Financial $ billion $ billion (per annum) 2018 – 2020 framework $99 $54 $50 Oil products 4-5 40 Conventional oil + gas 4-5 $44 30 $52 Integrated gas 4-5 Deep water 5-6 20 Chemicals 3-4 10 Shales 2-3 New energies 1-2 0 Total 25
Slide 44: Portfolio
Resilience Diverse business segments Geographic diversity Active portfolio management Portfolio Marketing earnings Projects waiting FID: average Cash engines break-even <$30 DEEP WATER OIL INTEGRATED CONVENTIONAL PRODUCTS GAS OIL + GAS Permian direct field Growth expenses -33% in 2017 Chemicals earn
Slide 45: Nigeria environmental performance
Nigeria Clean-up Bodo & UNEP1 progress SPDC JV spills environmental ◼ Bodo spill cleanup first phase completed (free-phase Thousand tonnes 15 300 # performance oil removal), contracting for remediation nearly finalised (target starting date Q2 2019) 10 200 ◼ July 2018: SPDC JV2 completed its first-y
Slide 46: NAM
50:50 joint venture June September between Shell and January Heads of Agreement Final report on 6000 ExxonMobil Earthquake Zeerijp MEAC1, ExxonMobil, outstanding damage claims to with a force of 3.4 Shell; signed MEAC NAM on the Richter scale February October Gas production Presentation ‘Nationaal l
Slide 47: Tax and revenue transparency
Tax and revenue In 2018 Shell paid $64.1 billion to governments transparency ◼ $10.1 billion income taxes ◼ $5.8 billion government royalties ◼ $48.2 billion levies on fuel and other products Shell is transparent on its tax payments Shell is actively involved in responsible tax ◼ Total tax contribut
Slide 48: Chemicals and plastics
Chemicals Alliance to End Plastic Waste Chemicals ◼ Chemicals demand is growing faster than GDP ◼ Shell a leading member1 and plastics ◼ Growth priority for Shell ◼ Chemicals are a component in medicines, detergents, ◼ Alliance goal to invest $1.5 billion over the next 5 years to help eliminate plas
Slide 49: Oversight of climate change risk management
Board of Royal Dutch Shell plc (1) Oversight of climate change risk management Corporate and Remuneration Audit Committee Social Responsibility Committee (AC) (3) Committee (CSRC) (2) (REMCO) (4) CEO and Executive Committee Most senior individuals with accountability for (1) Oversight of climate cha
Slide 50: Joint statement – updates
Public short-term Joint statement – Net Carbon ◼ 3- or 5-year targets to operationalise the long-term NCF ambition updates Footprint targets ◼ Update: first target set in 2019 (2019-2021) ◼ Update: link between energy transition and long-term remuneration in Targets linked 2019 to remuneration ◼ Ful
Slide 51: Shareholder resolution – response
Follow This resolution Shell response Shareholder resolution – Shareholders request the company to set and publish targets that ◼ Shell already set the Net Carbon Footprint1 (NCF) ambition (November 2017): are aligned with the goal of the Paris Climate Agreement to limit ◼ Around 50% reduction of Ne
Slide 52: OPL 245 chronology of events (1)
Chronology Phase 1 of events (1) ◼ 1998 – Malabu awarded licence for OPL 245 OPL 245 ◼ March 2001 – Shell Nigeria Ultra Deep (“SNUD”) farms in ◼ Representations and warranties were provided on ownership of Malabu ◼ Federal Government Nigeria (“FGN”) consented Phase 2 ◼ July 2001 – FGN revokes the Ma
Slide 53: OPL 245 chronology of events (2)
Chronology Phase 2 (continued) of events (2) ◼ Various litigations follow: OPL 245 ◼ May 2002 – SNUD commenced International Chamber of Commerce arbitration proceedings against Malabu ◼ August 2002 – Malabu commenced proceedings against FGN, Shell Nigeria Exploration and Production Company (“SNEPCO”
Slide 54: OPL 245 chronology of events (3)
Chronology Phase 3 of events (3) ◼ December 2006 – FGN settles litigation with Malabu and reallocates the licence to Malabu OPL 245 ◼ Malabu and SNUD now have competing legal rights to the Block ◼ April 2007 – SNUD commences Bilateral Investment Treaty arbitration against the FGN for wrongful exprop
Slide 55: OPL 245 chronology of events (4)
Chronology Phase 4 of events (4) ◼ 2010 – negotiations now include ENI OPL 245 ◼ Settlement with FGN – negotiations are conducted with Attorney General of FGN, the Minister of Petroleum Resources, the Minister of Finance and senior NNPC officials ◼ April 2011 – settlement is achieved. FGN receives $
Slide 56: OPL 245 agreements of April 2011
Agreements ◼ Heads of Agreement between NAE and SNUD and SNEPCO: allocation of the payments due to FGN of April 2011 ◼ Block 245 Resolution Agreement: FGN, NNPC, SNUD, SNEPCO and NAE OPL 245 ◼ Payments to FGN and award of the licence ◼ FGN indemnifies SNEPCO and NAE against competing claims ◼ Key fi
Slide 57: OPL 245 Shell review
Shell review ◼ Debevoise & Plimpton LLP, an international law firm, was retained by the Shell Group OPL 245 ◼ Debevoise conducted and led an investigation which included staff from the law firm and Shell’s Business Integrity Department ◼ Periodic updates to senior management, Audit Committee and RDS
Slide 58: Royal Dutch Shell April 11, 2019
Royal Dutch Shell April 11, 2019