Information Data & Analytics

Title: Strategy Day 2021 - Plenary Session with Ben van Beurden & Jessica Uhl

Duration: 61:34 minutes

Description: 

Ben van Beurden and Jessica Uhl, CEO and CFO of Shell respectively, talk about Shell's Powering Progress strategy and vision for the next 30 years, including capital allocation, managing carbon, and the Three Pillars approach.

Strategy Day 2021 - Plenary Session with Ben van Beurden & Jessica Uhl Transcript

Powering Progress Part One

[Background music plays]

Slow meditative music.

[Animated sequence]

Abstract 3D forms in Shell colours slowly change as words display on the screen.

[Text displays]

Shell Strategy Day 2021. Our purpose, to power progress together by providing more and cleaner energy solutions.

[Video footage]

Close up of Ben van Beurden in an office setting.

[Text displays]

Powering Progress. Ben van Beurden, CEO, Shell.

Ben van Beurden

Powering Progress. That's how I think about our role. That's what I believe we do, and we should continue to do. That is what I think the case for Shell. Powering Progress sets out our strategy to accelerate the transition of our business to a net-zero emissions business, purposefully and profitably. Powering Progress delivers value for our shareholders, for our customers, and for wider society. It builds a strong and a resilient company by putting customers at the centre of our strategy. 

Powering Progress means partnering with others to reduce carbon emissions, especially in sectors that are hard to decarbonise. This includes supporting government policies to reduce carbon emissions sector by sector. At our Q3 results, we introduced you to our new approach, and today, we build on that, explaining we are ready to seize the significant opportunities at our fingertips in the energy transition.

But first, let's look at a short film that illustrates a challenging, but a possible vision of the future. It underlines great opportunity, but also, the urgent need to accelerate to meet Paris.

Accelerating to Net-Zero Emissions Film

[Background music plays]

Calming keyboard music plays.

[Video footage]

Scene of a sunset over misty mountains. A wind turbine on a hill is in the foreground.

[Text displays]

Shell Strategy Day 2021. Accelerating to Net-Zero Emissions with Ben van Beurden.

[Video footage]

Aerial view of a city with older buildings overlooking a riverfront, skyscrapers in the background. Closeup of Ben van Beurden viewing pictures on the wall.

Ben van Beurden

The way the world produces and uses energy is visibly changing.

[Video footage]

Van Beurden speaks to the camera. 

[Text displays]

Ben van Beurden, CEO, Shell

Ben van Beurden

But to meet the most ambitious goals of the Paris Agreement, change needs to happen faster.

[Video footage]

Shot of an electric vehicle being recharged at a Shell station. A couple refuel their car in front of a sign reading Shell Hydrogen. Closeup of a hand removing a nozzle from a bank. Shot of the sun shining through clouds. Aerial shot of a field of solar panels. Closeup of a wind turbine with others visible in the background. Shot of man in safety gear up a pole working on a wind turbine.

Ben van Beurden

Shell is becoming an energy business for the future, and it's playing its part to help drive that change.

[Video footage]

Shot of idyllic island with palm trees and mountains, and a wind turbine in the foreground. Shot of man adjusting lightbulbs in a hut. Closeup of Ben van Beurden.

Ben van Beurden

Our scenarios help inform our thinking and show how the energy system could transform quicker.

[Video footage]

Shot of a station in an underground transport system, time lapse showing trains arriving and passengers getting on and off. Cut to time lapse of a city at twilight, with traffic moving on elevated highways. Cut to closeup of Geraldine Wessing. Time lapse shots of large crowds of people. Closeup of a young woman's face, looking up and smiling.

[Text displays]

Geraldine Wessing, Senior Political Analyst, Shell

Geraldine Wessing

The transition of the world's energy system is happening while global population is growing, potentially to 11 billion by the end of the century.

[Video footage]

Time lapse of people and traffic moving through a city centre. Cut to a large screen mounted on top of a building, showing two girls using a tablet device. A busy highway is below. Graphic appears with a triangle and the words powering lives. Cut to wind turbine seen through trees. Cut to montage of people laughing and clapping.

Geraldine Wessing

That's more people requiring more energy for a better quality of life.

[Video footage]

Shot of very busy traffic flow. Closeup of Ben van Beurden.

