Shell plc (SHEL) Earnings Call Transcript

Well, good afternoon. And of course, first, I do apologize to those of you who've had to wait patiently for this meeting to start. We do respect the right of everyone to express their point of view, and we do welcome any engagement on our strategy and the energy transition, which is constructive. Of course, what we witnessed this morning was not quite that. And due to the disruption, we will move the procedural aspects of the meeting. And post the speeches that Ben and I intended to give on our shareholder site before the end of today, and I do encourage you to read those. For those of you here or, well, I guess, on the phone, without Internet access, do contact shareholder services, and they'll be happy to send you a copy by post. I think when I was interrupted the first time around, I was starting to thank you all again for your support at our last general meeting.

[indiscernible]

Excuse me. Excuse me. Excuse me. We will have to ask you to be removed now, please, so that we can continue with the meeting. No, I'm sorry, you're interrupting with the format of this meeting, and I would ask you to stop, and I will answer your questions in time.

[indiscernible] it's my future that's under threat and you just sit there and you choose to lie again, again, and again. [indiscernible].

Shall I try one more time. Okay. Well, that's much appreciated, but I must say, it's me to thank you for your support of the company. Thank you.

[indiscernible]

Well maybe in a good way, but no -- okay. Well, if I may continue, I do thank you for your support at our last general meeting in December, which enabled us to simplify our structure. So let's get started. Again, I'm not sure I did say this, if you're participating online, please refer to the guide on the Lumi platform. If you're here in the room, see one of the ushers at the question points. And when asking questions or making any comment, please state your name and the name of your organization you represent, if anything. Tjerk Huysinga is our Executive Vice President of Investor Relations, and he will support the question portion of the meeting, which is all of it now. He'll read out the questions that are submitted on the Lumi platform. Some of the questions may be moderated just to avoid any unnecessary repetition to make sure we have an orderly meeting. And Tjerk will also balance the online questions with those on the phone line and from you here in the room. So please bear with us as we kind of bring them all together.

[indiscernible] earlier comments, but one of the reasons I come to AGMs is to hear Chairman and Chief Executive's speeches. Despite the disruption this morning, I would urge you to give them first. Let's just kind of resume from that [indiscernible].

Should we do that?

We can. Yes.

I mean it really is up to the will of those in the meeting. We were trying to obviously make up for lost time. But we are prepared to give them. But we were really, I'm just interested, if there's no -- pardon? Hands, maybe yes. Is there any or any counterview? Would you like to hear us speak? I mean.

Yes.

Yes. Okay. All right. So I think probably -- I don't have them anymore on the teleprompter up there, so I'm going to just give them from, I think, I would just use paper, but that's fine.

Do you want to introduce the Board or...?

Did we skip that bit as well? I do apologize. I think Linda is suggesting I should also formally introduce the Board. So let me do that now while we get some of the speeches organized. I've got Catherine Hughes on my far right. Catherine is Chair of the safety -- Sorry, just a minute.

[indiscernible]

Okay. All right. So I've got, look, I'm sure you can put up with this. But I think I also need to confirm that we have a quorum present and now declare the Annual General Meeting formally open and suggest, with your permission, that the notice convening the meeting is taken as read. And I would just add a little bit from some of this just to make clear that pursuant to 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 also appoint the company's registrars, Equiniti to act as scrutineers. And I hear by propose that each of the resolutions 1 to 21, which are set out in full in the Notice of Meeting. Resolutions 1 to 16 are -- and resolution 20 proposes ordinary resolutions and, therefore, each requires a simple majority of the votes cast in favor in order to be passed. Resolution 17 to 19 and resolution 21 are proposed as special resolutions, and therefore, each of those resolution requires a 75% majority of the votes cast in favor in order to be passed. So I now declare the poll open. And to allow sufficient time for other shareholders wanting to ask questions after we finish speaking, please do keep your questions and comments short and to the point and relevant to the business of today's meeting. And with those here, in the room, and for those choosing to ask a question via the teleconference facility, I do say if I believe your question or statement is particularly long, then I may ask you to bring it to a close. And I do intend to, wherever possible, bring questions or comments of a similar nature together and grouping questions in this way in many cases avoids repetition and make sure we get through as many issues as possible. So I'm continuing to indulge your patience on a few things. I will, of course, continue now that we appear to have a more orderly meeting to ensure that our proceedings are conducted in a proper and orderly manner, and we'll do my utmost to ensure that all shares of opinion are given a fair hearing. But in other respects, too, as I'm sure you will now respect our procedures and order of the meeting. And for those watching on the Lumi platform, if you're still with us, a copy of the Notice of the Meeting can be found under the documents tab on the screen. Those watching on the webcast, it can be found in the General Meeting section of our website. So all of that said, now let me introduce our directors. Their biographies are provided with the Notice of the Meeting, and that was circulated to shareholders on April 20 and added to our website on the same date. So starting on my right, Ben van Beurden, our Chief Executive Officer. Then we have Sinead Gorman, who's our new Chief Financial Officer. Sinead joined the Board in April, and she's succeeding Jessica Uhl, who resigned due to family circumstances, which made relocating long term to the U.K. unsustainable for her and her family. She has been with Shell for some 22 years and has held several increasingly senior finance positions in Europe, North America and globally. And on my left is our Company Secretary, Linda Coulter. Proceeding now with our directors, on Linda's left is Euleen Goh. Euleen is our Deputy Chair and she's a senior independent Non-Executive Director; as well as being a member of our Nomination and Succession Committee and our Remuneration Committee. Now behind me, where I was starting on the right is Catherine Hughes. She is Chair of the Safety, Environment & Sustainability Committee; and Catherine is also a member of the Remuneration Committee. And then we have Dick Boer, Dick's a member of our Audit Committee and our Nomination Succession Committee. And then Martina Hund-Mejean, also a member of our Audit Committee. We then have Neil Carson directly behind me. He is Chair of our Remuneration Committee and a member of our Safety, Environment and Sustainability Committee. And next to Neil is Jane Holl Lute. Subject to her reappointment at the end of the meeting, Jane will step down from a role in the Audit Committee and become a member of the Safety, Environment and Sustainability Committee. Moving on is Bram Schot. He's a is -- Bram is a member of the Safety, Environment and Sustainability Committee. And again, subject to his reappointment, Ben will then also become a member of our Remuneration Committee. And finally, we have Ann Godbehere. She is Chair of our Audit Committee and a member of our Nomination and Succession Committee. Look, he's not present here today, but I'd also like to recognize Gerrit Zalm, who's watching the proceedings online, I think. As we announced in March, Gerrit is not seeking reelection today following -- serving us for more than 9 distinguished years on the Board. Gerrit, on a personal basis from myself, we really will miss your insightful council, and thank you for your invaluable contribution to the business. So now that is your Board. Let's move on to the speeches. And I'm going to find my...

