Incoming Shell CEO has ‘most challenging job in history’ of oil giant

Activist groups are calling on Shell’s incoming chief executive to make “bold decisions” in order to revolutionise the supermajor.

Follow This has been quick to remind Wael Sawan of the need for the oil and gas giant to “drastically” cut its emissions, describing the task as the “most challenging job” in the history of the company.

It was revealed on Thursday that Mr Sawan will take over from longstanding CEO, Ben van Beurden at the turn of the year.

During his nine years in charge, Mr van Beurden presided over several significant moments Shell’s history against a backdrop of highs and lows for the oil and gas industry.

Hague court ruling

Among the key milestones of his tenure was a decision by a Dutch court in 2021 to order the company to cut its emissions by 45% by 2030.

The ruling was help up as a watershed moment by climate groups, though Shell (LON: SHEL) subsequently appealed the verdict.

While the appeal is likely to remain tied up in the courts for the foreseeable future, it is a relic from his predecessor that Mr Sawan will likely have to combat at some point.

Mark van Baal, founder of activist shareholder group Follow This, said: “Wael Sawan has the most challenging job in the history of Shell: drastically reducing emissions by 2030 as more and more investors request and the Dutch judge has ordered. If he stays CEO as long as Van Beurden, this will be within his tenure, in 2030.

© Follow This

“He has to make bold decisions to explore new business models instead of new oil and gas. If he fails to deliver deep emissions cuts, he puts the company at great financial risk. Perhaps the greatest financial risk comes from litigation. Oil, coal and gas companies will be held liable for the staggering costs of devasting climate change. Other financial risks are stranded assets and disruptive innovation.”

He added: “Mr Sawan has to overcome the same disadvantage as Van Beurden: decades of success in oil and gas. We hope his recent year in renewables has stimulated his imagination beyond oil and gas.”

Calls to shelve Jackdaw

Environmental group Greenpeace has called on Mr Sawan to go one further and cancel the planned development of North Sea Jackdaw gas field.

A final investment decision was taken on the project earlier this year, with a view to having it up and running in 2025.

Much like the Cambo project, Jackdaw has already attracted the attention of activists and is likely to become another battleground between industry and climate campaigners.

© Supplied by Uplift

Charlie Kronick, climate campaigner for Greenpeace UK, said: “The only meaningful way to judge the appointment of a new CEO at Shell is to look at his quantifiable objectives for the company’s future and his delivery on those objectives.

“To represent the change we need to see, he must clearly state that Shell will cut its absolute carbon emissions by 50% – including those of their customers in the next decade. He must state that they will cancel projects like Jackdaw to cut production of oil and gas by 45% in the next decade to align with objectives of the Paris agreement and remain consistent with 1.5 degrees.”

A ‘well respected’ individual

Though a number of challenges await him, Mr Sawan, currently Shell’s head of integrated gas and renewables, has received backing from across the industry.

Responding to the news of his appointment, Biraj Borkhataria, associate director of European research at RBC Capital Markets, said: “We believe Mr Sawan is well respected by the investor community and the shift is likely to be more of a continuation than revolution of the strategy put in place by van Beurden.”