Ben van Beurden

So the question is, what could this energy system look like?

[Video footage]

A giant screen shows a woman's face on one side, and a wind turbine on another. Clouds are behind. Cut to aerial shot from above the clouds of the sun sinking below them. Cut to giant screen in a city, split into nine, showing nine different people including the speakers in this video. Zoom in to closeup of Mallika Ishwaran. A graphic appears beside her of the globe surrounded by lab beakers, an electricity pylon, and the symbol for hydrogen. Cut to shot of a city at night from street level. The graphic and a screen showing a wind turbine are in the foreground. The screen shows a field of wheat.

[Text displays]

Mallika Ishwaran, Senior Economist, Shell

Mallika Ishwaran

For the global economy to achieve net-zero carbon dioxide or CO₂ emissions, electricity, primarily from renewables, as well as hydrogen and biofuels are expected to be important in the future energy system.

[Video footage]

Aerial shot of a wind farm in hilly country. Closeup of Geraldine Wessing. Cut to scene with two workers in safety gear comparing notes with electrical pylons in the background.

Geraldine Wessing

Shell scenarios explore a range of possible futures to help make better decisions today, for tomorrow.

[Video footage]

Man walks past a bank of screens showing graphical data. Four red-clad workers walk through an industrial plant towards the camera. Closeup of Geraldine Wessing. A graphic appears beside her and then fills the screen, showing a graph labelled CO2 emissions with lines showing the effects of the various scenarios. Closeup of Geraldine Wessing. Cut to forest scene. Graphic overlay shows tangential circles and the words achieving net-zero emissions.

Geraldine Wessing

Our newest scenarios, Waves, Islands and Sky 1.5, are all on a path towards net-zero CO₂ emissions, with energy systems eventually dominated by renewables. But the choices society makes will determine how quickly the world moves towards net-zero emissions.

[Video footage]

Closeup of Mallika Ishwaran.

Mallika Ishwaran

In the most ambitious scenario, Sky 1.5, the average global temperature rises above and is then limited to 1.5 degrees Celsius above pre-industrial levels before the end of this century.

[Video footage]

Shot of a path lined with palm trees. Aerial shot of a busy city street lined with skyscrapers. Cut to forest scene.

Mallika Ishwaran

This requires the entire world to reach net-zero CO₂ emissions by sometime before 2060.

[Video footage]

Closeup of Ben van Beurden. Shot of Shell Hydrogen sign. Closeup of Shell logo. Aerial shot of city with solar panels in the foreground.

Ben van Beurden

Our scenarios show that leading economies, sectors and companies must act faster for the world to achieve this timeline. And we want to be one of those leading companies, which is why Shell's target is to become a net-zero emissions energy business by 2050 or sooner.

[Video footage]

Closeup of Adam Eales. Cut to time lapse night shot of an airport with planes taking off and landing. Night shot of a port with containers being loaded onto a ship. Aerial view of a train coming out of a tunnel and moving through a green landscape. Aerial view of a city with elevated trains moving through it. Time lapse of an office building with glass walls, showing many rooms with people working inside them. 

[Text displays]

Adam Eales, Energy Analyst, Shell

Adam Eales

The Sky 1.5 scenario requires energy efficiency improvements of around 50% across the global economy, but more energy will still be needed to meet demand. So, the emerging system needs to address the economic sectors that consume the most energy.

[Video footage]

Aerial view of a city. Cut to interior of an industrial plant showing heavy machinery. A graphic is superimposed, labelled industry energy consumption. A pie chart with the globe in the centre shows the proportions of energy sources today. The graph changes to show a net-zero emissions scenario. Parts of the graph are emphasised as the speaker mentions them.

Adam Eales

To get from today's energy consumption to a net-zero emissions energy system, industry will need to shift towards more electricity, primarily from renewables as well as hydrogen and bioenergy.

[Video footage]

Time lapse of traffic on a busy highway. A graphic is superimposed labelled transport energy consumption. A pie chart with the globe in the centre shows the proportions of energy sources today. The graph changes to show a net-zero emissions scenario. Parts of the graph are emphasised as the speaker mentions them.

Adam Eales

Currently in transport, energy consumption is mostly from oil-based fuels. But the use of hydrogen and biofuels will need to grow, as will electricity, mainly from renewables.

