Shell to enact first of its kind policy linking executive pay to carbon emissions

Gas giant Royal Dutch Shell announced dramatic goals Monday to cut carbon emissions starting in 2020, including a pay incentive for top executives to meet them.

{mosads}The company plans to set annual three- to five-year carbon reduction targets beginning in 2020 to reduce its carbon footprint. The program will run until 2050.

The decision comes after mounting pressure from Shell’s investors to actively decrease carbon emissions. Fossil fuels are a leading contributor to greenhouse gases, which add to the effects of climate change.

Shareholders previously criticized Shell’s plan last year to set nonbinding goals to halve its emissions by 2050. Major investors include asset management company Robeco and the Church of England.

The new plan will link emissions targets to its executive remuneration policy.

Shell has already linked ten percent of its renumeration policy for executives to carbon-cutting goals, but the new policy will go further by looking at ways to cut the emissions coming from customers who burn Shell fuel and millions of drivers who use their gas.

No formal benchmarks were put forth by the company on Monday. It said investors will not vote on the proposal until 2020. 

Shell’s announcement comes as world leaders meet this week in Poland for the United Nations COP24 conference, that aims to create a rulebook for the 2015 Paris climate agreement.

The agreement, signed by former President Obama, directs countries to set emissions targets in order to reduce the effects of climate change. President Trump has since announced he will pull the U.S. out of the agreement in 2020.

BP and Total, two other fossil fuel giants, have previously announced short-term carbon-cutting targets.

Shell signed a joint statement under Climate Action 100+, a group of over 320 investors, outlining their carbon targets.

“When it comes to meeting the demands of the Paris Agreement on climate change, we believe it is necessary to strengthen partnerships between investors and their investee companies to accelerate progress towards reaching such an ambitious common goal,” said Peter Ferket, chief investment officer of Robeco, in the joint statement.