Climate change and energy transition

S
hell has long recognised that greenhouse gas (GHG) emissions from the use of fossil fuels are contributing to
the warming of the climate system. In December 2015, 195 nations adopted the Paris Agreement. We welcomed
the efforts made by governments to reach this global climate agreement, which entered into force in November 2016.
We fully support the Paris Agreement’s goal to keep the rise in global average temperature this century to well below
two degrees Celsius (2°C) above pre-industrial levels and to pursue efforts to limit the temperature increase even
further to 1.5°C. In pursuit of this goal, we also support the vision of a transition towards a net-zero emissions energy
system. Shell agrees with the Intergovernmental Panel on Climate Change (IPCC) 1.5°C special report, which states
that in order to limit warming to 1.5°C above pre-industrial levels, the world economy would need to transform in a
number of complex and connected ways. Meeting this challenge would require an even more rapid escalation in the
scale and pace of change in the coming decades than was foreseen in the Paris Agreement.

Society faces a dual challenge: how to transition to a low-carbon energy future to manage the risks of climate change,
while also extending the economic and social benefits of energy to everyone on the planet. This is an ambition that
requires changes in the way energy is produced, used and made accessible to more people while drastically cutting
emissions.

We believe that the need to reduce GHG emissions, which are largely caused by burning fossil fuels, will transform the
energy system in this century. This transformation will generate both challenges and opportunities for our existing
and future portfolio.

We welcome and support efforts, such as those led by the Task Force on Climate-related Financial Disclosures
(TCFD), to increase transparency and to promote investors’ understanding of companies’ strategies to respond to the
risks and opportunities presented by climate change. We believe that companies should be clear about how they plan
to be resilient in the energy transition. In 2017, we joined the Oil and Gas Preparer Forum, initiated by the TCFD and
convened by the World Business Council for Sustainable Development. The forum´s objectives are to review the
current state of climate-related financial disclosures, to identify examples of effective disclosure practices and make
proposals on how disclosures may evolve over time. The Shell Energy Transition Report published in April 2018 (2018
SET report) described the energy transition and considered Shell’s resilience against future scenarios. The 2018 SET
report followed our discussions with the TCFD about increasing transparency to help investors understand climate-
related risks and opportunities. Our approach to the energy transition as described in the 2018 SET report, in
combination with the Shell Sustainability Report (April 2019) aims to complement this Report in responding to TCFD
recommendations, including discussing the energy transition and Shell´s portfolio resilience.