[Video footage]

Closeup of an office building. A graphic is superimposed labelled buildings energy consumption. A pie chart with the globe in the centre shows the proportions of energy sources today. The graph changes to show a net-zero emissions scenario. Parts of the graph are emphasised as the speaker mentions them.

Adam Eales

Today, buildings mostly consume energy from non-renewable sources. In the future, they will require electricity mostly from renewables with some bioenergy.

[Video footage]

An elevated train runs through a city. Cut to closeup of Geraldine Wessing. A graphic appears beside her, showing the globe surrounded by an electrical plant, a wind turbine, a solar panel, and a pylon. Cut to a montage of industrial scenes.

Geraldine Wessing

Deep electrification of the global economy is needed to achieve net-zero emissions, which means more than tripling electricity consumption.

[Video footage]

Closeup of Mallika Ishwaran. Cut to aerial view of a field of solar panels. A graphic is superimposed labelled power generation. A pie chart with the globe in the centre shows the proportions of energy sources today. The graph changes to show a net-zero emissions scenario. Parts of the graph are emphasised as the speaker discusses them. Cut to shot of offshore wind turbines in the sunset.

Mallika Ishwaran

In power generation, electricity will increasingly come from renewables, primarily wind and solar, as well as some nuclear. Natural gas will continue to play an important role supporting the transition from coal and compensating for the intermittency of renewables.

[Video footage]

Closeup of Adam Eales. A graphic beside him shows the globe surrounded by lab beakers and the hydrogen symbol. Closeup of a vehicle with the words powered by Shell hydrogen on the side of it.

Adam Eales

Commercial production of biofuels from biomass must ramp up, alongside the production and distribution of hydrogen at scale.

[Video footage]

Shot of a freight train pulling into a station. Closeup of Mallika Ishwaran. A graphic beside her shows the globe surrounded by a CO2 symbol and some trees. Shot of an industrial plant. Closeup of sign reading CO2 to pipeline. Closeup of an industrial pump. Aerial view of a forest. Aerial view of a forest with a road running through it.

Mallika Ishwaran

To achieve Sky 1.5, unavoidable emissions are removed from industrial processes or from the atmosphere using both technology and nature.

[Video footage]

Closeup of Geraldine Wessing. Cut to twilight scene of a road. Beside the road is a billboard with a giant screen. On the screen, there is a montage of crowds of people in different places. Cut to a view of an industrial plant. An inset screen shows pylons in the sunset.

Geraldine Wessing

While the energy transition is inevitable, it will proceed at different paces in different places and sectors and with different degrees of turbulence.

[Video footage]

Closeup of Ben van Beurden. Cut to aerial view of a busy city street lined with skyscrapers. A graphic is superimposed showing stylised clasped hands and the words generating shareholder value.

Ben van Beurden

Faster progress needs pioneering leaders in government and businesses to act. Government policy and greater alignment will also be crucial, country by country and sector by sector, with each needing a different approach to unlock well-directed investment.

[Video footage]

Closeup of Geraldine Wessing. A graphic beside her shows the globe surrounded by a solar panel, a wind turbine, and recycling symbols. Cut to aerial shot of an offshore wind turbine. Closeup of an electric vehicle being connected for charging. Closeup of a charging point symbol. Closeup of sign reading Shell Hydrogen.

Geraldine Wessing

We know that the energy transition can only happen if governments and businesses incentivise low and zero-carbon choices and if customers embrace these changes.

[Video footage]

Closeup of Ben van Beurden. 

Ben van Beurden

There is no doubt the transformation of the energy system must move faster to limit global warming.

[Video footage]

Shot of a forest. A graphic is superimposed, showing a stylised leaf and the words respecting nature. Cut to shot of the sun shining through the forest canopy. Cut to shot of hut with a solar panel. Cut to an interior scene showing children playing. Cut to closeup of wind turbine.

Ben van Beurden

And this is a huge challenge that affects everyone because the world needs energy to improve lives. And for a healthy planet, this must be cleaner energy.

[Video footage]

Aerial view of field with solar panels. Closeup of Ben van Beurden. Cut to two people discussing data on a computer screen. Cut to shot of a government assembly. Cut to a field with pylons, with an animation showing solar panels covering the field.

