It made the announcement – after growing investor pressure over climate change – in a joint statement with institutional investors on behalf of Climate Action 100+, an initiative led by investors with more than $32 trillion (£25tn) in assets under management.
Last year, Shell set out its ambition to reduce the net carbon footprint of the energy products it sells by around 20% by 2035 and 50% by 2050.
The company has now pledged to build on that long term goals with the commitment to set specific targets for shorter periods of three or five years, starting from 2020 and running until 2050.
It will link them to its executive pay, subject to a shareholder vote in 2020.
CEO Ben van Beurden said: “Meeting the challenge of tackling climate change requires unprecedented collaboration and this is demonstrated by our engagements with investors. We are taking important steps towards turning our net carbon footprint ambition into reality by setting shorter term targets. This ambition positions the company well for the future and seeks to ensure we thrive as the world works to meet the goals of the Paris Agreement on climate change.”
The announcement has been applauded by investors.
Anne Simpson, the inaugural Chair of the Climate Action 100+ Steering Committee said: “The commitment by Shell to fully respond to the engagement shows the value of dialogue and global partnership to deliver on the goals of the Paris Agreement on climate change. Shell is setting the pace and we look forward to other major companies following its lead.”
Peter Ferket, Chief Investment Officer at Robeco added: “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. This joint statement is an example of such a partnership.
“As institutional investors in Shell, we continue to support Shell on its journey in the energy transition, aiming for other companies to follow suit.”