Shell plc (SHEL) Earnings Call Transcript

[Presentation] Good morning. I'm Chad Holliday. I'm delighted to welcome you each to this 2021 Annual General Meeting of Royal Dutch Shell plc. I hope you enjoyed that opening video. Our last AGM was limited due to COVID, and we are all sadly still managing the challenges of the ongoing coronavirus pandemic. On behalf of the Board, we sincerely hope that you and your loved ones are staying safe, healthy. And for those of you who have lost loved ones, our deepest condolences. Due to coronavirus restrictions, unfortunately, it's still not possible to return to our normal AGM format where we welcome the physical presence of our shareholders and enjoy engaging face-to-face. And what we hope is the next best alternative, we have embraced technology and introduced a hybrid meeting this year, providing a platform for shareholders to both vote and ask questions. The clear benefit of this is being able to welcome the participation of those shareholders who normally haven't been able to attend our AGMs in person. With that introduction, I confirm that we have a quorum present. So now I declare the Annual General Meeting formally open and suggest that with your permission, the notice of convening the meeting is taken as read. In accordance with the company's Articles of Association and as stated in the Notice of Meeting will be held in English. For those watching via the Lumi platform, voting will be open throughout the meeting and will remain open 15 minutes following the conclusion of the meeting. Once you have voted, you can change your vote, but when the voting closes, your last choice will be submitted. In accordance with the company's Articles of Association and as contemplated by the Notice of Meeting, I hereby call for a poll to be taken on each resolution, and I'm appointing the company's registrars Equiniti to act as scrutineers. I hereby propose each of the resolutions 1 to 21 set out in full in the meeting notice. Resolutions 1 to 17 and 20 are proposed as ordinary resolutions, and therefore, each requires a simple majority of the votes cast in favor in order to be passed. Resolutions 18, 19 and 21 are proposed special resolutions and therefore, each of these resolutions requires at least a 75% majority of votes cast in favor in order to be passed. The poll is now open. Before I introduce the Board and those shareholders that want to ask questions, please refer to the guide on the Lumi platform. To allow sufficient time for other shareholders wanting to ask questions, please keep your questions and comments short, to the point and relevant to the business of today's meeting. For those who choose to ask their questions via the teleconference facility, if I believe your question or statement is excessively long, please note that I may ask you to bring it to a close. I intend where possible to all questions or comments of a similar nature are grouped together. Grouping questions and comments in this way will help avoid repetition and ensure we address as many issues as possible. However, I also request your patience if there's a lot of interest in any one particular issue. As Chair of the meeting, I have a duty to ensure that today's proceedings are conducted in a proper and orderly manner, and I will do my utmost to ensure that all shades of opinion are given at a fair hearing. To help me fulfill these responsibilities, I would ask that you respect our procedures and order of the meeting. Now let me start by introducing the members of our Board who are seeking reelection today. Their biographies are provided within the Notice of Meeting, which is duly circulated to shareholders on April 15 and added to our website on the same day. For those watching the meeting via the Lumi platform, a copy of the Notice of Meeting can be found under Documents tab on your screen. For those watching on the webcast, it can be found on the AGM section of our website. As you can see, 2 of our directors, our Chief Executive and our Chief Financial Officer, are here with me today as well as our Company Secretary. The other directors are joining us remotely and should appear on the screen when I introduce them. It's also a pleasure to see we have a good number of shareholders joining us online. So starting with my right, Ben van Beurden, our Chief Executive Officer; Jessica Uhl, our Chief Financial Officer. And on my left, Company Secretary, Linda Coulter. Moving to those joining us online, we have Euleen Goh, our Deputy Chair and Senior Independent Nonexecutive Director and member of the Nomination and Succession and Remuneration Committees; Dick Boer, who is a member of the Audit Committee and following this meeting, subject to his reelection, Dick will become a member of our Nomination and Succession Committee. Neil Carson, Chair of our Remuneration Committee and a member of the Safety, Environment and Sustainability Committee; Ann Godbehere, Chairman of the Audit Committee and a member of the Safety, Environment and Sustainability Committee; Catherine Hughes, a member of the Safety, Environment and Sustainability Committee and subject to her reelection, she will chair the committee from tomorrow. Catherine is also a member of our Remuneration Committee; Martina Hund-Mejean, Martina joined the Board following last year's AGM and is a member of our Audit Committee; Sir Andrew Mackenzie, who joined the Board in October of 2020 is a member of our Nomination and Succession Committee. A couple of years back, we announced that I would be retiring from the Board following this AGM. And in March of this year, we announced Andrew will be my successor. Andrew will become Chair, subject to his reelection after this completion of this meeting and will likewise chair the Nomination and Succession Committee. Sir Andrew has an extensive leadership experience in our sector. He has a PhD in organic chemistry, a member of the Royal Society and is considered one of the world's most influential earth scientists. I am honored to turn over my Shell duties to such a talented leader. Bram Schot, who also joined our Board in October of last year as a member of the Safety, Environment and Sustainability Committee; Gerrit Zalm, a member of the Audit Committee and a member of the Remuneration Committee. We also have Jane Lute joining us today, who will be a new addition to our Board if shareholders approve her election. If approved, Jane will join the Board starting tomorrow. Her biography is also in the Notice of Meeting, which outlines her skills and experience gained from her years of public service in military private sector. We hope you support her election. And last, but far from least, I'd also like to introduce Sir Nigel Sheinwald, who is not seeking a reelection today. Nigel is Chair of the Safety, Environment and Sustainability Committee and a member of our Nomination and Succession Committee. This is Sir Nigel's last AGM with Shell, and he will retire from the Board following this meeting. Sir Nigel has been on the Shell board for 9 years and leaves behind a strong leadership track record, and the Board is deeply grateful for his many years of dedicated service. Nigel, on a personal basis, I will miss you. I will miss your broad questions and observations that take full into account our stakeholders as well as our shareholders. We also appreciate your strong leadership of Safety, Environment and Sustainability Committee at a critical time in our company. You have read in the Notice of Meeting that not only is this meeting open to shareholders but is also a webcast meeting open to the -- forum to the public for any interested stakeholders to join. Therefore, we also warmly welcome those that are watching the meeting in that way. We will now transition to the 2 prepared presentations for today's meeting. The first one will come from myself, and then I'll turn it over to our Chief Executive Officer. Today is my last day at Shell. I want to thank every one of our shareholders for allowing me the opportunity to serve you for the past 10 years. It's been one of the honors of my professional life. 6 years ago, when the Board asked me to take on the additional duties of chairing, I took out 3 months to visit Shell facilities. I wanted to see the real Shell. I want to see our people in action, the issues they're facing, the challenges for the future and what was important to them. In Singapore, on one of these trips, I was having dinner, a very informal dinner around picnic tables. And I was moving around the different tables to get to talk to more people and listen to them. I sat down next to this man. I asked him a very simple question. In 3 weeks, I'll become Chair of the Board of Shell, what would you like me to do? He looked me right back in the eye and said, my 13-year-old daughter is embarrassed to tell her friends at school that her dad works for Shell. I want you to fix that. Now that's what I call a real conversation. I took that very seriously. I considered his request, because I knew it wasn't because he was unhappy with Shell. He's an engineer working on a project, liked what he was doing. He's very proud of this company. This is the perception his daughter had. I considered hundreds of things that came from that 3 months of visits. But this one kind of stood out on top, and I took as a personal goal. I was going to make sure every day I continue to serve Shell, I was going to do my best to be able to answer that 13-year-old daughter that I could be proud of everything Shell is doing and everyone else is doing the same thing. My report to you today will be on progress. I will use 3 examples to say, how are we doing at gaining the respect of everyone? The first one is about a time of crisis. Obviously, I'm talking about the COVID-19 pandemic, a real crisis, a crisis that's still with us today. You can tell a lot about a company and its people and how they hold up in this kind of a period. You've seen our retail in action. You've seen our people show up to work to provide fuel for the community, it's so vital in a pandemic time like this. Yet you've also seen us modify our shops, so we provided what people need when the other supply chains are breaking down, maybe fresh fruit, maybe produce, even toilet paper. I am proud of our retail people that showed up that you could see. What you couldn't see as well is the people in our plants and facilities and processing units that showed up every day to make sure the world had energy, which is so critical during this pandemic period of time. If you read my letter in the annual report, I talked about one such facility, I talked about a shift superintendent at a regasification plant in India who had a conversation with his 11-year-old son about why he needed to go to work, because the gas his plant produced allowed for electricity and allow for heat for people's homes. I checked in with him last week, recognizing how much more difficult the pandemic has become in India. I can report to you he's doing well. He's still showing up for every one of his shifts, and his family is healthy, too. Shell people showed up in the pandemic, and we all should be proud of it. Example 2 is one of my proudest moments in my time with Shell. It occurred 18 months ago. And even though we had made steady progress for years, under the leadership of Ben, the management of the company and the Board of Directors, we concluded we just were not moving fast enough, and we had to accelerate the transformation of Shell. Now mark you, 18 months ago was before COVID-19 was on our screen. But we continued through that process, and I could not be more proud of our Board and our management team to keep searching for how do we accelerate. And in February of this year, Ben and his team presented to the world our plan going forward. And we present to you, our shareholders today, for an advisory vote, that plan for our transition. We hope you will consider it very seriously and focus on a yes vote, because we believe it is the right plan for our company at this point in time. We are in no way trying to get you to take over responsibility for our duties and ask you for this vote, but we do want you with us, and we do want to understand your ideas. We'll come back to you every year with a progress report and give you a chance to give us feedback or vote on that. And every 3 years, we'll update the plan because we think that will be necessary. I am very proud of this plan. What's critical now, though, is implementing. So I started off by telling you we have people doing the job every day in the pandemic. We have a great plan that I'm very proud of. But what about the people of Shell that will spend the next several decades implementing that plan and taking us all the way to net-zero. I had to talk to them before I can report back to you today. So I chose people with about 8 years of service. They knew Shell, they knew the jobs. They knew what we're doing, but they have decades left to work. And they will be the ones that can see us through to net-zero. I picked 8 people from 5 different countries, 4 men, 4 women. They work in our Upstream businesses, our transition business and also growth. They range from hydrogen to wind power to exploration to chemicals production, even nanotechnology. This is an important time for us to get a feel for those individuals and how they see this plan, because if they don't believe in this plan and can't implement it, it won't happen. I can report to you today those 8 people, which were selected not by me, and I never met them before, absolutely support this plan. Now they push me, they say, can we move faster? Can we be bolder? And when I talk to them about priorities, we weren't in full agreement on what the priorities are yet. And I think that's very natural at this time, and it's encompassed in the fact we want to give you progress reviews and updates as we go through the processes. Let me just give a couple of quotes. This is an audacious plan. It has unlocked passion in our people.It's something like we have never done before. And if we don't do this now, we will lose the opportunity. If we don't do this now, we will lose the opportunity. The woman that said that was looking right through that video screen into my eyes. And as I looked at her eyes, I was hearing her say, if we don't do this now, you're going to lose me, because I'm going to make a difference in the world. I want to do it at Shell, but Shell must move forward now. That's why your vote for this resolution is so important. It will send a message not just to the 8 people I talked to, but it will send a message to the tens of thousands of Shell people that have to deliver this plan over the decades ahead. In summary, I believe we have demonstrated that 13-year-old daughter should be proud to tell her friends her dad works for Shell. The reality is that 13-year-old is now a 19-year-old young woman, thinking about what additional education she might want and where she might want to work. If I can have her here today, I could report on the last 6 years to say, you can respect this company, I will give you my word on it from everything I've seen, and I would hand her a copy of our energy transition report. I would say read this and consider, perhaps this is a company you can be so proud of that you will follow in your dad's footsteps. Thank you very much for hearing my report today. Before I turn it over to Ben, our Chief Executive Officer, I want to, Ben, publicly thank you for your leadership. It's been admiring to see the strength you've had through these challenging times, taking tough decisions. As I believe the history book will be written on Shell, they're going to look back at those tough decisions and say these are some of the brightest times our company has ever had. It's been an absolute joy working with you, Ben. I wish you the very best in the years to come. The floor is yours, Ben.