Ben van Beurden

Put simply, it is going to take ambitious orchestration of government policy, investment and sector cooperation. But we believe the world can achieve net-zero CO₂ emissions to meet the goal of Paris, if industry, government and society work together to make the right choices now.

[Video footage]

Closeup of Ben van Beurden.

Ben van Beurden

The energy system must change faster, and change is opportunity. Shell is acting today to be part of this future.

[Video footage]

The screen is split into 12 parts, showing solar panels, a girl with tattoos on her face, a forest canopy with the sun shining through it, a wind farm, more solar panels, a city, pylons against the sky, a farmer in his field, another wind farm, sun shining through greenery, the sky through a forest canopy, and a man with a beard and a turban.

Powering Progress Part Two

[Background music plays]

Slow meditative music.

[Video footage]

Closeup of Ben van Beurden.

Ben van Beurden

The transition to a low carbon world is an opportunity. Grasping that opportunity would radically transform the company's portfolio in the next 30 years. 

[Graphic]

A graphic appears beside Ben van Beurden showing three panels, labelled markets, assets and resources. The pictures show a woman at a petrol station fuelling her car, a worker in a hardhat surveying an industrial site, and a man standing in front of a 3D contour map. Words across the bottom read, enhanced value delivery through trading and optimisation.

Ben van Beurden

Today, we have a highly competitive portfolio of assets, products and market positions. Today, we deliver superior value from our integrated business model, as we produce, buy, trade, transport and sell our products around the world. But we cannot stand still. Pursuing the value in the future of energy means changing our businesses across each of our three pillars of growth, transition and upstream. 

We will take new opportunities to grow and become even more competitive, and even more resilient, and as we take those opportunities, we aim to be a compelling investment case for our shareholders, and also, a company that brings value to society. A company that is at one with society as it moves towards that net zero future.

[Animated sequence]

An animated graphic labelled the Shell investment case appears on the screen. Four stylised symbols are arranged in a diamond shape around the words powering progress. Clasping hands at the top, a person inside a triangle to the right, tangential circles at the bottom, and a leaf to the left.

Ben van Beurden

Powering Progress serves four main goals, all of which are critical to our future, and together, these goals integrate sustainability with our business strategy.

[Video footage]

Closeup of Ben van Beurden.

Ben van Beurden

These goals are founded upon our core values of honesty, integrity and respect for people, and they are secured through our determined focus on safety, and our commitment to doing business in a transparent way. It's through the successful pursuit of these four goals that we will build the investment case in Shell.

[Animated sequence]

The diagram described previously is shown again. The shot zooms in to the clasped hands. The words generating shareholder value appear beside the symbol.

Ben van Beurden

I will take you through each in turn now, starting with our goal to generate shareholder value. Powering Progress drives the creation of wealth for our shareholders in the short, the medium and the long term. 

[Video footage]

Closeup of Ben van Beurden.

[Graphic]

The stylised clasped hands appear beside Ben van Beurden, with the words generating shareholder value.

Ben van Beurden

That means seeking to grow dividends every year, and further increase in total shareholder distributions as we grow our cash flows, and by accessing the enormous opportunities that the future of energy holds, we will create the conditions for share price appreciation. 

The changing energy landscape means that Shell must take a dynamic approach to our portfolio of assets and products, and our upstream business will continue to generate the cash and returns needed to fund shareholder distributions and also to accelerate our transition into the future of energy. Of course, we will keep a disciplined approach to capital investment, and a strong balance sheet so our company remains strong, resilient and ready in this time of change.

[Animated sequence]

The diagram described previously is shown again. The shot zooms in to the tangential circles. The words achieving net-zero emissions appear beside the symbol.

Ben van Beurden

Next, becoming a net zero emissions business by 2050, in step with society. Our net-zero target supports the most ambitious goal of the UN Paris agreement, one and a half degrees Celsius.

[Video footage]

Closeup of Ben van Beurden.

[Graphic]

The stylised tangential circles appear beside Ben van Beurden, with the words achieving net-zero emissions.

Ben van Beurden

This means we have to transform our business, working with our customers and others in sectors that are difficult to decarbonise. That includes aviation, shipping, road freight, and industry. 

[Animated sequence]

The diagram described previously is shown again. The shot zooms in to the person in the triangle. The words powering lives appear beside the symbol.

