New research: Shell’s climate lobbying disclosures leave investors in the dark

The Australasian Centre for Corporate Responsibility​ (ACCR) has today published research highlighting how Shell plc is failing to disclose to investors its climate lobbying in emerging markets.

By not reporting on emerging markets, Shell’s lobbying disclosures are not proportionate to its business activities. Nearly 60% of Shell’s fossil fuels production from 2024 to 2050 is expected to come from emerging markets.

The research identifies multiple examples of undisclosed lobbying by Shell and its industry associations in emerging markets, including for policies that risk locking-in levels of fossil fuel demand that are misaligned with the Paris goals.

“In the dark: gaps in Shell’s climate lobbying disclosures”, reveals:

• While Shell publicly states its ambition to be a leader in lobbying transparency, it does not assess or disclose any industry associations it is a member of in emerging markets. Its lobbying disclosures instead focus on a small subset of advanced economies.
• ACCR has identified 80 associations which Shell has not assessed or disclosed, and that appear involved in climate and energy policy engagement. More than half (45) of these are based in emerging markets.
• Shell assessed 39 associations in its most recent disclosure. Yet, according to the ACCR research, Shell has not assessed at least 53 additional associations where it holds leadership and governance roles. This is despite Shell saying one of its criteria for assessing associations is that “Shell could be considered influential” in them.

The report also analyses Shell’s LNG growth strategy in emerging markets. It shows that as the largest private LNG trader, Shell is particularly dependent on LNG revenues and that its LNG demand projections are significantly more bullish than industry forecasts and are misaligned with the goals of the Paris Agreement.

Nick Spooner, UK Company Strategy lead, Australasian Centre for Corporate Responsibility said:

“This research is a stark assessment of Shell, a company that has consistently said it wants to be a leader on transparency around political engagement, yet is leaving investors in the dark about a large proportion of its lobbying activities.

“Investors want transparency and clear disclosures of lobbying activity where it is material to the company's forward business.

“Having policy and regulatory settings in place that enable investments in the low carbon solutions required for customers to transition is crucial for Shell to thrive in a net-zero world. Investors need confidence that Shell’s lobbying serves this purpose, not undermines it.

“Shell’s decarbonisation strategy stresses the importance of working with customers to reduce demand for fossil fuels. However, this research demonstrates that some of Shell’s industry associations are lobbying for policies that could have the impact of locking-in demand for fossil fuels in emerging markets.

“Investors need full transparency over Shell’s lobbying in emerging markets, especially because the company has an LNG growth strategy in these markets. Because this strategy faces energy transition headwinds and is built on overly bullish demand forecasts, Shell could well be motivated to lobby for lock-in of demand in emerging markets, especially in Asia – but if so, this would come at the expense of global climate goals and undermines the company’s own decarbonisation targets.

“Any lobbying by its industry associations for fossil fuel expansion in emerging markets would be in direct conflict with Shell’s stated support for the Paris Agreement and expose the company to undue risk in the energy transition, including the risk of capital misallocation and stranded assets.

“The need for climate policy improvement in emerging markets is even greater than in advanced economies. Investors need more information to assess if Shell’s lobbying activity in emerging market countries seeks to entrench the status quo and promote an outdated model for development that is based on fossil fuels.

“For investors, this report raises concerns around transparency and governance at Shell, and how suitable Shell’s strategy is for staying resilient through the energy transition.

“The first step for Shell now is to provide greater transparency to investors around its global lobbying footprint, one that is truly representative of the geographies where it does business. Investors need confidence that Shell’s lobbying does not undermine the success of the company’s decarbonisation strategy and long-term value creation, or the goals of the Paris Agreement.