Well, thanks very much, Chad. I think you have served for 10 years on this Board. You've shown not just commitment to this company, passion in this company, but a love for this company as well. And I think it showed in the speech that you just gave. I think the progress that we made under your leadership, 6 years as Chair of this Board has been tremendous and would not have been possible had it not been for your empowering leadership, for your encouragement, for your optimism, for your curiosity by instilling the best in the people of Shell. And being such a fantastic coach to me and such a good friend, with which I could discuss everything. So I also thank you for your amazing contribution and may our friendship last many more years to come. But it's not yet the end of the road. We still have an AGM ahead of us. So let's turn to the business of the day, and we'll say our goodbyes a little bit later. So ladies and gentlemen, thank you very much for joining us today at our AGM, and I'm really glad that technology means that we can all be together again today. But I just want to say, really one thing. And that one thing is that I'm truly excited for the future of your company. Today, I can tell you about the direction we have set, some first steps that we have taken, the strategy that will guide us in the years to come. But the future, the future is all about the progress we make, the projects we undertake, the targets we hit. And that is why I am excited about it, and why I think you should be excited, too. Our eyes are on that future for Shell, and we are already making confident strides towards it. Now of course, even as we do so, safety remains our first priority, and that is why I am so pleased that 2020 was Shell's safest year ever. Today, it has been 658 days since anyone died during our operations. And we also achieved the strongest ever process safety performance at Shell-operated ventures last year. Hard earned achievements. However, they can be easily undone, and we must always look for further improvement. And that is why we are now using a new approach on safety. This has a more complete focus on the way people, culture, equipment, work systems and processes, all interact. And this means a close look at how we expect where work will be carried out, but also what happens in reality, because people make mistakes and processes fail. But our new approach is designed to accept that mistakes will happen and allow us still to operate safely. And part of this is creating a psychologically safe environment. Every staff can speak up. And another part is building a learner mindset, which allows us to do even better with the lessons that we take from both our successes but also our failures. And there will be failures. And we will be tested. So our vigilance must and will remain. But it is through being tested that we know ourselves, through being tested that we can hope to improve. And this is not just true of HSSE performance. Without testing it, you cannot truly know the resilience of anything, from the strength of steel to a person's courage. And in the same way, without testing, you cannot know the core of a company. And make no mistake, we were tested in 2020. Shell stood up to it. Shell was and is strong, solid and secure. I don't need to remind you of the challenges of 2020. Yet 2020 was still a year of delivery from Shell, not just on safety performance within our operations and in our financial results, too. 2020 showed us that Shell has a resilient portfolio. It has steadfast people and the depth of capability that saw us through the worst of times. Now we also made tough decisions where we had to. So spending, write-downs and on the dividend. And despite everything that the year through at us, and the headline loss of $21.7 billion, our cash flow from operations continued to lead the industry, standing at USD 34 billion, and our adjusted earnings were almost $5 billion. And we not only delivered on cost reduction targets for the year, we exceeded them. And our performance on organic free cash flow was excellent at around $18 billion. That was actually close to 2019 levels, and we reduced net debt by almost $4 billion. Against the odds, we came out of 2020 with a stronger balance sheet. We came through it. We were and we are resilient. And today, as you know, there are promising signs towards the future. Our first quarter results represent the first page of a new chapter for Shell. We generated $8 billion of cash in the quarter. We increased dividend per share by around 4%, in line with our progressive dividend policy. And we reduced net debt in the first quarter alone by more than $4 billion, pushing towards the $65 billion milestone at which we have said we will further increase shareholder distributions. So Shell, your company, has been tested. We have been tested so we know we are strong, and that strength is on show for all to see. And the work to make Shell even stronger is well underway. In February, we set out our Powering Progress strategy for you, and we explained its 4 goals: generating shareholder value, achieving net-zero emissions, powering lives and respecting nature. We outlined our approach on capital and on carbon, and we detailed how all of that fits with our 3 business pillars of growth, transition and upstream. In essence, Powering Progress is a strategy to accelerate the transition of your company and to do so with purpose and with profit. It is how we build a yet stronger, yet more resilient company by putting customers at the center of everything we do as our customers and we move together into a low-carbon future. Overall, Powering Progress captures Shell's role in society, what we do, what we should continue to do and ultimately, the case for Shell as an investment. The full goals of Powering Progress are all critical to Shell's future, and they are founded upon our core values of honesty, integrity and respect for people. And they are secured through our determination and our focus on safety and our commitment to doing business in a transparent way. And together, the 4 goals weave sustainability and our purpose throughout our business strategy. There's a huge amount happening in Shell right now towards our Powering Progress goals, and I will briefly highlight 3 things. First, to embed our strategy throughout Shell, we are currently in the process of reshaping your company. When our reorganizations appear in the media, it is offered in the context of job cuts. And indeed, reducing costs is an important part of it. We have to be competitive, but it is about much more than that. It's also about putting Shell into a structure which matches our strategy that allows us to be bold and driving forward to change that must happen. And that makes us a more customer-focused organization than we have ever been before. All of this will help maximize the advantages we already have. From our ability to innovate and bring new products to market, drive trading and optimization capabilities to our global reach and our leading brand. In a very different way, you can see the influence of our Powering Progress strategy in the stance we have taken in Nigeria, which we outlined at our ESG update last month. Of course, as you all know, in Nigeria, we have faced a consistent environmental challenge, mainly because of leaks caused by sabotage and theft in areas that security is a serious problem. Now we have been reviewing positions that continue to be challenged from an environmental perspective, and a particular point of attention has been onshore oil in Nigeria. Now over the last 10 years, we have reduced the total number of licenses in onshore Nigeria by half. But unfortunately, our remaining onshore operations continue to be subject to sabotage and theft. And despite our best efforts to limit and respond to this illegal activity, it means that the balance of risks and rewards associated with our onshore oil portfolio in Nigeria is no longer compatible with our strategic ambitions. And because of this, we have started discussions with the Nigerian government to align on a way to move forward. But even so, Nigeria continues to be an important heartland for Shell. But our intent is to focus our investment on our deepwater and our gas positions. Now the third thing I want to highlight is a publication of the Shell Energy transition strategy, which is at the core of Resolution 20, and which I encourage you to support. This publication also springs from Powering Progress, because Powering Progress is ultimately about transforming Shell and the Shell Energy Transition Strategy gives you details about how we plan to do that. And it's not just our last word about how we aim to get there, our strategy will evolve, and it will grow over time. But we are talking about a long-term transformation. So it's only right that you, as our shareholders, have our detailed strategy for that transformation set down in writing. And it's only right that you, our shareholders, have the chance to vote on that. The scale of the transformation evolves means it is more important than ever for our shareholders to understand and we help also support our approach. But then why should you give that support? Well, let me give you 3 reasons for it: one, the Shell Energy Transition Strategy is comprehensive; two, it is rigorous; and three, it is ambitious. Our target is to be a net-zero emissions energy business by 2050 that the societies progress towards Paris. It's a comprehensive target that includes all the emissions from all our energy products. So this means net-zero emissions from our operations. That's our Scope 1 and 2 emissions and also net-zero from the end use of all the energy products that we sell, that's our Scope 3 emissions. Including Scope 3 is critical, because these emissions created by the end use of our energy products, they account for over 90% of our total emissions. But we are also comprehensive in how we define Scope 3. Of course, we could limit the definition to the oil and gas we produce ourselves. But we believe that definition is just too narrow, so we do not use it. We sell far more energy than we produce ourselves, almost 4x as much. So when we talk about Scope 3, we mean all the emissions from the energy that we produce ourselves and also all the emissions from the oil and gas that others produce, which we then sell to our customers in our energy products. And finally, we are comprehensive because when we say net-zero, we mean net-zero. We measure our progress towards our target by using a carbon intensity metric, but it is critical to note that achieving net-zero on carbon intensity is exactly the same as achieving net-zero on absolute emissions. And as I said at Strategy Day, we believe our absolute emissions across Scopes 1, 2 and 3 reached a high point in 2018 at 1.7 gigatonnes. And now we are working to bring them down. So that's what I mean when I say the Shell Energy Transition Strategy is comprehensive. But it's also rigorous. We have carbon intensity targets for the short, for the medium and the long term. And we believe these targets are aligned with a 1.5-degree Celsius scenarios used in the IPCC special report on global warming. And we have set out on Page 9 of the Shell Energy Transition Strategy why we believe this is the case. And we're also transparent about the accounting methods that we are using. We measure our carbon intensity using an approach that we developed ourselves. We call it our net carbon footprint methodology and the details of how it is calculated are available on our website. So our Shell Energy Transition Strategy is both comprehensive and rigorous, but it's also ambitious. Achieving our target would mean massive change for Shell, far more than we have already achieved. I've called it The Transformation, and it would be exactly that. There is a chart on Page 15 of the Shell Energy Transition Strategy report, which gives you an idea of the change that would be in store for the business over 9 years. Let me highlight a few points. Ore production falling by 1% to 2% a year, methane emission intensity at below 0.2%, no new frontier exploration entries after 2025, producing 8 tonnes more low-carbon fuels than today, storing away up to 25 million tonnes of carbon dioxide each year through CCS, with another 120 million tonnes mitigated each year through independently verified nature-based projects, selling double the amount of electricity compared to today, delivering the equivalent of more than 50 million households with renewable power, operating around 2.5 million electric vehicle charge points. That's a lot of change in 9 years. That's rapid change. And it would be only the beginning if we are to achieve our net-zero targets. Indeed, after 2030, Shell would be looking to accelerate even more. Now ultimately, achieving that level of change means changing demand, because it is demand for energy that is key, not restricting supply, which could then just come from elsewhere. Changing demand is a huge and complex task, a task that will take many years and one that is well beyond any one company, any one industry or even any one country, but it must be done. And Shell's ambition extends to doing everything we can to help get it done. So we will work with others. We will work sector by sector to find and agree and implement decarbonization pathways for these hard-to-abate areas of the economy, and we have already started our work on that. The Shell Energy Transition Strategy: comprehensive, rigorous and ambitious. It is our strategy for success. It is an agenda for the transformation of Shell. It is the setting of our compass towards a bright future with Shell is a critical part of a net-zero emissions world. Your company stands as the first of its peers to put an energy transition strategy up for a shareholder advisory vote, and our decision to do so was a crucial step in making ourselves transparent to you, our shareholders. So I ask you to vote for it, to vote for Resolution 20, because it is a vote for the future of your company, a future that I'm excited about and the future, I believe, you should be excited about, too. And next year, we meet again for the AGM, I hope you will be excited to hear more of all the steps that we have taken towards that bright future that is ours for the taking. Thank you.