[indiscernible]

Okay. Well, we'll, thank you for doing it respectively. I appreciate that. I'll take this just the case. Okay. So as noted earlier, the atrocities continue in Ukraine. Just a minute. I don't know. Yes. Okay. Yes. So we've recently announced, therefore, our intention to withdraw from Russian oil and gas, and we did this with conviction. Two weeks ago, we agreed a deal to sell our retail and lubricants business in Russia, and we've stopped buying Russian crude and Russian liquefied natural gas on the spot markets, and we will not renew any long-term contracts. We've also stopped spot purchases of cargoes of refined products those directly exported from Russia. Shell is also working hard to secure the safety of our staff and contractors and to support relief efforts and take action when we need to. We continue to do our utmost to keep retail sites operating in Ukraine, where safe to do so, to keep supplies moving and all our teams in the region secure. As well as being a human tragedy, the war has led to rising energy prices and deep uncertainty about supplies. Simply put, this disruption in the global energy market means a further painful increase in the cost of living. And that is why affordable, secure and reliable energy cannot be taken for granted. Global supply must be protected and managed through international cooperation involving governments. But if these are enormous challenges that we as Shell and others must act on today, the world also faces the huge and longer-term challenge. We all agree with this, our climate change, and we must all take action with this -- or on this, with equal urgency. And for shareholder, this means we are continuing to accelerate our strategy to become a net-zero emissions energy business by 2050, and then we'll talk about this in more detail in his speech. It means achieving short-term targets for cutting the intensity of our carbon emissions as we've done for 2021. It means working towards our interim targets for 2024 and 2030. And these are demanding targets, of course, but we're determined to meet them. No ifs, no buts. And finally, it means building on strong financial results like those we announced just a few weeks ago for the first quarter of this year. Shell must play its part in both supplying the energy of today and helping to build the low-carbon energy system of tomorrow. And for this, we want your support. In fact, I would urge everyone here today, everyone listening online or reading this later to see the energy transition as it should be an opportunity. It's also a great challenge. It's huge in complexity, and it is one that the teams in Shell, our people work on every day. And to make the most of the opportunity of the energy transition, we're transforming Shell. We're using our powerful, trusted brand to help us build market share in new low carbon products and services. It is the integrated nature though, of our businesses, that allows us to move fast to generate value, and I saw this very much in action recently on the Shell trading floor in Houston. There, I saw our teams operating second by second, looking at how we keep the energy flowing. While considering all the time the impact of the carbon emissions of our sales and purchases and in their way, making their own contribution to our targets, and as well as getting that energy to where it needs to be across countries, continents and oceans. So I want to thank all our different teams around the world for their incredible work and continue to supply energy to all corners of the world even in these most difficult times or other difficult times, I'm sure to come. We have the scale, the expertise and the experience to make the most of the opportunity that is the energy transition. And today, I want to give you a few specific examples of the kind of change taking place already, big and small tangible change. And I'll start with small and local. Just a short drive from here, perhaps in an electric vehicle where you will find our first EV-only charging hub in London. This is the first time that we have swapped all our petrol and diesel pumps at a site for an ultra rapid charge points. Apparently, local residents say, the site is quieter, cleaner and better per hose prices. Well, I can't vouch for that, but I can say that our hub on Fulham Road in Southwest London is part of a much larger charge, a larger change. At the end of 2021, we operated almost 90,000 charge points globally. By 2025, we're aiming for more than 500,000. And in less than 10 years, by 2030, we're aiming for 2.5 million and that will include 100,000 public charge points here in the U.K. That's a huge change that is taking place all around us. So now let me take you to the other side of the world to China, to our project in Hebei province, which offers a glimpse of how we're expanding our hydrogen network. Through our joint venture there, we have built a 20-megawatt electrolyzer that will produce hydrogen from renewable energy. And as we grow, we're using Shell's integrated businesses to connect the different parts of the hydrogen system. This means going all the way from offshore wind to power the electrolyzers that produce the hydrogen just as we are in China to then using hydrogen in our energy and chemical parks and eventually supplying it through our retail network to power trucks and buses. And to give you a sense of scale overall, we now have 30 megawatts of total electrolyzer capacity. And according to the statistics from the International Energy Agency, that is on Shell's account 10% of the global capacity of electrolyzers that were installed in 2020. My final example takes us back to Europe, to a large part of land at our energy and chemicals park in Rotterdam, the Netherlands. From 2024, we expect this site to play a key role in meeting Europe's growing demand for low-carbon fuels. This facility aims to produce 820,000 tonnes of biofuels a year. And when this site starts up, sustainable aviation fuel, or SAF for short, could make up more than half the capacity. Globally by 2025, we aim to make about 2 million tonnes of SAF a year. And by 2030, we aim for SAF to make up at least 10% of our global aviation fuel sales. So these 3 examples are glimpses of what a low carbon energy system will look like. And there are just some, a few examples, very few examples of what we're doing as an energy supplier. But for Shell's transformation to happen at the speed and scale that we wanted to, we must match our role as a supplier of energy with the role of others as the consumers of energy. Supply and demand both have to change. And our role is to work with -- that they have used for decades. And so far, we've formed more than 50 collaborations with key customers. For instance, with Daimler, we're working on how to increase the market for hydrogen trucks in Europe. With Hyundai, we're establishing a hydrogen refueling network in California. And with Rolls-Royce, we're looking at how planes can be powered 100% by SAF, sustainable aviation fuel. And when you consider that we span 160 markets, serve 32 million people a day at 46,000 branded retail sites and work with more than 1 million business customers, you see the great potential we have to grasp the opportunity of the changing energy system. Today, we're asking for your support on what we've achieved so far. To follow this resolution, Resolution 21 rejects and, in fact, imposes our strategy, and Ben will also talk more about this, too. I urge you to vote against it and in favor of Resolution 20. I urge you to acknowledge the progress that we have made and are making in our energy transition strategy in the space of a year. We are moving fast as we said we would. We are working with others to make significant change. We are rising to the challenge, and we're making the most of the energy transition. Thank you. I'll now ask Ben to add his remarks, Ben.

Well, thank you very much, Andrew. And thank you very much for our shareholders for joining us today. I hope many of you are still watching from home or from another place. Quite a few shareholders still in this room and I, again, also would like to add my appreciation to your patience and stay with us. And thank you, sir, for suggesting that we will do the speeches. That's actually a very good idea. Now a year ago, on our AGM, I told you about how excited I was about the future of this company because then we had just presented our new strategy, which we called Powering Progress. And we have just presented our targets to accelerate the transition of our business to a net-zero emissions energy business by 2050. But then, of course, the world has changed dramatically since then. Andrew already explained it. The war in the Ukraine, well, it still appalls me every day, as I'm sure, it also appalls you. And added to this humanitarian disaster that has disrupted, destroyed so many lives, people across the world, of course, also face other urgent challenges. Some parts of the world are still struggling very much with COVID, for instance, but we're also facing an urgent challenge to deal with climate change. Of course, very much also the theme of today, and many around the world are also experiencing a very difficult cost of living crisis. And this cost of living crisis is, of course, affecting life. And if you ask me what a role of a company like us, an energy company should be in helping to solve this crisis, I think the answer is a sustainable long-term transformation of the energy system because I believe we need policies that ensure that energy companies can deliver the oil and gas where it's urgent lead is today to rebalance supply and demand, which is a bit disrupted today, but simultaneously help replace these fossil fuels quickly, but responsibly with low and zero-carbon energy. If we want to prevent energy disruptions in the future, we need stable policies that stimulate investment in both the energy of today and the energy of future. Now with all this uncertainty and all the change that is currently going on in the world, some of you may wonder whether our powering progress strategy, the strategy that is going to transform Shell into a net-zero energy business by 2050, whether that strategy is still the right one. You can ask yourself, can our strategy withstand the fuel shortages for customers, the inflation, the extremely volatile commodity prices that we are witnessing? And can it cut emissions but, at the same time, continue to create shareholder value? Can it supply reliable energy to places where it is needed most? Fair questions, but my answer to all of them is, yes, our strategy is still the right one. Precisely, because it is designed to cope with change. It is designed to continuously deliver value for shareholders and society while taking the opportunities to grow and become an even more competitive and an even more resilient company. Now this means that we are focusing even more than we did on our customers. It means retraining thousands of staff and skills that will be needed for energy transition. And it means radically transforming the company over the next decades. Now let me give you some examples what this really means in practice. So to start, last year, we completed one of the most effective reorganizations in our history, and we are now operating in a smarter, more customer-focused way with fewer people. But we also simplified our share structure, and we moved Shell's headquarters, including our tax residence, from the Netherlands to here to the U.K. And these changes have given the company much more flexibility, and that, again, helps us to deliver value to you, our shareholders. The company must, of course, create value for shareholders. So I'm happy to see our financial performance and the recent quarters have been very, very strong consistently. But let's face it, we cannot just only use these metrics to judge the investment case in our company. Apart from...