Ben van Beurden

Powering Progress also means powering lives and livelihoods. Of course, you know us as a company that provides vital energy for homes, businesses and transport, but a supply of affordable energy is also crucial for addressing global challenges like poverty and inequality.

[Video footage]

Closeup of Ben van Beurden.

[Graphic]

The stylised person in a triangle appears beside Ben van Beurden, with the words powering lives.

Ben van Beurden

That is why we have set an ambition by 2030 to provide reliable electricity to 100 million consumers in emerging markets who do not have it today. Of course, everything we do, we focus on improving inclusion and representation in four areas. Disability, race and ethnicity, LGBT plus, and gender. 

[Animated sequence]

The diagram described previously is shown again. The shot zooms in to the leaf. The words respecting nature appear beside the symbol.

Ben van Beurden

Let's look at our goal to respect nature. We are stepping up our environmental ambitions to protect and enhance biodiversity.

[Video footage]

Closeup of Ben van Beurden.

[Graphic]

The stylised leaf appears beside Ben van Beurden, with the words respecting nature.

Ben van Beurden

We're also focusing on using water and other resources more efficiently, and reusing as much of it as we can. We are reducing waste from operations, and increasing the recycling of plastics.

[Animated sequence]

The diagram described previously is shown again.

Ben van Beurden

Now, you will find more information about our Powering Progress strategy on shell.com, and in April, we will talk in greater depth about the two goals of respecting nature and powering lives at our annual ESG update. 

[Video footage]

Closeup of Ben van Beurden.

Ben van Beurden

But today, our focus will be on our two interlinked goals of generating value for shareholders while achieving net-zero emissions. As I said right at the beginning, we expect to radically transform Shell over the next 30 years. We will do this by seeking out and grasping the tremendous opportunities of the global shift to a lower carbon future. Now, 30 years is a long time away, and it's not a timescale for hard predictions. But I can share my long-term vision for Shell. By 2050, I would envision all our cash flows coming from serving customers with net-zero energy solutions and sustainable materials. 

[Text displays]

Serving customers with net-zero energy solutions.

Ben van Beurden

Our energy product mix will be dominated by low and no carbon energy, such as renewable power, biofuels, and hydrogen. 

[Text displays]

Partnership across sectors.

[Graphic]

Around the words, pictures appear showing a plane refuelling, containers stacked at a port, a woman and child on a couch with a laptop, and a woman charging her car at an electric charging point.

Ben van Beurden

A product mix that we will develop in partnership with sectors that use the energy, from biofuels in aviation, hydrogen for heavy duty transport, renewable power for homes and businesses. Some of the products we sell might still contain carbon. But the majority of our energy products would come from renewable resources.

[Graphic]

Aerial picture of a river running through a forest.

[Text displays]

Capturing and storing carbon.

Ben van Beurden

All the fossil-based carbon that we would sell would either be captured and stored, balanced out through nature, or embedded in materials. So, I can imagine us capturing and storing maybe 50 million tons a year of carbon dioxide. I can imagine us working with nature to lock away maybe 300 million tons in forests and wetlands and soils. We could have established the commercial business storing away carbon dioxide emissions as a service for our customers.

[Graphic]

Aerial picture of a suspension bridge carrying six lanes of traffic, with a city and mountains in the background.

[Text displays]

Building out supply chains.

Ben van Beurden

In this future, Shell would have become an even more formidable partner for our customers, building out the supply chains to meet their low-carbon energy needs. This is our great task of the next 30 years. 

[Graphic]

A man in safety gear uses a tablet device. Industrial equipment is in the background.

[Text displays]

Using assets to transition.

Ben van Beurden

Our LNG, chemicals and products assets would be the platforms for our future biofuel plants, the hydrogen and synfuel facilities. Together with our power assets, they would form a highly efficient energy and product network that enables our transition, and just as today, our traders would optimise this for maximum value. 

In this future, upstream would play a key role for a long time to come, funding the bulk of our shareholder distributions well into the 2030s, as well as the acceleration of our shift into the future of energy.

That, all of that, is just how I see things. I cannot predict exactly how Shell would look as a net-zero emissions business, but I believe the value of our business would only increase as we make inroads into the future of energy. Yes, our legacy assets and resource positions may fade in the picture of our financial success, but they would be replaced by the value generated from our strong market positions, built on our advanced products and relationships with customers. 