Ben, thank you very much. Fellow shareholders, I think you can understand why the people of Shell are excited about what we're doing going forward based on the presentation Ben just gave you. We now come to that part of the meeting where you have the opportunity to ask questions or make comments. You may have seen the Notice of Meeting that most of the resolutions are of a mainly routine nature for our listed plc with the exception of the 2 climate-related resolutions. The first of these is Resolution 20, which is proposed by the Board and presents an advisory vote on Shell's Energy Transition Strategy. This strategy follows detailed conversations with shareholders and describe Shell's Energy Transition Strategy, including our emissions targets. We consider this publication and the strategy it summarizes to be aligned with the more ambitious goal of the Paris Agreement to limit the increase in average global temperature to 1.5 degree Celsius above pre-industrial levels. And we hope it provides a pathway for deeper and more specific dialogue on that alignment. Shell is the first energy company to submit its Energy Transition Strategy to shareholders for an advisory vote. We will publish an update every 3 years until 2050. And every year starting in 2022, we'll also seek an advisory vote on our progress toward our plans and targets. The Board and management also believe it's important for all shareholders to have a vehicle to express their views on whether our strategy is reasonable in the current environment. The advisory resolution is designed to make that a vehicle. For clarity, it does not shield or advocate the Board or management's legal obligation of the U.K. Companies Act nor does it ask shareholders to take responsibility for formally proving or objecting to Shell's energy transition strategy. The legal responsibility lies with the Board and the Executive Committee. The other climate-related resolution is resolution 21. It is a special resolution, which has been requested by a group of shareholders represented by the organization, Follow This. Your Board believes that Shell's more comprehensive strategy and actions to support society in meeting the goals of the Paris Agreement, which have been summarized in the Shell Energy Transition Strategy make this resolution redundant and recommends shareholders vote against it. We'll shortly hear from Mr. van Baal, who will tell you more about his resolution. To ensure orderly discussion, I will take questions in this order. For all questions or comments of a general or operational nature, including those about the climate change or the energy transition and all questions or comments about our strategy, including those about Resolution 20 and our energy transition strategy, we will take first. We will then take the questions in order of the remaining resolutions. I would -- could remind you to keep them to the point and short preferably no longer than 1 to 2 minutes, please, so we can get through as many as possible here today. For those asking questions via the teleconference facility, I would also ask you to give your name and if you represent an organization, the name of the organization when asking a question or making a comment. Now let's move to our question and answers, and we'll deal with the first question, please.

Operator, my name is Tjerk Huysinga. I'm the EVP Finance for Investor Relations. I would like to now start to do the Q&A. So we'll start first with the Q&A on the phone. So operator, can you call for questions?

[Operator Instructions] Our first question is from Mark van Baal.

Mr. van Baal, go ahead with your question or comment.

Yes. Good morning to everybody. Thank you for this opportunity to speak with you again, Chairman, Directors, shareholders, Mr. Van Beurden, and especially welcome to the incoming Chair, Andrew MacKenzie. Mr. MacKenzie, congratulations on your appointment. Now that you are the Chair of one of the world's largest oil majors, you are in a unique position. Together with Ben Van Beurden, you are one of the few people who can make or break the Paris Agreement. The decisions you will make in your tenure will define how Shell and the world will look like in a few decades from now. By that time, your grandchildren will realize what positions their grandfathers held and will surely ask, what did you do about the climate crisis. Today, the fifth Follow This resolution, Climate resolution will come to a vote for the fifth time. For the fifth time, your Board advised the shareholders to vote against the Climate resolutions. Let's make no mistake. If Shell's targets were Paris consistent, you shouldn't need to advise your shareholders to vote against Paris-consistent targets. This is the only thing we ask in our resolution. It's the only thing we want shareholders to support you in. Let me add today, the International Energy Agency published a report where they said stop new oil and gas projects will be impossible to reach net-zero. So the International Energy Agencies really says to the oil industry, please stop investing in new oil and gas projects. Otherwise, we will never meet the Paris climate agreements. Therefore, we trust that shareholders, responsible shareholders, will vote for these climate targets to compel Shell to advance its climate ambitions to Paris-consistent targets. And to offer shareholders transparency and clarity about your climate ambition, about your climate plans, we have 2 crucial questions. The first one is what reduction of net absolute emissions will Shell achieve by 2030? And the second question is, what percentage of Shell investments will be in renewables? And what percentage will be in fossil fuels in the years 2022 and 2023? Let me finalize. Mr. Van Beurden and Mr. MacKenzie, your shareholders and future generations count on you to take bold and brave decisions. Now I'd like to conclude with how I concluded every year and in our resolution. You have our support.

Mr. van Baal, we appreciate your comments. I'd like now to ask Ben to respond to that. And Ben, I suggest you do not just respond to the 2 questions, but he made a number of insinuations about our plan. If you could speak to that very comprehensively, I'd appreciate it.

Yes. Thank you very much Mr. van Baal. I think there's a bit of an echo here, so maybe if the audio team can take care of it. Thank you very much, Mr. van Baal, and I will indeed keep your last comment in mind when you say that we have your support. On your resolution, you asked for a number of things in here. And let me explain why we vote or recommend for against. First of all, in your resolution, you ask for us to set and publish targets. We've done that. You then say, can these targets, please be consistent with Paris? We think they are, and we explained in great detail why we believe they are consistent with Paris. Then you say there should be long but also short to medium-term targets. Well, we have targets for this year, next year, the year thereafter, 2030, 2035 and 2050, so I believe we've covered that one as well. You said they should cover Scope 1, 2 and 3. Well, they do. As a matter of fact, I explained what we even mean with Scope 3 as comprehensiveness. Then you say you should report on that strategy. Well, that's resolution that we bring out Resolution 20. And then you also say in your supporting comments that we can allow flexibility. So you may -- we may use whatever target we think is appropriate, also an intensity target. And that's indeed what we did, and I'm happy to explain also that. So there's nothing in your resolution that we haven't taken into account and haven't responded to. And that's why we say the resolution is redundant, and it is more important that shareholders also show their support for a much more detailed plan than the ones that you advocate. Now there's a few other things that you say, not in your resolution, but of course, you are in the press all the time saying that we have not set short-term and medium-term targets. Now Mr. van Baal, we both know that's untrue. I just mentioned the targets that we have set. You say there's nothing concrete in the plans. Well, I just made a very long list of the things that we intend to do over the next 9 years. And on Page 15 of our report, there's a long list of very concrete things that we are working on and delivering. You said the intensity metric is really a problem. Well, you suggested it yourself. I think it isn't a problem. It is actually the only sensible way to measure whether a company is transforming and substituting high carbon for low carbon energy. And then you also make an assertion that we will actually grow our absolute emissions, which is also untrue. So I think your last comment, that this is just a piece of evasive action, is really incorrect. And to be perfectly honest, the people in Shell take issue with that assertion as well. I think this is a comprehensive report, it is a serious report, it is rigorous and it is very ambitious for all the reasons that I just mentioned. I hope you will read it, and in it, you will find many answers to the questions that you ask. For instance, the change in the capital profile. We will, of course, change the capital profile of the company over time, but we also explained in the report that measuring where we invest is not a proxy to progress. If you want to measure progress, you have to look at the carbon intensity of the products that we sell. But we do indeed believe that over time, the investments will change away from our Upstream business to our growth businesses. And if you look at Page 21 of the report, we detail exactly how that shift will happen from 2020 and the period beyond 2025. And you will see more than a doubling of the investment percentage-wise in our growth businesses and roughly a halving in our Upstream businesses. But again, they are not the right metrics to judge us on. We haven't set an absolute emissions targets for 2030. We just said 1.7 gigatonnes. That's what the total footprint of our company, including our customers, was in 2018. So 1.7, that will actually come down going forward. Exactly how it will come down is a combination of all sorts of factors. But to just look at absolute emissions, I think would also not tell the whole story. Reducing absolute emissions at this point in time is predominantly possible by shrinking the business. If we want to really make change in the global energy system, we have to substitute the high-carbon energy that we are selling for low-carbon energy. And for that, unfortunately also, our customers need to substitute the appliances in which they use energy. And that is what we are going to do together. Now I'm sure that our targets will evolve over time, we will give you progress reports every year. And in 3 years' time, I'm sure there will be a further update to the strategy that we have set out, which will be reflective of the progress that society has made and the progress that we have made in driving that change. Thank you very much for your support, Mr. van Baal.