[indiscernible]

Let me restart with the paragraph where I got interrupted. So apart from creating shareholder value, we must also respect nature. And we do this by recognizing the growing urgency and the growing need for action to protect biodiversity or to protect water quality and to use resources more efficiently. You must also power lives by supplying, first of all, the energy to those that need it most and by being a diverse and an inclusive organization. So in 2021, last year, for example, 47% of all the graduates that we hired were women. On our Board, the percentage is 50%. Of all our employees and senior leadership around 30% of women, including senior leadership. So we are making progress, but then I'll be the first one to first admit that we need to do more and we can do more. Now another way to judge our investment cases by our readiness for the future because the world is changing. And as more people use low and zero-carbon energy, this is also where the customers of the energy sector will be in the future. And as you've heard, this means that for Shell, the energy transition is a great opportunity as long as we change as well. And our portfolio is changing. We recently announced the acquisition of Sprng Energy, which is one of India's leading renewable power platforms, and we won bids for offshore wind in Scotland that will produce enough renewable electricity to power every Scottish household, twice over. In fact, once the Sprng acquisition is completed, we will have about 50 gigawatts of renewable generation capacity in operation or under construction and potentially future projects, which should enough to more than power all the households in this entire country in the U.K. We're also building a comprehensive network of charging points for electric cars and we mentioned it. During last year only, we grew our worldwide network by about 50%, 50% more in 1 year. And we're making good progress towards our expected average 1% to 2% reduction in oil production to 2030. That's 1% to 2% a year. Now for some we're not moving fast enough to get out of hydrocarbons, but I believe we are. We have set climate targets that we firmly believe are aligned with the more ambitious goal of The Paris Agreement on climate change, which is to limit the increase in the average global temperature to 1.5 degrees above preindustrial levels. And last month, we published a report on how we are delivering on these targets. And today, you get the opportunity to vote on our progress, which I think really has been very strong. Let's start to recap it a little bit. By the end of 2021, we reduced the absolute emissions from our own operations and then the energy that we used to run these operations by 18%. That is compared to 2016, it's on a net basis. And our target is to achieve a 50% reduction, halving it compared to 2016, by 2030. Now cutting these absolute emissions from our operations is important, but you have another target that is perhaps even more crucial, not just for us but for the world because it includes the emissions from our customers. And this is the target to bring down a net-carbon intensity. So by the end of last year, we had reduced the net-carbon intensity all the energy products that we sell by 2.5%. That's also compared to 2016. So that means that we have met the target that we set to cut between 2% and 3%. Now you may say 2% to 3%, well, that doesn't sound like a lot, but let me give you some context. Last year, the world economy experienced a very intensive recovery with a 6% growth in global GDP. And at the same time, a 6% increase in CO2 emissions. And there was no reaction whatsoever in the world's carbon intensity. So the 2.5% reduction that we achieved in carbon intensity is indeed significant. And then, of course, this reduction target will quickly become much more larger, so we have set a target for 9% to 12% carbon intensity reduction by 2024. And we tie these targets to our executive pay of the top 16,500 people in Shell. Now like I said, this carbon intensity is just not crucial for us. It is also important for the world. And I can illustrate this with a simple example. Shell sells a lot of aviation fuel. You may see Shell trucks at airports, if you fly to another destination. Now imagine that we just stop selling the fuel. Imagine that we decided to close down our kerosene plants in our refineries, we stop supplying to our customers and leave this sector altogether. Now that would bring down our absolute emissions from our aviation business to zero, but would it help? Would it really help the world to come closer to achieving necessary emissions? But as a result of our departure from this sector, fewer planes depart from airports. I don't think so. Because if we supply less kerosene, it wouldn't mean that people would fly less, people are not that loyal to our brand. That simply buy from another company, and the total demand for fossil fuels wouldn't change at all. Now imagine another scenario. And this is the scenario where we continue to sell aviation fuel, but more and more the fuel that we sell is sustainable, sustainable aviation fuel. And so we help our customers change the type of energy they use and then lower the CO2 emissions that they produce. And this is what we are doing, and I believe this is the best solution for both our shareholders but also for society. Because together with our customers in aviation, we are helping to change demand for energy to lower carbon. We are working on ways to help increasing the use of low carbon fuels, and we are decreasing the emissions of this sector. Now in Rotterdam in the Netherlands, as was said before by Andrew, we took a final investment decision last year to build at 820,000 tonnes a year biofuels facility. And this will be amongst the largest biofuel facilities in Europe, producing the sustainable aviation fuels from waste and from certified sustained vegetable oils. And this sustainable aviation fuel will not replace all the kerosene in the world in the next few years, but it will help the sector move away from kerosene. It will start to help lower emissions from aviation as a whole, and it will bring down the carbon intensity of the energy products that we sell. And that is a difference. That's the difference between helping reduce the intensity of emissions by gradually improving the energy use of an entire sector or just letting go of our customers in this sector altogether and let somebody else deal with the problem. It's a difference in my mind between walking away from a problem or stepping up to be part of the solution. And that's what we intend to do, be part of the solution. We are stepping up. We are working with all the sectors that use a lot of energy and that need help from energy companies like us with expertise and experience to find a path to net-zero emissions. And aviation is just one of a good set of examples of these sectors. But in the same way, we are working together with our customers in shipping. We are working with our customers in heavy-duty road transport. We are working with our customers and industry in the production of chemicals, et cetera, et cetera. And we are investing in the technologies that will help these sectors find their own path to net-zero emissions. And these parts can include beyond biofuels that I just mentioned, wind and solar power, of course, hydrogen, carbon capture and storage, offsetting mechanisms by planting trees, preserving nature, et cetera. And in this way, apart from bringing down our own emissions, we also help our customers to adapt. That brings you back to our strategy, Powering Progress. It was designed to respond to changing circumstances. Without those insights, it factors in different ways in which energy makes a difference. And in doing so, our strategy helps us to deliver a secure supply of reliable and sustainable energy across the world. And that's a tall order, but we will not shy away from it. But no company can do this in isolation. So we will continue to work with our customers, of course, with governments, and with you our shareholders because we need your support for this. Now last year, in the AGM, you actually overwhelmingly supported our Powering Progress strategy and our plans to transform Shell into this net-zero emissions energy business, both purposefully and profitably. And today, the vote is about the progress that we have made in the last 12 months since we launched that strategy. And I think this progress has been strong. It has been strong, especially if you consider that according to the International Energy Agency in Paris, almost all activities in the global economy produced more carbon emissions in 2021 compared to 2020. Just try to think of a single sector that succeeded in reducing emissions. Power generation did not. Industry as a whole did not reduce emissions. Transportation did not reduce emissions. Emissions from all these sectors went up in 2021. So our progress in the energy transition is ahead of what we see in most sectors using energy. And what's more? We achieved this progress profitably. So I think our strategy is working. And therefore, I ask you shareholders to vote in support of the progress that we have made in the last 12 months and not to vote for the resolution or Follow This. The Follow This resolution calls for targets that actually would conflict with the Shell strategy that so many of you agreed with. In fact, this resolution could be harmful to our strategy that you approved last year. The Follow This resolution proposes targets that go much further than even the most progressive pathways to net zero in our sector, for instance, the pathways that have been proposed by the -- in the governmental panel on climate change and the pathways of the International Energy Agency. And what's more? The IPCC and IEA pathways include actions by all parts of society. But Follow This suggests that we should reach the targets on our own, which is unrealistic for Shell as a single company to achieve. And most significantly the Follow This resolution focuses solely on changing the supply of energy. This approach would mean, as I said earlier on, that we have to abandon our customers and shrink our business. And that's fundamentally different to the energy transition strategy that we have just explained. And hopefully, you understand from the example that I've given about Shell's role in helping aviation reduce emissions. So we believe that a dramatic change in demand for energy is just as critical as the required changes to supply, and that's needed for the energy transition to really take place. And this means working together again with government, society and crucially working together with our customers. That's why our strategy is customer focused. So in short, the Follow This resolution is unrealistic. It wouldn't help reduce the world's carbon emissions, and it is not in the best interest of you, our shareholders. So today, we ask you to vote in support of the progress that we have made in the last 12 months, and not to vote for a change in our strategy by pursuing misguided targets for our company as suggested by Follow This. Because I believe we have made significant progress. We are reinforcing Shell to deliver secure supply of energy in the places where it's needed most. We are changing into a net-zero emissions business by 2050, and we are strengthening Shell as a business for today, and a business for the future. Thank you very much. Back to you, Chair.

