LONDON (Reuters) - Royal Dutch Shell Plc on Tuesday became the first major oil and gas company to announce plans to leave a leading U.S. refining lobby due to disagreement on climate policies, citing its support for the goals of the Paris climate agreement.
In its first review of its association with 19 key industry groups, Shell said it had found “material misalignment” over climate policy with the American Fuel & Petrochemical Manufacturers (AFPM) and would quit the body in 2020.
The review is part of Shell’s drive to increase transparency and show investors it is in line with the 2015 Paris climate agreement’s goals to limit global warming by reducing carbon emissions to a net zero by the end of the century.
It is the latest sign of how investor pressure on oil companies, particularly in Europe, is leading to changes in their behavior around climate. Last year, Shell caved in to investor pressure over climate change, setting out plans to introduce industry-leading carbon emissions targets linked to executive pay.
Its chief executive, Ben van Beurden, has since repeatedly urged oil and gas producers to take action over climate and pollution, staking out a more radical position than the heads of other major oil companies.
“AFPM has not stated support for the goal of the Paris Agreement. Shell supports the goal of the Paris Agreement,” the Anglo-Dutch company said in its decision.
“The need for urgent action in response to climate change has become ever more obvious since the signing of the Paris Agreement in 2015. As a result, society’s expectations in this area have changed, and Shell’s views have also evolved,” van Beurden said in the report.
The company has disagreed with AFPM on a number of issues for some time, according to two lobbying sources. Shell said it also disagreed with AFPM’s opposition to a price on carbon and action on low-carbon technologies.
Shell and AFPM have also been at odds in recent months over regulation over the use of renewable fuels. While Shell and other large refiners invested in cleaner fuel technology, AFPM has fought hard against standards requiring refiners to blend or subsidize the blending of biofuels into the gasoline pool - saying it hurts independent refiners.
Shell and rivals Exxon and BP have in recent years left the American Legislative Exchange Council, a conservative political group, over its stance on climate change.
AFPM Chief Executive Chet Thompson thanked Shell for its “longstanding collaboration.”
“We will also continue working on behalf of the refining and petrochemical industries to advance policies that ensure reliable and affordable access to fuels and petrochemicals, while being responsible stewards of the environment,” Thompson said in a statement.
AFPM counts around 300 U.S. and international members including Exxon Mobil Corp, Chevron Corp, BP Plc and Total SA that operate 110 refineries and 229 petrochemical plants, according to its 2018 annual report.
French oil major Total said in a statement to Reuters that consensus required by organizations such as AFPM does not always reflect its position, and that it regularly monitors the relevance of its participation.
“In this case, Total takes a pro-active approach in order to convince its peers, particularly on climate issues. In case of differing points of view, Total publicly defends its position, and is ready to reconsider its participation in case of disagreement,” the company said.
Total said it was fully aware of climate issues, has publicly recognized them and takes them into its strategy.
Shell’s review was welcomed by Adam Matthews, director of ethics and engagement for the Church of England Pensions Board, which invests in Shell and led discussions with the company over its climate policy.
“This is an industry first,” Matthews said. “With this review Shell have set the benchmark for best practice on corporate climate lobbying not just within oil and gas but across all industries. The challenge now is for others to follow suit.”
Shell also found “some” misalignment with nine other trade associations, including the American Petroleum Institute, the oil and gas industry’s main lobby.
Shell said that while it had some climate-related differences with the API, it welcomed the lobby’s advocacy on a range of state and federal issues such as trade and transport, as well as the API’s efforts to reduce methane emissions.
Shell said it will continue to engage with the API and other groups over climate policies and monitor their alignment.
Shell last month urged President Donald Trump’s administration to tighten restrictions on emissions of methane, a potent greenhouse gas, instead of weakening them as planned.
Reporting by Ron Bousso; Additional reporting by Jarrett Renshaw in New York and Bate Felix in Paris; Editing by Louise Heavens, Emelia Sithole-Matarise, Lisa Shumaker and Leslie Adler