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Shell Will Become the First Energy Company to Link Executive Pay to Carbon Emissions



Royal Dutch Shell appears to be getting serious about reducing its carbon emissions after 2020. The Anglo-Dutch energy behemoth announced today it will implement carbon emissions targets beginning in 2020 after coming under pressure from its investors and the public.

In a move that is the first of its kind, CNN reported that Shell will link executive pay to the company’s ability to hit these emission targets.

The firm was in the news earlier this year when its high-profile investor, the Church of England, penned an open letter to the company chairman calling for the implementation of more stringent carbon emissions targets.

The letter, written by senior members of the church leadership asserted that the church believes “targets are more meaningful than ambitions” and described the “necessary internal and external accountabilities, providing a clear impetus for action.” The church was concerned that its goal of reducing emissions by 50% by 2050 fell short of what is required.

Royal Dutch Shell has responded. Its announcement on Monday detailed new carbon emission reduction targets covering short-term, three to five-year periods.

To ensure these targets are met, Shell will link as many as 1,300 senior employees pay to the successful meeting of these targets, the BBC reported.

Before the policy comes into effect, it will be subject to a shareholder vote in 2020 but given the shareholder demands for more effective targets on carbon emissions, it is likely to pass.

This is a major landmark for sustainable investing and could result in demands for other energy giants to follow suit. David Cumming of Aviva Investors told the BBC, “we will see more of this going forward” adding, “the pressure is on for that, they [oil companies] will come around to statutory [carbon] metrics”.