So, how might we travel this journey? How might we evolve towards this future? I may only have been able to give you a vision for the next 30 years, but we have already clear ideas and expectations for the next decade. That starts with a deliberate approach and a strong discipline of managing capital and carbon. Let's start with capital.

Capital Allocation

[Background music plays]

Slow meditative music.

[Video footage]

Long exposure shot of a highway passing between tree covered hills at sunset. Trails from the vehicle lights are on the highway.

[Text displays]

Shell Strategy Day 2021. Our Plan, Capital Allocation.

[Video footage]

Closeup of Jessica Uhl in an office setting.

[Text displays]

Jessica Uhl, CFO, Shell

Jessica Uhl

Delivering our strategy will require clear and deliberate capital allocation choices. How we reward our shareholders, manage risk and invest in our businesses will define the pace and quality of our delivery.

[Graphic]

Vector circle with three parts labelled enterprise, portfolio and project. Sections are highlighted in yellow as they are discussed. Words appear below repeating some of the speaker's words.

Jessica Uhl

We approach capital allocation at three levels, enterprise, portfolio and project. The enterprise level is about how we make choices between increasing distributions to our shareholders, investing in our business and/or strengthening our balance sheet. The portfolio level is about how we allocate capital between our three business pillars - Growth, Transition and Upstream. The project level is about how we evaluate and prioritise investment opportunities.

At the enterprise level, we look to achieve the right balance between shareholder distributions today, and investing for value enhancing growth. Having a strong balance sheet provides financial strength for resilience and allows us to pursue opportunities. That is why we have a clear approach on shareholder distributions as well as debt and capex levels.

[Graphic]

Table labelled near-term cash capex, $19-22 billion. 

Jessica Uhl

As we said at Q3, while our net debt is above $65 billion, we plan to invest $19-22 billion a year, which will be allocated across our portfolio. This will sustain our core businesses while funding moderate growth.

[Text displays]

Approximately 4% dividend per share growth annually, subject to Board approval.

Jessica Uhl

We will do this while continuing to grow the dividend per share annually, subject to Board approval. This will provide a strong, steady return for our shareholders while offering the potential for both increased distributions and share price appreciation.

[Text displays]

Bringing net debt to $65 billion. Total shareholder distributions, 20-30% of CFFO.

Jessica Uhl

In this context, we announced last week our intention to increase the dividend per share for Q1 by 4%. We will also strengthen the balance sheet, reducing net debt to $65 billion. Once we have reached this milestone, we will look to further increase total shareholder distributions. Through our progressive dividend and share buybacks, we target total distributions to shareholders of 20-30% of our cash flow from operations. At this time, we will also seek measured increases in investments to grow value and further strengthen our balance sheet.

[Graphic]

Vector circle diagram with portfolio highlighted in yellow. Words appear repeating some of what the speaker is saying.

Jessica Uhl

At the portfolio level, our strategy determines which businesses we will sustain or grow... transitioning our portfolio towards the future of energy. 

We will allocate our capital spending between our business pillars to achieve three key objectives, maintaining our assets, sustaining cash flows from our strong, existing businesses, and building new cash flows by finding and creating value in the future of energy. Importantly, these businesses have different capital profiles. 

[Graphic]

Graph labelled balanced approach to investment decisions across pillars.

Jessica Uhl

Upstream and Transition require a large proportion of their capital to maintain their assets and sustain cash flows, while most capital spending in our Growth pillar is aimed at increasing cash flow and value. A key principle for our strategy is our focus on the customer. This will shape the portfolios of each of our businesses, reinforcing our value over volume approach for Upstream, repurposing our refining assets for biofuels and hydrogen production, as well as developing renewable energy infrastructure and our customer portfolios. 

[Graphic]

Table showing desired changes that the speaker has been outlining.

Jessica Uhl

Shell has traditionally focused on securing and developing assets – a business model that linked us to commodity prices and project-based returns. The Shell we are building will create value from advanced products that provide low or no-carbon energy, risk management and related services.

[Text displays]

Keeping near-term capex between $19-22 billion. Opex no higher than $35 billion. Divestment programme $4 billion a year.

Jessica Uhl

As already mentioned, we will keep capital spending between $1