Thank you, Ben. So we've now finally come to the part of meeting where you have the opportunity to ask questions. And a little bit of repetition, you may have seen in the Notice of the Meeting that most of the resolutions are of mainly routine nature for a listed plc with the exception of the 2 climate-related resolutions, which both I and Ben have just made reference to. Just to remind you, the first of these is Resolution 20, which is proposed by the Board and represents an advisory board on Shell's progress against our energy transition strategy. And I think you've heard that your directors strongly believe that Shell's energy transition strategy is in the best interest of our shareholders as a whole, and as a whole of wider society as we've explained. Equally, the Board and management also believe it's important for all shareholders to have a vehicle to express their views on whether our strategy and progress against it is reasonable in the current environment. The advisory vote resolution is designed to be such a vehicle. For clarity, it doesn't shield or abdicate the Board or management's legal obligation under the U.K. Company Act nor does it ask shareholders to take responsibility for formally approving or objecting to Shell's energy transition strategy. That legal responsibility continues to remain with the Board and the Executive Committee led by Ben. The other climate-related resolution is resolution 21, and that is a special resolution, which has been requisitioned 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 energy strategy, make this resolution redundant. And further, the directors believe that Resolution 21, if adopted, could be harmful to what we think is a successful energy transition strategy and against good governance. And so we unanimously recommend that shareholders vote against this resolution. We'll shortly hear, I think, first, from Mr. Van Baal, who will tell you more about this resolution. But to ensure orderly discussions, I'm going to put this upfront, but for all questions or comments of a general or open nature, including those about climate change or the energy transition and all questions or comments about our strategy regarding including those about Resolution 20 and our energy transition strategy, we'll then take all the questions then and, again, those with the remaining resolutions. Again, just a reminder, to keep your questions to the point and short, preferably no longer than 1 to 2 minutes so we can get through as many as possible. And if you're asking your questions through the teleconference facility, please give your name and if you represent an organization, the name of that organization when asking a question or making a comment. So maybe I could, as I've said, just ask Mr. Van Baal to make a short statement about your resolution. Thank you.

Thank you so much. Yes, Mr. Chairman. Mr. Van Beurden, directors and fellow shareholders. An organization that has so many qualities, so much expertise, so much capital has to be able to reinvent itself. Mr. Van Beurden, I hope you recognize this quote, it's your own quote in 2014 when you just took the helm of this company. After we read this quote before, this would be demand who could drive the energy transition. And in the 7 years that followed, we tried to help you with a shareholder mandate to reinvent Shell. And on the way, we support it, and we welcome every single step you took, specifically accepting responsibility for Scope 3. Reluctantly, but you accepted responsibility for Scope 3, you're the first oil major to do so. Today, the Follow This climate resolution will come to vote for the sixth time. For the sixth time, the Board advised the shareholders to vote against the climate resolutions, against this climate resolution. And since 2017, we consistently support this company, Shell, to set no more and no less. Let me emphasize this to shareholders. Mr. Van Beurden misconstrued our resolution just before me. We asked no more nor less than Paris-consistent emissions reduction targets. And in 2017, you called this Paris-consistent emission reduction targets unreasonable. In 2018 to 2021, you call them unnecessary. And in 2022, a new argument came onto the table, unrealistic. It's the exact same resolution, dear shareholders. So after 7 years, we have to conclude that Shell has not reinvented itself. Emissions have not been down dramatically. And more important, the investments, 90% or more of the investments still go to fossil fuels and not to renewables. And in this decade, and that's very important, Shell has no plans to substantially shift investments to decrease emissions. Nowhere what is needed to radically put the climate, realistically put the Paris goals within reach. According to the benchmark of the Climate Action 100+, the world's largest investors alliance, Shell has no Paris-consistent emission reduction targets. And even more important, no Paris-consistent capital expenditure plans for this decade. A Dutch court confirmed this order to decrease emissions. The IEA told you not to invest in more renewables of the IPCC, contrary to what Mr. Van Beurden just said. It also says, emissions have to be down by around 40% this decade. And how much you want to contribute to that, that's up to you. But at this moment, you still want to increase emissions. So today, shareholders in Shell will show what future they prefer, a world of increasing oil and gas production and devastating climate change, or a world that curbs emissions in order to achieve the goal of the Paris Climate Agreement. They will do so by voting for or against Climate Resolution 21. That's a request, again, no more than no less than emission reductions in line with the Paris Accords. And the key question on the AGMs of Big Oil in 2022, indeed, is, will investors give in to the narrative from oil companies that the energy crisis created by the Ukraine war overrides the climate crisis? We think, not. So we thank the investors in advance who voted for curbing emissions. They are the true change agents of this industry, an industry that has proven to be changed the first for decades but can make or break the Paris Accords. Together with these shareholders, we must convince more shareholders that Big Oil will only change course when they vote as well. Luckily, 9 out of the 10 largest investors in the Netherlands, these shareholders, 9 out of the 10 largest investors in Netherlands have predeclared their vote for the Follow This resolution and against Shell's climate plan because they simply think it's not good enough to reach the goal of the Paris Climate Agreement. And I think investors who vote against Paris-consistent emission reduction targets should realize that they are complicit in Big Oil's refusal to seriously cut emissions these decades, not in 2050, but this decade. So at the AGM, Mr. Van Beurden a year ago, who offered shareholders transparency about your strategy, we asked you a very simple question. And that year, the question was, yes, your answer was it's a guess. So I hope you can answer that question today to your shareholders. Your shareholders need to know where your absolute emissions will be in 2030. So that's my question for today. What reduction in net absolute emissions will Shell achieve by 2030? I hope you can answer that question today.

