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Shell 2022 numbers may damage ESG credentials as tax calls get louder

2nd Feb 2023 13:12

(Alliance News) - Shell PLC's annual results did little for its green credibility, with numbers showing it has pumped more into keeping shareholders, than it has in renewables.

The oil major's record profit may also only serve to intensify calls for greater tax scrutiny, something its former chief executive said was inevitable.

Shell said its total shareholder distributions were USD26 billion in 2022, 38% of its USD68.41 billion cash flow from operations for the year. Back in July 2021, it said it planned to increase distributions to within a range of 20% to 30% of cash flow from operations.

Cash capital expenditure from Shell's Renewables & Energy Solutions arm amounted to USD3.57 billion in 2022, rising from USD2.36 billion. Across all units, cash capex totalled USD24.83 billion, up from USD19.70 billion in 2021.

"Shareholders will be pretty pleased though, given news of a new multi-billion-dollar buyback. It feels somewhat telling that, for all the fine words about the energy transition, Shell has returned more to shareholders than it has spent on renewables this year," AJ Bell analyst Russ Mould commented.

Shell has come under fire for "misleading" authorities in the US over its energy transition offering.

Lobby group Global Witness said it has submitted a complaint to a US watchdog accusing Shell of "lumping together" gas-related investments with renewables. This, Global Witness alleges, inflated Shell's "overall investment in renewable sources of energy".

"Despite fossil fuel giant Shell claiming to spend 12% of its annual expenditure on 'Renewables & Energy Solutions', we found that in reality the company only spends 1.5% of its overall expenditure on solar and wind power generation. Alarmingly, it appears that a significant portion of Shell's spending on 'Renewables & Energy Solutions' actually goes to investments in climate-wrecking gas," Global Witness added.

"We cannot afford fossil fuel companies like Shell to carry on with these greenwashing and delaying tactics. That's why Global Witness has filed a groundbreaking greenwashing complaint with the US Securities & Exchange Commission, the US agency charged with protecting investors, showing how Shell overstates its investments in renewable energy by including gas-related activities, such as integrated power, gas marketing and trading, hydrogen, and carbon capture and storage."

Shell's chunky 2022 profit also puts calls for tax hikes for oil majors back on the agenda, CMC Markets UK analyst Michael Hewson commented.

"Inevitably today's record profits will draw the usual ire from politicians looking to deflect the blame for the energy policy failures of the last 20 years, by actively encouraging the big oil companies not to invest in new capacity, while failing to plan for what would replace that lost capacity as oil and gas demand increased," Hewson added.

"Going forward this means that oil and gas prices will continue to remain high, as will profits, until it is acknowledged that the only way to push prices down is to add new capacity in the short term, while transitioning to more sustainable sources of energy in the long term. Until this uncomfortable truth is confronted then the controversy over the oil and gas sectors big profits will continue."

Shell shares were 2.4% higher at 2,422.00 pence each in London on Thursday morning.

By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.


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