Thank you, Ben. Next question?

Operator, next question on the phone please.

Next question comes from Adam Matthews.

Hello. Thank you very much, Mr. Chairman, for calling me. My name is Adam Matthews, representing the Church or England Pensions Board that has co-led Climate Action 100 engagement with Royal Dutch Shell together with Sylvia van Waveren of Robeco. Climate Action 100+ is the third year of a 5-year engagement that concludes in 2023. What message is being sent today to the Board of the company from investors? Speaking on behalf of the Pensions Board on one level, there is a recognition that Shell has taken another important step in setting out its Energy Transition Strategy, the first in the oil and gas sector to do so and to put it to an advisory vote. It shows that Shell is accountable for delivering a genuine 2050 net-zero target in both absolute and intensity terms. But this step builds upon previous announcements, accepting targets covering Scope 1, 2 and crucially, Scope 3 emissions. That all activities are covered by Shell's targets. That Shell will work with its customers and in time, will stop selling energy to customers that do not have commitments to be net-zero themselves. That Shell will leave industry associations that are lobbying in a manner unaligned with the Paris Agreement. However, there is a clear message that whilst there have been these steps have often been industry-leading steps, there are many companies in the sector that, like Shell, we have to be clear that the assessment of the Climate Action 100 benchmark highlights the gap from where Shell is today and where Shell needs to be by 2023, if it is to carry the confidence in future years of its shareholders. Specifically that in addition to intensity targets, that short- and medium-term targets need to be expressed in absolute terms as you have done for 2050. Further disclosure is needed on capital expenditure alignment. Industry association membership needs to be consistent with achieving your strategy, not just about governance of unaligned lobbying. The proposed role of the strategy of offsets and CCUS is shown to be credible in practice, not just in theory, and that the strategy has kept under review for alignment with the new International Energy Agency 1.5-degree scenario that was released today. At the Pensions Board, we have today supported the energy transition strategy not because we believe it's perfect, but the first phase of Shell's transition over this crucial complex decade. We do so knowing and expect it will change significantly as the company adjusts to what works and what needs to change. As a fund, we welcome today's vote. All carbon-intensive companies should put their climate strategies before their shareholders. But we're also clear that unless there is full alignment by the conclusion of the first phase of Clement Action 100 in 2023, and in accordance with the commitments we have made to our own pension fund members, we will disinvest our holding in Shell as we have already done in other carbon-intensive companies. We believe engagement with Shell to date has delivered tangible progress from the response of the company but still needs to go further. So Mr. Chairman, today on this vote, you have our support to go further and faster in transitioning Shell. We know you're at the start of reshaping the company, but we need to continue to engage intensely to address the areas we have outlined. As a fund, we're committed to do so in advance of our 2023 deadline. Thank you very much.

Thank you, Mr. Matthews. Let me respond, and I'll ask Ben to add any additional comments he has. This type of dialogue that you've just demonstrated is exactly what we're looking for. You told us what you like about our plan and you talked to areas that you think we could make it more robust. That is exactly what we visioned by putting this strategy up for a vote that we would start that dialogue and that we would have the report every year on how we're doing and the update of the plan in 3 years. So I commend you for starting this dialogue, and we look forward to working with you on it. Ben, anything else to add?

Well, just to say, Mr. Chairman, that indeed, Mr. Matthews, it has been a real pleasure working with yourself and with Sylvia van Waveren and the whole of Climate Action 100+. It's fair to say we have tremendously benefited from the insights that you have provided, the challenge that you have given. And I would also like to think that between the 2 of us, we are in the process of advancing the debate from what is quite often maybe a little bit uninformed and simplistic to a real dialogue that we are now having. There is no doubt in my mind that our plans will have to evolve and they will evolve, and I hope that will evolve as a result of a continuing productive dialogue that we have had. As you will note, we take the benchmark of Climate Action 100+ very serious. As a matter of fact, the way we have laid out our report is exactly as per that benchmark. You will see that in some areas, we are not perfect yet, and we know that we have work to do. In other areas, we seem to have a different view on how to, for instance, best measure process -- progress. But I am sure that as we continue the dialogue, we will get to a better and aligned way of driving progress not just at Shell but hopefully in society.

Our next question.

Mr. Chair, I will read a few questions now online, and then we'll go back to the phone. So I'll now go for the first 2 questions from Mr. John Stephen Betty . His first question is, at the last AGM in London, when audiences could attend, I noticed that all those on stage were either Dutch or American. I noticed that a few years ago, Shell, as IPM and as IPC brought out Shell America, i.e., a structural change. And also that a few years ago, after a bit of a scandal concerning declarations of company assets, a result of EP filing inflated figures, I believe, that all arrangement of Royal Dutch and Shell U.K. operating somewhat independently was streamlined between brackets. Does this mean that now Shell is predominantly a Dutch-U.S. company and the British influence and control is diminished? How much were these decisions influenced by shareholder geographic locations, economic considerations and geopolitical considerations? How does the company now consider these decisions in the light of the rise of China and the stance of being taken by America? This is his first question. He also has a second question, Mr. Chair. How does Shell see the problems of safety issues impinging on the market for hydrogen's use of both static and mobile equipment. Let me pause there.

So thank you very much for your questions. Jessica, could you please address the first question? Maybe put it in context for our shareholders who might not be familiar with some of the terms. And then, Ben, could you take the second question on hydrogen safety? Jessica?

Thank you, Chair, and thank you, Mr. Betty , for your question. Royal Dutch Shell plc is a U.K. company. It was born out of the unification that happened in 2005 between Royal Dutch and Shell transport. Previously, it was a somewhat unusual structure. It was a joint venture between 2 independent entities to streamline and modernize corporate governance, the unification happened. And so we are a U.K. company headquartered in the Netherlands. What I would also say is that from a management perspective, we run the company from a global perspective. So we have global lines of business. Our Dutch-U.K. heritage, of course, has shaped and formed the company that we are today and continues to be very relevant. But ultimately, we are a global company with leadership and employees around the globe in the 70 or so companies where we operate. Thank you.

Thank you, Mr. Betty and your question on hydrogen. It is indeed a very important question. It's -- it's not a new product, of course. We actually use hydrogen quite a bit already in our refining processes and our chemical processes, and it is being used in other technologies around the world as well. But of course, if we are to roll out hydrogen as a much more, shall we say, commoditized product for, say, for instance, mobility or heating in homes or energy storage, for instance, we will, of course, have to pay tremendous attention to the safety standards surrounding it. And that's not just Shell. That is, I think, everybody from appliance manufacturers and vendors to indeed, industrial processes. Now there is a lot of technology knowledge already. Shell actually started its hydrogen business in the 90s. We thought at the time that hydrogen was about to take off. We were probably 25 years too early. But that is often, of course, the story of our company. We now think that indeed that moment is there again -- and this time, it's real. But in the 25 years, we've also had a tremendous amount of experience in understanding how would you charge a car with hydrogen? How would you reticulate hydrogen into networks? What sort of other safety standards would surround hydrogen? And particularly, also if you have to liquefy hydrogen, for instance, if you were to transport it around the globe? Because we think that, that is also part of the future system for hydrogen where renewable electricity converted to hydrogen, transported in a liquid form to other places in the world is going to be potentially an important part of the energy system. It would be too much to explain to you exactly how we are going to do this and how the industry is doing this, but let me reassure you that safety standards surrounding hydrogen are of the utmost importance and have a total attention as we figure out our strategy for that product. Thank you very much for your question.

Next question?

I will do 2 more questions online, and then we'll go back to the phone. I have a question here from a Dutch shareholder, Mrs. Wenzy. What does the Board think is more likely for 0it to ever support to follow this proposal or to be dismantled by society?

Thank you very much for your question. What we are proposing with Resolution 20 is a start of a dialogue. We believe that dialogue should be with people that agree with us and don't agree with us. So on the points where follow this or any other organization disagrees, we want to listen. We want to understand. We want to help them understand our plans better. Perhaps we're saying the same thing and just somehow aren't communicating. So what we can commit to you and what your Board is committed to you is not just one dialogue session. We're talking about dialogue every year. We're talking about submitting this progress report for your approval and then update the plan in 3 years. I think that this should be the right way to go forward. What was the next question?

Mr. Chair, I have a next question from Anthony Charles Philip Alwyt . Why is Shell not robustly defending the virtue of fossil fuels in enabling for the past 150 years and into the future, human health, prosperity and happiness to an extent never before seen in history? To date, no source other than nuclear is able to provide at scale the affordable, abundant, reliable, storable transportable energy that fossil fuels provide. Moreover, fossil fuels derive CO2 as a net good to the atmosphere as it is a wonderful plant food that over the last 40 years, as regreened the planet by 30% according to NASA satellite imagery. So please stop apologizing for Shell's primary product.

We appreciate your point of view. Let me make a couple of comments and see if Ben would like to add. Your Board has taken extraordinary efforts to make sure we understand the science. We've had climate scientists come meet with us and talk to us about it, and so we could ask questions, understand the trends, make sure we know the latest research. We think we're highly informed with the technical details that we need to set our strategy forward. And what we're proposing to you today takes that fully into account. Ben, any additions?

Well, thank you very much, Mr. Alwyt for the comments that you make. And I agree with many aspects of it, particularly, of course, the fact that hydrocarbons, oil and gas have been such an incredibly important component to modern life as we know it. Quite often, of course, not fully appreciated, because we take energy for granted. It is just always there as a background thing on demand. But then again, of course, our industry, the energy industry, has been under tremendous evolution ever since it started. We have evolved from being one form to another form to yet another form over the last 100-plus years. And I think we should continue to embrace that evolution. And I think the last evolutionary trend to just see whether we can actually reduce the greenhouse gas emissions from energy demand and energy use are important trends to embrace and to do something about. But in some areas, indeed, it will be much more difficult to do. We talked about the hard-to-abate sectors like aviation, deep sea shipping, some industrial processes where actually most of the emissions actually come from. And they will not be trivial to undertake. They will need a tremendous amount of collaboration between industry, government and society, and that's why we need to focus on it, because if we don't focus on what we have learned, we will not make too much progress. And that is why we have a 32-page report that sets out how we are going to make that transition and what our role in that transition should be. Not that we are not proud of the progress that our industry has brought to society, but we're also proud on the changes that our industry brings to the benefit of the planet.