Thank you, Mr. Van Baal. I'd like to ask the CEO to respond before we invite any more questions or comments. Ben?

Yes. Thank you very much, Mr. Van Baal for coming to London and for also being patient through the morning. Thank you for reminding me of my statement back in 2014. It sounded quite familiar when you started mentioning it. And I believe actually that we have reinvented the company quite considerably already. I must say, we take a little bit of issue of you calling us an oil company, but I guess that is probably something that we cannot agree on. We think of ourselves as an energy company rather. To your points and the concerns that you have, we believe that our strategy and the target that we set are actually consistent with the Paris Agreement. We have explained how that works in the strategy last year and the document also this year. And to be perfectly honest, to put pretty simple for the shareholders here, what you are asking for which a 40% reduction is 2x Paris. Let's be clear. We are Paris compliant. We're being asked to do 2x Paris. And of course, there will be a 40% reduction in the entire economy, et cetera, but it's usually not over 10 years. Europe talks about 55% reduction over 40 years. The IEA talks about a 20% reduction over 20 years. And if you just look at the sectors that we serve, it's about a 20% reduction that is going to be needed to be Paris consistent. And that is what we do. You talk about the investment levels that we put in. Our investment levels have gone down quite consistently and considerably and are now more or less in line with the net-zero emissions scenarios of the IEA. We used to invest more than $13 billion in oil, per year, we now do less than $8 billion. The IEA says, as a world, we should go from $700 billion a year to $500 billion a year. The IEA never said zero, that is misconstrued. To say that we have no plans, I think, would be mischaracterization. You also say we still increase emissions. Well, no, we have reduced emissions. I just mentioned it, 18%. And don't think I can get away by just saying something and not be serious about it. Everything that we say in meetings like this, everything that we file in an Annual Report or in a document is being scrutinized by regulators. We have no option to just say something because it sounds convenient. It has to be true. It also says, by the way, that our absolute Scope 3 emissions have come down by 16%. We don't set a target for it, by the way, but it's just a fact. So everybody who says, you just do more, is just quoting from a set of data that I simply do not recognize. Like I also don't recognize that we would be pedaling a narrative that Ukraine now overwrites Paris. It's exactly the opposite to what I say. Actually, Ukraine reinforces the need to go faster. That's exactly what we are doing. We have not set a target for absolute emissions simply because we believe an intensity target is better. Think of it this way. Do you want to be judged on how fast you shrink your legacy business? Or do you also want to be judged on how fast we grow a new business? If you want to just have a shrinking target, then absolute emissions will do the job. If you want to have a replacement target, then you have to work with an intensity. So the intensity target that we have set for 2030, and that's the only commitment I make to you, Mr. Van Baal, is at least 20%, which is fully aligned with Paris for the sector that we serve. And I will commit to that again, and we are well on track to meeting it. Thank you very much for coming.

Yes. Thank you so much for answer. It's very clear that you don't want to commit to absolute emission reductions. I think your shareholders, your responsible shareholders are aware that the world has to halve their emissions by 2030, approximately 40%, maybe 30%. That doesn't matter. Paris consistency matters. Your shareholders really want to know what your contribution will be in absolute terms to achieve the Paris Accords? And dear shareholders, I want to advise you, you have a CEO here who says, a resolution that ask for Paris-consistent emissions that cast their vote next year. Thank you.

Thank you, Mr. Van Baal. I mean just to reinforce. We do think that Paris is realistic, and we do think that we are consistent with it. And we have offered our absolute targets for our own Scope 1 and 2 emissions. We just believe it's more top effective for the world to have carbon intensity emissions for our Scope 3 anyway. So we now can open it more widely to questions, Tjerk.

[Operator Instructions] So I now invite someone and this, I think, is Sylvia van Waveren. And for the next question here from the room, and then I will go online, and I will come back to you, sir, on number two. So Sylvia, go ahead.

Yes. Thank you. My name is Sylvia van Waveren. and I'm from Robeco. And today, I speak on behalf of a group of institutional investors. So including Robeco that is PGGM, Mn [indiscernible] and SPV. To start with, I would like to thank management and the Board of our ongoing discussions on topics like strategy, remuneration and climate change. It is of crucial importance to have this open dialogue, especially in these challenging times of ever-increasing climate risk and international military conflicts. And on the last couple of years, we have attended Shell's AGM with the same basic message that Shell has a critical role to play in mitigating climate change. And that it is of the utmost importance that the company clearly discloses how it aims to achieve the energy transition strategy by showing plans, actions, targets and progress that minimizes the risk to shareholders. We recognize that the company has shown leadership by being one of the first companies in the sector with the [ say on ] climate vote last year. And the current progress report is beneficial in helping us to understand the steps the company is taking throughout its transition. And that is clearly illustrated with the fact that Shell has had climate targets that cover carbon emissions of Scope 1, 2 and 3 with short-, medium- and long-term reduction periods with the end goal of achieving net zero by 2050. Furthermore, we are encouraged by the fact that the Shell executives are incentivized to reduce these emissions as this is incorporated in your annual bonus scorecard as well as in the long-term incentive plan. At the same time, however, we should be mindful that we have moved another year down the line, and that meeting the goals of the Paris Agreement requires far greater immediate actions, and Shell progress report and its strategy in our opinion, has several items that trigger our concern and should be improved. And I name here three: First of all, except for the net-zero target for 2050, which has recently been strengthened, Shell has not set absolute targets for Scope 3 emissions in the medium term unlike some of your peers. And as such, there are no guarantees that the action that Shell is taking in investing in low-carbon technologies will help to reduce climate-related financial risks for the company. Secondly, the net-carbon intensity metric and target setting is the guiding metric for Shell strategy. And at this point, there is certainly not a single framework for independent verification of that. With our recognized tool, for example, those based on methodologies from TPI that show us that although Shell's long-term net zero target is aligned with the Paris goals, there is greater uncertainty whether this is the case for the short- and medium-term targets. And thirdly, we are concerned about the risk of overinvestment in fossil fuel assets. It's critical for the company to have clear disclosures on how investment decisions are made around high carbon assets, including the assumption used within your investment decision making and how these are consistent with limiting warming to well below 2 degrees and the ambition of achieving 1.5 degrees Celsius. Today here at this AGM, the investors I represent have made their voting decisions each on their own merits. And voting, by definition, is binary. You are either for or against. And the reality is much more complex, and actions require more balanced nuance and granularity. And in that spirit, we would like to share with you our suggestions and some questions on how we think the company could enhance its strategy in order to be considered aligned with the goal of the Paris Agreement. And we believe it is our duty to provide you with this feedback, and we hope we can count on you and on your openness, as you have shown us in the past. So here are my 3 questions: We agree with you that the sole focus on changing the supply of energy is not enough, and it's only a one-sided approach, which will not lead to the desired energy transition. A dramatic change in demand for energy is just as critical as a required change in supply, as you already indicated. And we see in your progress report that you are actively acting on this front, and you provide a couple of examples which we highly appreciate. This is my question. When do you think, and how would you be able to formulate quantitative progress for the full scope of your actions towards changing the demand side? Secondly, the current mid-term target of 20% CO2 intensity reduction does not align, we believe, with the TPI, the IEA global CO2 reduction target of around 40%, and we have heard your comments already on that. What would it mean for Shell if you would report on the main differences of your current strategy compare what it would be against those 40% that's, for example, the IEA pictures? And thirdly, there has been a court case in the Netherlands last year. You have responded to that ruling and saying your Scope 1 and 2 absolute emission reduction targets of 50% and the actions you are taking to deliver position the company well to meeting the obligations of the District Court. However, it is unclear whether and how Shell's Scope 3 emission reduction targets are aligned with the so called significant best efforts obligation ordered by the District Court. How are you seeking the necessary assurance that you are in compliance? And what are your legal counsels advising you? Furthermore, could the company expand on how it plans to manage broader climate litigation risks? I will end here now. I would appreciate your responses to the above raised questions, suggestions, and comments. But before I hand over to you, Mr. Chairman, I would like to repeat and indicate to you that we very much value the engagement results we jointly achieved so far. And as I expect, we will achieve again going forward. Thank you very much.