Next question?

Operator, next question please on the phone?

Next question comes from Michiel van Esch.

My name is Michiel van Esch. I work for Robeco. And today, I also speak on behalf of a group of institutional investors, including, Robeco, APG, BMO Global Asset Management, PGG, and NNIP, MN and Halozyme Kempen . First of all, I would like to thank management and the Board for their ongoing discussions with us on a variety of topics, including strategy, remuneration and climate change. We specifically would like to thank the Chairman of the Board, Mr. Holliday, for his open conversations with us over the last couple of years. We also would like to wish Mr. MacKenzie the best of luck as his successor, and we look forward to continuing our constructive dialogue in the future. Over the last couple of years, I have attended Shell's AGM with the same basic message, that Shell has an important role to play in mitigating climate change and that it is of the utmost importance that the company is clear on how it aims to achieve its energy transition targets in the long run by showing plans, actions, targets and progress in the short run. The energy transition report aims to do that, and we believe that the company has shown leadership by being one of the first companies in the sector with the say on climate votes. The report allows us to better understand the steps the company is taking throughout its transition. We expect that the recurring shareholder vote is an effective way for shareholders to monitor progress and to have a more content-oriented discussion on progress. We appreciate that this is a step -- a next step in terms of accountability towards shareholders. Still, most of the plan requires significant action in the coming years. And in that context, I have a couple of questions and comments. In recent weeks, there has been discussion around the auditor's observation that Shell's operating plan and pricing assumptions do not yet reflect the 2050 net-zero emissions targets as Shell has put it forward. We do understand that the other procedures are primarily backward-looking and that Shell's target is forward-looking. Yet for us verification of progress is an important component of the credibility of climate targets. Two questions related to this. First, what actions will Shell undertake in the coming years to achieve verification that plans are aligned with its climate targets in first instance, the 2030 targets? What mandate has Shell given its auditor in relation to verification of its operating plan and price assumptions in relation to its climate transition strategy and targets? We would also welcome the auditor to explain what were his observations if possible during this AGM. My next question relates to an updated target by the EU to cut emissions by 2030 with 55% compared to 1990 absolute levels. We also see recent appetite for enhanced targets in other nations. Shell's plans specify an intermediary target of 20% carbon intensity reduction by 2030. As Shell has repeatedly mentioned to align its progress with society, does management see a need already to further increase its targets in the intermediate term? Can you also explain, we understand that there's no target, but what you expect to be your absolute emissions by 2030 if you meet your current intensity targets? We appreciate that Shell has shown leadership in the sector by asking shareholders advice and for providing further detail to its climate strategy. It is understandable that Shell's strategy will require updating and changes throughout the years to address changes in expectations, demand and regulation. It is critical to get things done in the short term. A challenge in monitoring progress for Shell's plan is that a 20% intensity reduction target applies for 2030. But 80% of reductions still need to happen between 2030 and 2050. Therefore, in coming reports, we expect Shell to explain what it has already achieved in progress with our Energy Transition Strategy but also to be concrete on what still needs to happen. As shareholders, we need a realistic and concrete projection of how net-zero can be achieved. We expect Shell to continue to make further progress in the next years, and we are looking forward to those coming reports. Then I will come to my final question, which relates to Shell's operations in Nigeria and recent court filings. Can Shell guarantee shareholders also in line with recent court rulings on Shell's duty of care that it will do all that is necessary to ensure satisfactory conclusion for all stakeholders in relation to its activities in Nigeria, so that the company will not be haunted by the situation in the Niger Delta for years to come? Also, can you elaborate on the lessons learned in that regard and how these lessons will be used to further promote and respect rights of local communities across all operations? Those were my questions. Thank you.

Thank you very much for your very clear extensive list of questions. So there's 3 basic questions. I'm going to -- in just a minute, ask Alistair Wilson, our external auditor to comment on his letter, which I think maybe all shareholders might not be familiar with it. So I would ask Alistair to update us on what they were saying in his letter about verification and what shareholders should take from that. Then I'd like to turn to Ben to deal with the other questions on climate that are raised. On Nigeria, Donny, our General Counsel, well, to call on you next to update the shareholders on any ongoing litigation that you think relates to the question at hand. And then Ben, if you could follow up with that with the steps we're taking in Nigeria, which you included quite a bit in your speech, but to add to that. So if we could go to Alastair first to give comments about your report.

Thank you, Mr. Chairman, and thank you for the question. Throughout our audit opinion, we have provided considerable transparency into how our audit was impacted by climate change and the energy transition. For example, in areas such as refining margin and the estimation of the recovery amounts of refineries, the impairments of upstream assets and integrated assets, it's credit gas assets, decommissioning and restoration provisions, deferred tax assets and so on. So we've provided considerable insight into how we took climate change and energy -- climate risk and the energy transition into a auditing those amounts from the financial statements. And you would have also seen in our audit opinion that we reported to the Audit Committee that we did not see any evidence that Shell's balance sheet either overstated assets or understated liabilities. So that's taking into account energy climate risk and the energy transition. There's a very big difference between pursuing an energy transition strategy that is aligned with the Paris goals as Ben has set out. That's very different to Paris-aligned accounts. And what has been referred to is our statements in the accounts that Shell has reported in the -- to the consolidated financial statements that their operating plan and pricing assumptions do not yet reflect shows 2050 net-zero emissions target. So we're just reporting what Shell has also reported in Note 2 to the financial statements. And it's for that reason why we have set out the reasons why it would not be appropriate for us to attempt to second guess management and to set out in our opinion what assumptions management would have made worthy accounts to have been Paris aligned. So that's the reason. It's neither in our view, responsible or appropriate or within our professional remits to do so, and that's why we haven't done so. But it's also why we've provided considerable insight, in my view, into how our audits and the key judgments and estimates in Shell's accounts we've taken account of climate change, climate risk and the energy transition.

Thank you, Alistair. Ben?

Yes. Thank you very much, Mr. van Esch, for your question. I think it's quite a very important question, and I'm sure there will be a few more clarifications required between intensity targets versus absolute targets. But let me just, if you don't mind, make a few statements about what is the difference between the 2 and why we have chosen the intensity metric. So first of all, think of it. If as a society, we have to get to net-zero, there's only a few things that we can do. We can, of course, make the economy more energy efficient and reduce the energy need to bring economic prosperity. And therefore, indeed, make the problem smaller, so to speak. But then the second action would be to have whatever energy we still use to power our lives and our economy to have that energy as low carbon as possible, so reduce the carbon intensity of the energy mix. And then the third measure, which we think is needed, and don't take my word for it, but probably every reasonable climate scientist as well, we will have to offset whatever emissions are still there, either by common capture storage or using nature as a tool to offset. So these are the 3 things that society needs to do: reduce energy demand, make energy less carbon intensive and deal with whatever emissions are still remaining. Now we think as a company, we cannot achieve number one. We cannot just say, let us reduce energy demand in society. That is not within our remit. But what we can do is to say, let's provide energy with a lower carbon intensity. And let's also deal with the third one, which is to mitigate emissions that may still be there. So that's why we use energy intensity as a metric. Let me explain it another way. And apologies for taking a little bit of time, but I think this is a really important issue for all our shareholders. So at this point in time, if we had to, indeed, shrink the footprint of the company, the only sensible way you can do this fast is to just retreat from the business. Now would that help society? No, because, of course, the demand wouldn't go away. If we wouldn't supply it, somebody else would. So retreating is not exactly a solution for society. It would help us if we had set an absolute target, but it wouldn't necessarily help society nor do we believe would it help our shareholders. So what else can we do then? We can dilute our energy mix. We can just say, well, this is selling petrol and diesel and jet fuel and everything else, let's also sell renewable power. Let's also sell biofuels. Let's also sell clean hydrogen, and we can do that. And in doing so, we will reduce the carbon intensity of the total mix. And that's what we are doing at the moment. But is that enough? No, it's also not enough. In the end, we will have to substitute. So we will have to substitute high carbon-based energy for low carbon-based energy. Now the challenge with that is that also that we can't it do alone because it takes 2 to tango for substitution. If we are to sell more electricity to cars rather than petrol to cars, you have to have different cars showing up. If we have to change the use of energy and industry from, say, oil and gas to hydrogen, you probably need different industrial processes. You may need different trucks to fill them up with hydrogen rather than petrol or diesel, et cetera, et cetera. Now the substitution process that we are trying to achieve to accelerate by the sector-by-sector approach is actually still in its infancy. That's sad and difficult to hear, but it's also true. Look at the amount of electric vehicles on the car -- on the road. It's growing tremendously. But as a percentage of the total fleet, it is still a fraction of a percent. So we need to accelerate it. That's why we are calling also for internal combustion engine bans. We need to accelerate the change from petrol -- from petroleum-based kerosene to sustainable aviation fuels, and the same is true for shipping and for other areas. We think it will take at least a decade for that to become such a material movement that we can see that it overtakes the dilution and the retreat part of our strategy. Now how fast it will go? I don't know. That's why we actually say in line with society. But where we will be at 2030 would indeed be a guess. So I'm not going to hazard a guess. The only thing I'm going to say is we're going to work very hard to make it happen. In the meantime, though, we have set pretty hard targets for what it is that we want to achieve. And the short-term targets, the ones for this year, next year and the year thereafter, are actually linked to the remuneration of 16,500 people in Shell. Now we will update you every year on how we see not only our progress but also how we see progress within society. And I hope we can demonstrate that as a matter of fact, we are not only pushing society, but we're probably going to go a bit faster than society as well. So thank you very much for your question. And apologies for explaining it extensively, but I believe it is one of the key points that needs to be clarified around our approach.

Ben, thank you, and thank you for taking time to explain it completely, because it was very important. Donny, if you could update us on the major litigation in Nigeria there, our shareholders could be focused on.

Thank you very much for the question. Indeed, I think Nigeria is a challenging environment to operate in, and there's a lot of litigation there. But in actual truth, actually, we win the vast majority of the cases that are brought against us. Last year, for example, out of the cases that were brought against us, we only paid out about $5.2 million in Nigeria. So I think a lot of the cases in Nigeria, the claims themselves are quite inflated. And actually, we only -- at the end of 2020, we have only provisions of about $150 million in the accounts for what represents hundreds of billions of dollars of claims. I think more importantly, I think, it's perhaps a reference to the litigation in Nigeria are the 2 cases that we've had recently, one in the Netherlands and one in the U.K. And we're disappointed by the decisions. They relate to spills, and we are still very convinced that actually the spills occurred as a result of sabotage. The case in the U.K. is now having to go back to the lower court. So no liability has been found. So it's too early to speculate what the quantum is in terms of exposure. And going back to the case in the Netherlands, we are also appealing the case at the moment, because we were required to install a leak detection system, and we're trying to clarify what is the specific requirements there. And again, the -- no liability has been found in terms of quantum. But again, I think one of the things that the PDC staff do extremely well is that they remediate all spills regardless of whether it was caused by operations or by sabotage or theft. And I think they are doing such a great job there. And I hope that actually the litigation will indeed reflect that the work that they do as well.

Thank you, Donny. Ben, anything else to add on future plans?

Yes. Thank you, Chair. I think Donny covered it quite comprehensively already. I would, first of all, say, what have we learned, Mr. van Esch, well one thing I've learned also from my talks to our Nigerian colleagues and visits there. We have amazing Nigerian staff that work under incredibly difficult situation, not just for the personal security but the challenges in the community, the challenges in keeping the infrastructure and looking after its integrity, cleaning up spills, et cetera, et cetera. That is the first thing I've learned, and I have the highest respect for our Nigerian staff in that regard. The other thing that we have learned is that this is a very difficult challenge. When law and order breaks down, when sabotage and theft is rife where you try to operate, no amount of effort that we put in can actually try to compensate for that. So I think the important lesson that we have learned is that this is not any more a risk that we feel we can be exposed to. It's not something we can solve. We cannot solve community problems in the Niger Delta. That is for the Nigerian government perhaps to solve. We can do our best. But at some point in time, we also have to conclude that this is an exposure that doesn't fit with our risk appetite anymore. We've drawn that conclusion, and we're now talking to the Nigerian government on the way forward. Thank you very much.

Next question?

Mr. Chair, I have another question on the line here. It's a question from David Prosser. Should Shell be rebranded as an energy company, not an oil company, i.e., to be called Royal Dutch Shell Energy plc to make quite clear that the generation of energy is in its business and the extraction of oil and other carbon generating forms of energy are part of its history rather than its future?

Mr. Prosser, thank you very much for your question. I'm glad you're focusing on the Shell brand, because the Shell brand is very valuable. It's well perceived by consumers and thought of highly around the world. We have an outstanding branding organization here that works thoroughly to find the best way to use that and how to project it as we go forward. We will take into account your suggestion, but let me assure you, we agree with you in spirit that the naming and the focus of how we communicate our brand is very critical going forward, and we'll take it into account. Next question?

Mr. Chair, I've got a question here from the Dutch Shareholder Association, the VBDO. Question one, Shell offers its customers carbon-neutral driving based on the offsetting of customers' emissions through carbon credits. In practice, the purchasing carbon credits often do not have a full effect on the amount of carbon absorbed or stored. A natural ecosystem protection projects can suffer from additional problems e.g., baseline setting, lack of biodiversity, land grabbing and permanence issues due to forest fires, et cetera. Shell mentions the use of high-quality and independently-verified nature-based solutions. It refers to a McKinsey report, which outlines the MBS benefits and business opportunities valued at $50 billion by 2030 but also acknowledges various challenges. Without consensus on an international acknowledged framework to measure and verify MBS carbon credits, how does Shell intend to approach risks related to carbon credits related to natural climate solutions to ensure it's aligned with its targets? Second question from the VBDO. In the upcoming years, can Shell transparently report how it performs due diligence regarding MBS to guarantee stakeholders that carbon offsets are indeed realized? Let me pause there, Mr. Chair.

Thank you. Very important questions. Ben, could you address that, please?

Yes, absolutely. Thank you very much. Well, you do indeed bring up a very important point and a point that we have been raising ourselves as well. We believe, let's, first of all, make that point as well, that nature has a role to play in dealing with the climate challenge. There will be many emissions that are diffused, hard to capture and hard to avoid that will need to be offset. Our philosophy is that we would only use offsets like nature in those cases where it is a last resort, where actually avoiding the emission or capturing the emission another way is simply not possible. And you can imagine, of course, they are mostly going to be emissions of our customers, like, for instance, people who drive a car still with an internal combustion engine in it. You're absolutely right that there are many challenges when it comes to nature-based solutions. It's still a very embryonic market. And therefore, we have said very clearly, we will only use the highest quality products that are available. But it would be so much better if there was a separate body that would certify that, and that is what we are calling for as well. Now in the meantime, we not just rely on taking credits out of the market. As a matter of fact, we do our own origination. Basically, with that, I mean, we are enforced in our own landscape projects, reforestation projects, protection projects so that we have a direct line of sight on the quality of the credits that we are creating ourselves. But in the end, if the world indeed is going to rely on this, which is inevitable to a very large degree, we will have to have independent verification. That's exactly what we are calling for. And indeed, challenges like rebaselining; challenges like well, forest fires, et cetera, that all have to be taken into account. And to the extent that we can, we do take that into account. We do take into account that some of this carbon will leak back. And therefore, we will have an extra safety margin in how we create these individual credits. Going forward, I think your second point is an excellent point. We will have to show more transparently how we are using these credits, what sort of credits they are, and what sort of verification actually sits behind it. Because without it, I fully agree with the sentiment of your question, this will remain to be an issue of challenge by many people who are critical to the use of nature by companies like ourselves. Thank you.

Next question?

Operator, let's go with your question on the phone now please.

Next question from Doug McMurdo from PIRC.

Very good afternoon, Mr. Chairman. I think it's afternoon for you now, but good morning. Just to introduce myself. I'm Councillor Doug McMurdo, Chair of the Local Authority Pension Fund Forum, representing 83 fund members and the further [ 7 to ] companies with assets under management as asset owners, [ unlike that ], in excess of $420 billion. Mr. Holliday, I'd like to put on record our thanks for your contribution to Shell, and I do acknowledge many of your positive contributions. Thank you very much. I welcome and, of course, subject to the conclusion of this meeting Sir Andrew Mackenzie to our company in his new role as Chair. I look forward to working with him, having already invited Sir Andrew to meet me. So just to get to the question, we have recommended to our members, and we described why, to vote against your resolution and would like to see another, next year or in fact, even earlier, if you reminded to hold a special general meeting. We would like to see a resolution that sets targets putting aside the potential income from the oil and gas sector in the short term, which too often, many portfolio managers will be principally concerned with income. It requires focus on the medium to long term, which have helped already this morning, for the sustainable viability of Royal Dutch Shell as a net-zero company in a market with competition from renewables and with credible plans that any use of offsets such as nature-based solutions and carbon capture and storage to include the financial risks. Are you prepared to work with lab and better understand our asks and importantly, to bring about a clear and robust just transition to a net-zero environment in a timely manner? Thank you, Mr. Chair.

Thank you. Let me comment and Ben can add. First, thank you for doing exactly what we hoped. To have a dialogue to understand the aspects of our strategy that you support and those aspects you'd like more clarification on or possibly consider adjustments. This is exactly what we hoped so we put this forward and look forward to working with you in maybe a better setting. We can understand more details. Ben, would you like to comment on any specific suggestions now?

Well, first of all, to also thank you, Mr. McMurdo for your comments and questions. I hope you will agree with me that we did set out quite a few detailed targets, short, medium and long term. We did also include, by the way, a significant amount of financial numbers in there where we expect the bulk of our investment to go to also where we expect the cash flows to come from going forward. Of course, as you can imagine, many of the risks that we have financially are also related to the macro environment. There is indeed a lot of discussion about the risk of, for instance, stranded assets or the risks that the transition could bring to a company like us. As you may be aware, we are early supporters of the TCFD, the Task Force for Climate-related Financial Disclosures. And in the report, there is actually a section dedicated to how we embrace the recommendations of the TCFD. There are many recommendations in there and a lot of also disclosures associated with it, many more than we could include in the 32-page document. But if you would, for starters, go there first, and indeed follow the pathways that we have in the report to the various disclosures we have, you can begin to understand how we ourselves see the risks. And hopefully, you can begin to understand that these risks are not out of the ordinary. If indeed, there would be the need for further dialogue could I suggest, sir, that you reach out to our Investor Relations team, who can talk you through it in a bit more detail or can bring you into contact with the right experts in our finance organization. And we would be delighted to listen to you and your recommendations for how else we can improve or further the disclosures that we have in this area.

Thank you. Next question?

I will now take 1 or 2 questions online again, Mr. Chair. We've got a question here from Nestle Mamet, representing DWS in Germany, which is one of our shareholders. She has -- they have raised here about 5, 6 questions. So in the spirit of having only a few questions by shareholder, I'll summarize it in 3, and then we will go back to them on the last outstanding questions with the Investor Relations team. The first question from DWS is to the auditor. Could you comment on the feasibility of Shell's Energy Transition Strategy with regards to whether the company can provide investors with visibility of over how a net-zero pathway could impact its financials? What risks do you see? So that's the question to the auditor. Two questions now out of 5 for Shell, and then we'll come back on the other outstanding questions, as I said. In your ambition to achieve net-zero emissions by 2050, why are scope-free emissions not explicitly included as a target? First question. Second question. In your scenario planning, do you refer to a 1.5 Celsius scenario? And if yes, do you plan on reporting on the key risks and opportunities identified? Let me pause there, Mr. Chair.

Thank you. So Allister, if you could speak to the questions directed to the auditor first. And then Ben, if you'll take the other points.