Thank you. Thank you, Sylvia. Look, I'll probably pass some of the more detailed parts of the questions to Ben. But I would observe obviously, and along with Mr. Van Baal, we clearly have a difference of agreement as to where to place the emphasis on Scope 3. Where we believe the best way to help the world as well as Shell and Shell to play a part is to be based on carbon intensity targets around absolute emissions at this stage. We agree with you that short or medium-term targets matter. And that's why we've introduced more recently and be very clear about our absolute emissions targets we have on Scope 1 and 2, and I welcome your acknowledgment of the importance of changing demand, and we're working on it. I don't know if there's much more that you can add, Ben. But I would reinforce that from our analysis and, particularly, when you take account of our medium-term target for 2035, we are strongly compliant with Paris, and I don't recognize your statement as being thus. So Ben, anything for me to add?

Well, first of all, Sylvia, thank you very much for coming. And thank you also for recognizing the progress that we have made ever since I have been in discussion with you for the last 8.5 years. You're very right to acknowledge that indeed what needs to be done on demand, and it needs to be acknowledged. And that I hope you will recognize also our strategy. Our strategy is actually to reduce the demand for carbon-intensive energy and replace it with low carbon or no carbon energy, which basically means working with our customers and trying to, of course, make money in that transition that our customers also need to do. Now on the IEA, I know there's a lot of discussion out there about while the IEA has a scenario that brings us to net zero, why don't you follow that? And there's, I think, two misconceptions about it. First of all, the IEA scenario does not prescribe a 40% or 50% or 45% reduction this decade for customers of our company. It talks about a reduction in the entire economy. And most of that reduction actually comes from switching coal-fired power stations to renewables. If you just look at the transportation sector and the industrial sector, the IEA scenario actually looks at something like 20% to 25% reduction over 20 years. Here, we are constantly talking about the remainder of this decade. Can't you do the same for the remainder of this decade? But that's -- actually half of the time is already gone. And secondly, it is a subset of the economy that we happen to serve. We don't have coal-fired power stations that we can switch off. We can only switch planes to fly on sustainable aviation fuels. We can encourage customers to come with their electric cars rather than the petrol cars. And that actually is a different reduction scenario than the overall reduction scenario of IEA. That's point number one. Point number two is the IEA scenario, which was made at the request of the British Government, in the lead up to the Glasgow Cup, is a goal-seek scenario. So it's how could you mathematically get there? It didn't sort of say, well, this is how it's likely going to happen or this is what could happen or whatever. It actually works out how you're going to get to net zero in a mathematical way, not necessarily in a sociological way. And if you now look back, this scenario came out a year ago, yes? And a year into this scenario, the world is 2.5 years behind. So we managed to get a 2.5-year sort of backlog a year into this scenario. And this is not my number. This is the number of the IEA. So this scenario is interesting, and I think it's really good, as a society, to just say, well, look at what we should have been doing and this is what we actually have done. And, therefore, it's a good mirror to have, but it's not necessarily some sort of business plan or a target that you can adhere to. And that's why we are focusing on the strategy that we have, and that we are using the parameters that we have. The only thing that actually the IEA scenario has been delivered on, is the amount of investment in oil and gas. The investment in oil and gas in the world has indeed reduced in line with the IEA net-zero scenario. Apparently, that is why we are looking at $115 oil today. Now can we do more to track against it? Yes, I think we should, Sylvia. I think we should -- in our next year's report, we should bring this out more clearly where we are going, what others are doing. We should give also more assurance that we are working on the sector strategies and the progress that we are making, and we should demonstrate, which we are doing, by the way, but we should demonstrate more explicitly that indeed, we are making significant best efforts to help our customers reduce their emissions. I think we are doing that. I think we are complying with the court case, but I agree with you we need to make that more transparent for you as a shareholder as well.

Okay. We're going to take one more from the...

Yes, we go to question point number 2, if you can stand up, and then I'm going to go online, and then I'll come to you at question point number one. So you go first. So we have quite a few questions online as well, and I want to make sure that those questions are asked. Go ahead, sir.

John Farmer, Mr. Chairman. A shareholder. There's a substantive question on performance. But first, quick constructive questions on your annual report and the AGM. Thank you, first for your, Chairman and Chief Executive, presentations. Fully welcome. As to the Annual Report, speakers one, who reads many with optician-tested excellent eyesight. But suggest respectfully, there is room for improvement in yours. The content page white on red is poorly legible. And I for one intend to refer back to that when I'm going through the text. Your gray print just about manageable, could be blacker, and it sometimes gets a bit small, but the red subheadings are quite a good contrast. But importantly, particularly, with the trends reading online, would you print across the page and not in columns to save worrisome scrolling. And finally, Chairman, on the Annual Report, I suggest, respectfully, it's far too long. The aim should be to communicate succinctly and relevantly to your interested shareholders. World War II, Prime Minister, Winston Churchill, had a habit of requesting briefings on no more than half a page. That is a far cry from your 350. Could you please shorten and be more incisive and concise and relevant. But as to the AGM, Chairman, perhaps laboring the point. But first, a constructive comment, welcomed as your extrication from Royal Dutch Shell and you'll return to Shell plc, and your return to London because video linked to The Hague was imperfect and a bit worrisome. But can you please learn from this morning and plan for dissent. In my opinion, those dissenters should have been extricated far more quickly. And I suggest an analogy with BAE Systems plc, which is an arms supplier, has had demonstrations in its time, although I haven't been to its distant Leatherhead AGM. On one occasion, protesters plastic handcuffed themselves to block 6 seats, which were amenable to being carried out. And I suggest by analogy that you could have carried out the protester stuck to the seats and dealt with them later. So there's a constructive set of point there. Would you like to respond before I go on to my performance question?

I would mainly say, thank you for your suggestions. I mean, of course, we always look to improve and then it's designed by younger people on average that are meant to read them, and I have the same issue. So we'll take them all on Board as well as those for the AGM. So thank you for them.