Thanks again, Chair, and thanks for the question. I think perhaps this is more of a question for the company's answer more than me, but I'll give you my view, and I think I've already covered many of the points. I think it's very difficult to estimate what adjustments would need to be made or what estimates need to be made, what assumptions need to be made in order to achieve Paris 2050. So I -- my personal view, it's a very, very difficult exercise just in instances like oil price assumptions but also in terms of alternative technology, because I think a lot of the effort to achieve the 2050 targets will require the use of energy, which we -- sorry, with the technology that we don't even have yet. So I think it's a very difficult exercise to perform from my perspective to make judgments and assumptions that would be applied to achieving something 30 years in advance. So that's my view from my perspective.

Thank you. Ben?

Yes. Thank you very much. And let me deal with the 2 questions. The first 1 puzzles me a little bit to be perfectly honest. Why would our ambition to achieve net-zero not explicitly include Scope 3 emissions? As a matter of fact, it does. So when we talk about our ambition to be a net-zero emissions Energy business, it includes Scope 3. So in other words, if we are going to be at net-zero by 2050 or for that matter, any targets that we have set as a interim target, this will take into account the emissions from our own operations, the emissions of the energy providers that serve us, that's Scope 2 actually, and also the emissions of our customers, so the ones who use our products. And of course, you can imagine that the emissions of our customers are best tackled by providing them with energy that doesn't have any carbon in it or if it has to have carbon in it, then at least, it should be bio-based carbon. So in other words, carbonate is already inherently offset. And then, of course, we will take into account also the actions that our customers take. And of course, many of our customers will have to take actions if they have no alternative but to use carbon-based energy. And there will be plenty of our customers still in 2050 that will have no access to technology or products to just have no emissions at all. Think of aviation. I think there will still be planes flying around based on petroleum-based jet fuel. Now we have to find a solution for those, but we've also said we will not sell any oil and gas products anymore to any customer who will not deal with the emissions that it causes. So in other words, our entire value chain will be net-zero, either because we have done it, or we have worked together with customers to do it. Yes. Now on the scenario and the 1.5 degrees centigrade. Yes, that is what it is. And again, I will refer you back to the reports where we explain how we got to it. But maybe also here are a few words. This is not based on our scenario. The 1.5-degree scenarios that we use are the scenarios of the IPCC special report on 1.5 degrees C. There are multiple scenarios in that report that show how the world could get to 1.5 degrees, some are more likely or more plausible than others. We've removed some of the outliers, which we thought were, frankly speaking, too optimistic, too technically infeasible or rely too much on sort of shock change. And then the core of these scenarios, we have used to say, within that band, we have to move as well. And that's how we have set our targets. Now there will be risks and opportunities in that transition. And of course, many people will say, well, the risks are very clear. Your oil and gas won't be needed anymore. No, I think there will still be oil and gas needed as a matter of fact, also in 2050, if only to use as a carbon base for materials that the world will still use. And as a matter of fact, if you just use the projections of our production, most of the reserves that we have will be produced by 2035, definitely by 2050. So the risk that we are somehow sitting on resources that can't be produced anymore is actually quite negligible. And wherever we take longer-term decisions, we will make sure that they are carbon resilient. That they are first quartile in that class. So if the world is still using some oil and gas, we will be fine from a carbon intensity perspective. Now there may be other risks. Refining, will the world need as much refineries as it does? Maybe not. But then that's why we are concentrating our portfolio to 6 refineries from 64 that we had when I joined Shell. And then finally, a lot of people think that when the world will finally indeed be successful in turning its back on oil for transportation and industrial processes, surely the oil price must come down as well. Well, that correlation is not a guaranteed. As a matter of fact, many of scenarios will actually show that we can also see a very high oil price scenario, because we will continue to invest in oil and gas production as a world, not as a company, as a world to still meet the shrinking demand for oil and gas, because the way supply will shrink without investment is much faster than the world ever would have to shrink demand. So I think the risks are actually well understood. Of course, we try to continuously challenge ourselves. Are we critical enough here? But the more important thing is, there are many opportunities. And these are the opportunities also that we have laid out in the 32-page report how we transition the company. Thank you very much.

Thank you, Ben. Next question?

Mr. Chair, I'll now take the next question here online, and I'll read it. You have to bear with me, because it is also a statement and then I'll come to the question. This is a question from the [Foreign Language], so the Dutch Shareholder Association, the VEB. VEB votes in favor of the Resolution 20, Shell's Energy Transition Strategy. Getting to this point has by no means a walk over. We feel that we owe our support to Shell right now. Shell commits to being carbon neutral in 2050. With this, it's already ahead of the pack. And most importantly, albeit under the guise of an advisory vote only, we, the shareholders, now get to have a say on Shell's climate strategy. This is a groundbreaking turn from the past and as much as it's first of its kind. Voting in favor here and now is our way to express that we take Shell up on its pledge to give due credit to its shareholders. Put differently, we believe that voting in favor is our way of saying to Shell that to us, its Energy Transition Strategy is a binding commitment. Shell expresses that enacts in line with Paris agreement. We will not shy away from calling Shell to account if it turns out otherwise. With that, we do wish to see clear performance measurement. This is needed from next year onwards. On the disclosed short-term, medium- and longer-term emission reduction targets but also as to whether the investments in its green propositions concretely yields the depicted financial returns trajectory, for the avoidance of doubt, we vote against to follow this resolution. Our support for the Shell resolution expresses that we take Shell up on taking its shareholders seriously. Our voting behavior must be aligned to that. This is not to say that we don't endorse follow this request that Shell reports on its performance towards its targets. During the Strategy Day, Shell mentioned that as the size of the growth pillar in its business will increase, financial performance will become less dependent on oil and gas prices. However, for the next decade, Shell's cash flows will still be highly correlated to oil and gas prices. To what extent are Shell's ambitions to lower its carbon footprint dependent on the development of oil and gas prices. i.e., in a USD 30 to USD 40 oil price scenario, could Shell generate enough cash flow to stick to its capital allocation plans for the growth pillar and realize at the same time, its net carbon intensity reduction targets? Here, the statements from VEB and the last question stops Mr. Chair.

Well, we thank you very much for your statement. It is very much in the spirit of dialogue that we would hope would occur. We had this resolution forward, and we're committed to continue conversations with you to move forward. I'd like to ask Jessica to talk to oil price a bit from her perspective and how that's impacting our plans and how you deal with that in your financial planning.

Thank you for the question. Indeed, our cash flows today are, to a large extent, impacted by the oil and gas price environment as well as the refining downstream margin environment as well. So that will impact our cash flows. However, when looking forward in terms of the energy transition, we've built a company that is fundamentally resilient to a wide range of outcomes in terms of the price environment. And I think you saw that in terms of our 2020 performance, a very dramatic year in terms of the macro environment. And yet in that year, Shell generated significant cash flow and importantly, reduced our net debt, which is a very good measure in terms of the resiliency of the company in a very extraordinary set of circumstances. And so while we would benefit in the near-term because of our composition of our company, the composition of the energy system with a higher price environment, our strategy is not dependent on a higher price environment. And in a lower price environment, we would still generate the cash needed to generate significant cash flow and to invest in our growth pillar and to reshape the future of the company. So while it might be constrained in the near-term, I think 2020 showed that we have the resilience to take the steps necessary to reshape the company from an operational expense standpoint, to reshape it from a capital expense standpoint, to ensure that we do have the cash available to reshape the company for the energy system of the future.

Thank you. Next question?

Operator, can I have the next question online, please?

We can now take our next question from Natasha Landell-Mills.

Great. Thank you. Can you hear me?

Yes.

Yes. Hello. So my name is Natasha Landell-Mills, and I'm representing the asset management, Sarasin & Partners. And I actually would like to ask 2 questions, if I may. The first to the Audit Committee Chair, Ann Godbehere. Shell has clearly stated in its annual report that its accounts are not drawn up using assumptions consistent with the Paris goals, because it does not see this as a likely scenario. However, the shareholders have a legitimate interest in understanding how the world transitioned onto a 2050 net-zero pathway could impact Shell's capital strength and performance, not least because as we've been hearing this morning, this is the pathway that Shell has committed to. With the publication of the IEA's special report on a 2050 net-zero pathway this morning and projections of oil prices falling to $35 a barrel in 2030, down to $24 a barrel by 2050, this visibility becomes even more urgent. Could you please comment on whether the Audit Committee will look again at whether its accounts should use forward-looking assumptions consistent with the Paris agreement or at the very least publish the results of sensitivity analysis showing how a Paris-aligned pathway could impact its financial position in its next financial statements. My next question is...

Thank you for -- please go ahead.

Thank you. My next question is for the auditor, Allister Wilson, who has been getting a lot of attention this morning quite rightly. I wanted to, first of all, state that we really welcomed EY's very detailed response to the IIGCC Investor Expectations for Paris-aligned Accounts in Southern Europe pool. We likewise very much appreciated the clear opinion that Shell's assumptions are not in line with the Paris pathway. EY, as we've also heard this morning have indicated that it is neither possible nor appropriate for them to provide disclosure of the financial statement consequences of such scenario. However, I'd like to make 3 points, if I may. Firstly, Deloitte did provide such commentary for BP this year. Secondly, EY does undertake stress test but critical forward-looking assumptions already, and it is unclear why scenario aligned with net-zero not appropriate or possible. And finally, in light of the publication this morning of the IEA special report that I mentioned before, which includes commodity price trajectories, this will provide an external benchmark to support such stress testing. So the prices that the IEA scenario came out this morning of $35 a barrel in 2030 and $24 a barrel by 2050 underlines the importance of doing such a stress test. So we would like to know whether EY would provide investors with the visibility they seek on the risks from a 2050 net-zero pathway next year.

Thank you for both of your questions. I will, as you suggest, turn to Ann and Allister in just a minute, but let me first speak to the IEA report that came out this morning. We just have not had time to study that in depth, understand the assumptions, see how they compare with ours. So I think it would be very appropriate to -- without studying that, inappropriate to respond to that report at this point in time. But with that set aside, we certainly will in due course as we have a chance to study it. I would like to turn to Ann now to respond to her questions.

Thank you. Thank you, Chad, and thanks for making that remark, because it was [indiscernible] remark I was going to make. But of course, we will, as we say, a lot of external information in. We will be selling that over time. But let me make perhaps a number of remarks this morning. Ben opened his remarks today by referring to his excitement on direction, first steps and strategy. The Board shares that excitement and commitment for Shell to become a net-zero emissions company by 2050 in such a society. However, as both Chad and Ben have sort of said and in answering a number of questions but also in their remarks this morning, regardless of the strength of our commitment, meeting the goals of Paris alignment requires the economy to transform in a number of complex and connected ways. To say that our accounts are Paris-aligned today would imply that a path of how to get to net-zero by 2050 is already 100% mapped out, not just by us, but between governments, companies, customers and society. And as we talked about a number of times already, that detailed path to transform across all stakeholders simply does not exist today, which is why no one company or government, I believe, can say today that its accounts are Paris-aligned. And as Allister, our auditor, in his response to an earlier question as well, we don't know what those assumptions should look like 20 years -- 30 years hence. Having said all that, let me make a few more comments. And one is in not responding to what's only come out this morning, but Ben made an important observation to a recent response as well, and that is about our reserves and the fact that our current reserves are expected to be entirely used before 2050. So just sort of another important point. But let me say something about our accounts as well and the climate change energy transition. As in fact a key consideration today across many critical accounting judgments is carbon pricing, climate change, energy transition. And in fact, in our Audit Committee report, in the annual report, we referred to some of this in our key areas of judgment. I know from time to time, we get a question, why don't you have climate change and energy transition as a stand-alone area of key judgment in the report that we put into the annual report, the Audit Committee report. And I'd say because climate change energy transition is not a single focus area. It cuts across many of them. And again, Allister mentioned a few of them this morning, and 3 of them are highlighted in the Audit Committee's report, in the annual report. And that's around obviously, impairments, taxation, deferred tax assets, the future of the refineries, portfolio, and again, specifically on that one, reflecting energy transition, the company's strategy of moving from, for instance, 14 sites to 6, high value chemical and industrial parts. So I'd like to assure everyone that's on the call today that the Audit Committee is very focused on this. That also, as we said in the Audit Committee report, we specifically, this year, have asked both our external auditors and our internal audit function that every time they report to the Audit Committee that they specifically highlight what work they are doing on climate change and energy transition on our financial accounts. So we are gathering a lot of information. We're trying to be transparent, but we're not trying to overstate by saying we're Paris aligned today. As I say, that pathway is still an uncertain pathway. And over time, certainly, assumptions will change in the next 30 years, but we believe we are taking all the information that exists today that is relevant and appropriate for making assumptions in our financial statements and are incorporating it. Thank you. Allister, I think you were going to address the question as well.

Thanks, Ann. Thanks, Natasha, for your question. I think a lot of it has been answered by Ann already. But in terms of -- in terms of our commitments, I don't -- I'm not sure that I can make a commitment today because we will see what happens in the year and the progress that the company makes. So in terms of what we do, will, to a large extent, be driven by what the company does. I would just make the point that assumptions need to be supportable. And that's the biggest impediment to preparing a set of accounts with assumptions and estimates and judgments that are supportable for something that's going to happen in 30 years' time. In terms of -- it's not really for me to comment on Deloitte's and BP's accounts. But I think that's why earlier, I made the distinction between a company pursuing an energy transition strategy that is consistent with the Paris goals, which I think is what Deloitte says versus Paris-aligned accounts. But it's something which, as I said, we will certainly look at today and focus on this year and will be done in conjunction with the progress that the company makes.

Next question?

I'll now take 2, 3 more questions online. First question is from Vanessa Calvert , representing Fair Share. She's asking a question on behalf of ShareAction. My question is in relation to the real living wage as defined by the Living Wage Foundation. This is an hourly rate calculated to reflect the cost of living in the U.K. It is currently GBP 10.85 per hour in London and GBP 9.5 per hour throughout the rest of the U.K. Living wage employers commit to providing all direct employees and third-party subcontractor staff essential to the success of their businesses at least this rate. Momentum behind the standards has grown. There's now over 7,500 accredited employers, including 45 of the FTSE 100, and BP who accredited in 2020. Please would the Board provides an update on Shell's position regarding the living wage? Additionally, would the board be willing to meet with ShareAction and Living Wage Foundation to discuss this further?

So Ben, could you comment on that? Or should we take it offline?

I can make a few short comments on that. I think the area of living wage is indeed an important area. And I know that there are definitions out there, but there is also a wide range of opinions on what exactly is a living wage and how it should be applied. We are still studying the evolving landscape there, but we're very clear that we expect to pay our employees, whether that's in the U.K. or elsewhere, a wage by which they can comfortably meet all their financial obligations. And we benchmark that quite extensively. And we survey whether our people believe that they are paid fairly and appropriately. And so far, all indications are that is the case. When it comes to the indirect employees, we believe, that actually is a different matter. We do not control the remuneration policy of the people that we work with other companies. But we have said in our supplier principles, very clear expectations that we expect our suppliers to pay their employees, first of all, a minimum wage, but also pay them responsibly so that indeed, they can meet the living requirements. We're very happy to have further dialogue with you, Ms. Calvert, and I suggest that the IR team reaches out to you and set up a further dialogue if that is needed. Thank you very much.

Next question.

Next question is again online. It's from Moira Elizabeth Johnson . Greenpeace and Friends of the Earth have accused Shell of investing heavily in fossil fuel initiatives very recently despite the escalating climate crisis. What can you offer in your defense? It must be a very difficult dilemma for a company based on oil.

Let me take that question. We offer resolution 20. And we think that comprehensive description of what we're doing is the right steps. We believe the world does need oil and gas for some period of time. We described it quite well in our work, and we think it speaks for itself. Next question.

The next question is from Peter Jeffrey Conquest . Does the company have computer-controlled systems that might be susceptible to hacking by unfriendly agencies? He has another question, does the company have any prior clients in the U.S.? What precautions does the company have in place to protect computer-controlled systems that might be susceptible to hacking by unfriendly agencies?

Thank you for both your questions. Jessica, could you take both, please?

Yes. Thank you, Mr. Conquest, for your questions. Unfortunately, most companies and individuals are susceptible to hacking. It is a key priority for the Board as well as the Executive Committee. It's a topic that gets special attention in both forums. And over the years, we have built considerable defenses to protect ourselves and the entire value chain of systems from preventing and detecting issues to recovery should an issue occur. It's an area where there's a lot of coordination that happens between the private sector and the public sector with governments around the world, also between companies and industries. It's probably one of the better areas where you see collaboration happening because it is such an important issue for all companies, and frankly, for society. I'd also note that should Jane Lute join our Board, her expertise in this space will also be beneficial to the Board. We're working hard to create essentially a zero trust environment, investing considerably, as I said, to understand all threat vectors that may cause issues from phishing attacks to PCD control systems, et cetera. In general, I'm pleased to say we have been reasonably effective in terms of managing the threats over the last several years. We've had no material interruption to our operations and certainly, then to our business-critical issues systems. However, there are issues that we have faced. And things don't always go as we would like them to. But on the whole, we've been able to manage it effectively. It's an area though that will require chronic unease. These are words that we use within Shell on issues like this given the sophistication of the unfriendly actors, as referenced, that show considerable persistence and professionalism at their craft. But also recognizing with digitalization, the potential of this issue will only grow throughout society. So it is front of mind today, and I expect it will continue to be so.

Next question?

I have another question here online. It's from Sunil Kumarpal . My question on diversity and inclusion on Page 108, I assume he is talking about the annual report and diversity of leadership on Page 141. Why is it an all-white Board and all-white senior management?

Let me address the Board and Ben, you could speak to the senior management. It's not an all-white Board, we have diversity of multiple forms. We also have, with completion of this AGM, we'll have 50% women. We believe a diverse Board is very important. And we believe racial diversity, which is implied by this question, is important. And we do have diversity today and we'll seek to continue to diversify in the future. And I'm quite proud of the way the Board stands today and the way it acts on diversity and way it takes into account. Ben, could you speak to management?

Yes. Thank you very much, Mr. Kumarpal. If you look at the Executive Committee for starter, I do believe we have a reasonably diverse management team as well. We have one member of our management team from Southeast Asian origin. We have one member of our management team from Middle Eastern origin. But more importantly, if you look at the top, say, 200 people in our company, you will also find that not only do we have reasonable diversity in terms of ethnicity, but that it is actually improving over time. And we pay specific attention to it when we go through the organizations as we are currently doing. But also on the matter of gender diversity, at this point in time, in our senior staff, we have 30% of the leadership positions occupied by females, which I think is probably one of the leading percentages in our industry, something we're very proud of. Thank you very much.

Next question?

I've got a question here, Mr. Chair, from a Dutch Shareholder Association, the VBDO. The VBDO would like to complement Shell on the fact that it has diversity and inclusion initiatives for a wide range of diversity dimensions: gender, LGBTI, ethnicity and ability. Shell utilizes the people survey to understand its diversity and inclusion performance. Can Shell expand on the results of this survey and what activity Shell is undertaking as a result -- as a response to these results? Additionally, has Shell analyzed this survey to specific between brackets minority groups for example, groups separated by gender or nationality in order to understand the inclusion of these groups? If not, can Shell commit to start analyzing this in the future and transparency report on the matter? Those are the first 2 questions. There's a follow-up question. Shell is clear about its commitment to human rights, both in its own operations and its supply chain. Following this commitment, Shell indeed conducts assessments in case of high-risk suppliers. VBDO and other stakeholders are ever unable to gain insight into several vital aspects of the systematic approach that Shell employs to guarantee human rights are upheld in its supply chain. Can Shell, similar to the information it currently reports regarding local communities in the Sustainability Report on Page 79, provide insight into the work that it is doing in its supply chain?

I think some of this question could probably be handled offline with our investors affairs group. But Ben, would you like to comment now?

I think -- thank you very much. They are indeed important questions. We do take the Shell people survey outcomes very serious. We've been doing this for decades, and we continuously evolve the survey. We debated it extensively. And we do deep dives and adjustments to the survey to understand better exactly what the issues are. The matter of diversity, ethnic inclusion or inclusion in general, are indeed very important and continuously evolving. I have to give some thought to the idea to what extent we want to put broader information out. This is not meant to be for disclosure. This has meant for us, as management, to manage the company with. But I do believe, indeed, in today's day and age, it is important that we are transparent, where we can. So let me give that some thought. Thank you.