Thank you. And most sensitive question on performance, Chairman. You say on Page 12 of the Annual Report that you have an aim of being a compelling investment case paying yourself lavishly as a Board, performance is lackluster in terms of total shareholder return. I think I looked up that you have paid executive directors in the last year some EUR 12 million. Is that right? Nonexecutives another EUR 2.6 million, quite a some. And what have shareholders got for it, a total shareholder return in 10 years of a paltry 20%. And harking back to my point about the Annual Report, Chairman, would you in future reports, please quantify the inflections of the graph, which this year is on Page 182, so we can actually read it. And that graph does show that you're well below peer group. So were I being rude, I could suggest that the Board is money for all group. What you and your colleagues, perhaps the Remuneration Committee Chairman and maybe even the Finance Director and perhaps the Chief Executive, give some thoughts on what you're doing or propose doing or will do in future to align Board remuneration with what shareholders actually get. Because fundamentally, you are here to perform, and I just round off by quoting the Chartered Institute of Marketing's definition of marketing: The management process responsible for the identification, anticipation and satisfaction of customer requirements profitably, and I stress the profitably. Shareholders are rewarded by total shareholder return. And frankly, Chairman, over 10 years, we've had very little of it from your Board. So what will you do in the future to improve?

Okay. Well, there's a lot to take on board there. I mean, of course, I would have to say on behalf of the Board that we absolutely want to stand for improved shareholder returns. And we share in many ways, your frustration and not being able to return more and are working hard on the agenda that you were describing. I think in terms of the relationship between executive remuneration and the shareholder experience, I think it's closer than you're suggesting. I mean most of the executives are substantial shareholders themselves and are required to have very large share holdings before they can sell, I think, up to about 900% of his base pay in the case of the Chief Executive. And so in that sense, we build the alignment. About 35% of the bonus is based on financial performance, the things that you would recognize. But we do allow allocations for other things like operational performance and there is an increasing slug for what will probably be the predominant discussion of this meeting of our -- you would call our performance in the energy transition. And that is seen by many stakeholders as significant and an important way of rewarding shareholders. But we -- you have our commitment as a Board and as management to continue to live performance. I hope you've enjoyed some of the more recent results. I mean just in the last quarter, we were able to announce earnings over $9 billion in the quarter and an EBITDA of $19 million in the quarter and an aggressive continuation, which is a return to shareholders of our buyback program. And we have been continually increasing the underlying dividend, the underlying progressive dividend as well. So -- but I take it all on board. And we will work for a larger returns as we improve the running of the business. And we've already suggested on the current track that we expect our return, our cash returns to shareholders in the second half of the year to be in excess of our upper part of the range in our financial framework of 30% of cash from operations.

So could I provocatively suggest, Chairman, that the performance metrics, such as you've alluded to have not actually succeeded in the last 10 years to any great extent. And secondly, as to your Board being large shareholders, you're paying them so much they [ want ] to be.

Well, I did -- our Board are not large shareholders. I mean we have small shareholdings to protect our independence. They can't be too large, but our executives are large shareholders.

All right. Well, just as a final remark, say that your presentation this morning probably welcome to the intelligent converted and urge you to maintain the momentum in moving the emphasis away from fossil fuels to clean energy. Thank you.

Yes. You can take that for granted. Thank you very much for your constructive comments.

Thank you. We'll now take a question which has been posted online. It's a question from [ Mary Ann Pritchard. ] Her question is as follows, the IEA states, governments, companies, and investors will need to do much more and fast in order to bring more affordable and clean energy into the system. Why is Shell not doing much more? First part of the question. The IEA notes that there can be no new oil, gas or coal development if the world is to reach net zero by 2050. Why is Shell ignoring this? These are the 2 questions, Mr. Chair.

Well, I think quite a few of the issues around the IEA, Ben has already addressed in answers to other questions. I think I'm right. Ben, correct me if I'm wrong, but the IEA has not said no to all new oil. It's just said, no to new provinces. And we've, as Shell, committed that from 2025, we will not go into any new frontiers, but we will continue to develop the hydrocarbon provinces that we're operating at, albeit at a slow rate of capital spend, as Ben has described. But if I might point out that oil -- no oils are the same. And as we're going forward, we have to find the kind of oil whose carbon cost of production is low. Now there is such a thing as a low-carbon hydrocarbon value chain, and they're the ones that Shell strives to build. And we do that by carefully adding to some of our existing developments. So we're not ignoring this. We're very active. And I hope, actually, from both Ben and my speeches and our commitment that I think we communicated recently that we expect about half of our investment in new activities by 2025 to be into the low-carbon and zero carbon space [ dedicates ] that we're very serious about this. I don't know if there's anything you want to add.

No.

Okay.

Okay. Let's then go to question point #1. Ma'am?

[ Jenny Edwards ]. I'm an individual shareholder, and I've been a shareholder for some time having inherited my shares. Last time I was with you was in 2019 in The Hague, so I'd like to say hello to people who were there. Nice to see you again. Welcome to slightly weird start to your time in London and also welcome those of you who are new faces. Welcome to Andrew. I'm here both as a shareholder. Of course, I'm retired. I'm very keen on my dividends, but I'm also a human being, and I'm deeply concerned about the future facing us. I heard from the IPCC in their mitigation report that they're calling for a revolution in energy generation and supply. And what I've heard is, though it's welcomed steps in the right direction, it's not a revolution. So I look to all of you who have responsibility on the Board or as executives to move up to that energy revolution. The planet is not negotiating with us. The planet has a timetable, which actually is racing ahead all the time of our predictions for it. We have to move faster and with greater determination. I have to say I'm not convinced by your change in investment plans. You may say anything else is unrealistic, but the planet is not negotiating with us. Now I have been alerted by the Union of Concerned Scientists to one particular aspect of what's happening in Shell. It actually came from your climate lobbying report last month, where you found that there was misalignments in some of your lobbying investments and your aspirations. Specifically, 2 examples were the American Petroleum Institute, which is trying to use the war in Ukraine as an excuse for stalling or rolling back on climate change aspirations and the transition; and also the U.S. Chamber of Commerce, which is lobbying against climate policies. But you're still in there saying you're working from inside. I think that strategy has been tried for a long time, and it's time for Shell to cut that connection and either find lobbying bodies that properly are aligned with what we know is needed, what the UN and what the IPCC is telling us or to establish something to actually lead that revolution that we're being called upon to do. And I do that with goodwill. I intend to stay with Shell, and I intend to be here every year to raise similar issues but also to say you're not anywhere near there at the moment. You must move faster. We must move faster because I accept I carry a very tiny part of the responsibility for what this company does as a shareholder.

Okay. Well, I guess it's -- context is everything. And I've been in this industry for 40 years, it feels like a revolution to me, but I accept your take on the system as well. But we are definitely increasing the pace. And we're always dreaming of greater possibilities of change. Look, we've all read the most -- the latest IPCC report, and we agree with their call to action. And we believe we're following it, but we are more than happy to be held to task by you. I think the issue about membership of trade associations is a thorny one. Shell has a process where they review, I think, annually -- Ben will correct me if I've got this wrong -- the -- our membership of a wide range of associations. And we are looking for exactly what you're concerned about, that they may be lobbying counter to the views that we and shareholder that you hold about what is necessary in the transition. And that has led to us resigning from some of those associations, and we will continue to repeat that. The API and the U.S. Chamber of Commerce are more complex, and this will sound a bit like a sort of a lame excuse. But of course, they do many more things than talk about climate. The API provides an awful lot of standards and is a great place for sharing how we can make the industry safer. The U.S. Chamber of Commerce, of course, is seriously concerned about a number of issues that matter to Shell, for example, trading conditions and our commitment to free trade. And so it's not as easy to just say, "Well, we like all these bits, but we don't like the climate bits. And therefore, we're going to resign and leave all of that." But it's something we keep under review. I understand the tension. I'm not sure I would quite characterize these organizations as use -- trying to use the Ukraine war as a reason to reject climate change. And maybe some of the members are like that, but I don't think that's a consensus. So I don't go to the API. I think Ben does or maybe not. I think probably it's our U.S. President. I don't know if there's anything you want to add, Ben.

Perhaps just to reinforce. And indeed, we have left some of these associations when we felt that the differences became just too large, too irreconcilable and started to overshadow the good signs of being part of such an association. And we will continuously evaluate that on a year-by-year basis. What we will not do is do something that is optically interesting but actually has no substance. And in the years that we have been in the in the API and the last few years that we have indeed threatened with leaving, and we have worked very hard from the inside to change their policy positions. It is remarkable how much they have changed. And I have no issue to publicly say that we take credit for it and credit to Gretchen Watkins, who is representing us there. But there may come a time, as with some of the others, I would just say, "Well, now we don't see any progress anymore. Let's just go." I just want to make one more point, if I may, Mrs. [ Edwards ], on your investment levels and the revolutionary nature of it. So a lot of people talk about Paris-compliant investment. Well, there is no such thing. But if you just look at the total amount of money we spend, our capital investment and our operating costs, we spend $55 billion a year on stuff, projects, making energy and supplying it to people. About 1/3 of that spend is actually on low and no carbon this year. And by 2025, we think it will be 50%. So sometimes you hear people just quote historical numbers at 1% or 4% or whatever else. It is actually, by the middle of this decade, half of our expenditures will go on low and no carbon energy. There is no definition of whether that's enough or not enough or whatever else, but it's not insubstantial. It's not as if we are ignoring this. And indeed, if you look at historical numbers, they're much lower, and that's why I would agree with Chairman that it is actually -- it feels to me also like quite a significant change.

I can see there's been progress since 2019, but not what I would have hoped to have seen and certainly don't do anything for the optics that isn't serious. But I think Shell should be absolutely working with those who are saying we must go further and faster because the planet won't wait for us.

Correct. We agree.

Thank you. I think we'll go now to question point #2, and then I'll go online again because there are quite a few questions online. Go ahead.

My name is Sophie Marjanac, here today representing ClientEarth. In our view, in order to maintain confidence of the company's shareholders, the Board must demonstrate that the energy transition strategy supports and secures the long-term commercial and financial sustainability of the company. Yet, as recognized by our fellow shareholders today, we believe that there are serious flaws and discrepancies in the Board's current approach, which undermine this objective. Three key points. The first already raised by, follow this, the company is absent -- the absence of short- and medium-term absolute emission reduction targets despite the judgment of the Dutch Supreme Court that the Board make a contribution of 45% by 2030; secondly, the scale of the intensity targets, which we believe to be too low, and the risk of the company missing these targets; and finally, despite your previous comment, the continued investment in the so-called legacy business with 14 projects in the pipeline that are inconsistent with the IEA's net zero scenario. For these reasons, we are unable to support the energy transition strategy and consider it appropriate to hold the Board to account on the company's behalf by way of our anticipated shareholder litigation in the English High Court. We encourage our fellow investors to support that claim. We do not ask the Board to comment on that claim in this forum. Rather, our question relates to the long-term net zero goal. And really, in your most recent disclosures, you found that there was a significant risk that, should society not move fast enough, that Shell would not meet that so-called 2050 target to become a low-carbon energy business. So our question is does the Board accept that this goal is unrealistic, potentially implausible and amounts to a vague hope given the state of inconsistencies with net zero targets that have been pointed out by others here today.

Okay. Well, I think you were good enough to mention that because, to some extent, it's in the court, there's a limit to what we would be prepared to comment on in this forum. And so I probably -- and I think in all of your 3 points, we've tried to address them in answers to other questions anyway. I think on our long-term net zero target, we've always said that it needs to be something that we do together, but we are determined to be a very strong partner and driver in that change.

Okay. Mr. Chair, I'll go to a question online here then. We've got a question here from [ Christian Donovan ]. It's a relatively long question, so bear with me. Question is in 2 parts. The shareholder again seeks reassurance of the Board that it wants nothing to do with identity politics, quotas and the like of the leftist toxic agenda. Appointments across our organization will be down entirely to merit in a competitive process. Those selected should be those that are considered to bring the best value to our business. Our marketing and our communications will not be a bias towards any particular agenda, bias or a representation of certain races over others, which is common in the [ MSM ] nowadays. The Board should not give into bullying from those who seek to disrupt our business. Whilst clean energy is a desirable objective, we cannot sacrifice the lives of our customers and shareholders, many shareholders being people who live ordinary in communities on the basis of bullying and harassment from those who seek to disrupt our business. Respectful dialogue and an exchange of ideas is to be encouraged. Bullying is not. I'm sorry. It was a statement and not necessarily a question.

Okay. Well, look, well, I don't recognize Shell in this would be my first comment. I mean I think my second comment would be that we make all our appointments based on merit. But we are actually very, very proud that we have a gender diverse Board and of the statistics that I think Ben covered in his speech about the strong pipeline of diversity that we have feeding the senior management of Shell to, in many ways, replicate what you see in front of you and the Board. I've said earlier, I've worked in this industry for nearly 40 years. And I certainly find that diverse and inclusive teams outperform those which aren't. And I have hard evidence to support me on this and not just a sense of feeling about it. And it's something we do because it's the right thing to do. But in many cases, it's actually very commercially sensible to do it, and it's entirely based on merit. I think that really covers everything.

Yes. Let's go to question point #1 again now. And then we'll go to 2 and then we'll go online again. Thank you. Ma'am?

My name is [ Grace Smith ], and I'm a long-standing shareholder not aligned to any particular group. During the long pause this morning, I was chatting and reminded of Mark Moody-Stuart, who was one of the first to set this company on a path towards greater sustainability. I used to enjoy coming to the meetings and looked forward to hearing the vision for the future and innovation. I go from this meeting a feeling that I've heard justifications and explanations. And our CEO has referred to strategies that can cope with change and responding to change. So my question -- my first question is, is that all we can aspire to. We've heard about helping to reduce emissions. We've heard about looking to find a path to solutions, but surely a company this size and capacity ought to be leading and spearheading change. So my question is where is our vision to lead towards a better future. And then secondly, moving from lofty aims to practicalities. Now that we are Shell plc, please, could we have an AGM at a reasonable time, Greenwich Mean Time, because some of your shareholders are disabled and have great difficulty traveling towards Central London during rush hour?

Okay. I will take note of that. But I also, as I mentioned earlier, acknowledge we're now doing all this online and trying to reach a global audience as well, but point well made on your second point, Ms. [ Smith ]. I've clearly done a bad job. I actually think that -- and I know Mark Moody-Stuart quite well -- that the Shell of Mark Moody-Stuart is alive and kicking. This is a highly innovative company that is driving hard to reduce emissions. Since becoming Chair, I've had the opportunity to visit quite a number of locations, and 2 of my trips have been to our major centers of research and development, where we are driving hard to really unlock some of the technologies that will allow all of us to move to a lower-carbon future. And so I'll watch our language, but I feel that I have failed and I've slightly misrepresented. And I have to apologize to Mark when I see him next.

Okay. I'm just looking for the time when I don't have to come here or go online to hear about what Shell is doing because I've already heard it out there because it's so exciting.

Okay. Well said.

Okay. Let's go to question point #2. Sir?