By Kathleen Wyatt and Rob van’t Wel on Jan 5, 2021
2020 was an extraordinary year on so many fronts. What would you say was the most challenging moment for you professionally? And the most inspiring?
There have been many challenging parts and also quite a few inspiring parts. The most challenging was communicating the dividend cut. It reset the entire organisation, it was a historic decision and it changed shareholder expectations.
And it was personal too. We thought 2020 would be the year of celebrating financial success. We had done all sorts of amazing things and I saw it as a year to show what we could really do. And then of course, a few months into it, not only did we realise that was not going to happen, but we realised that we would have to cut back in all sorts of ways, from spending plans to operating budgets – and the dividend. I had a knot in my stomach on the day we had to announce it, even though, at a senior level, we all agreed that this was the right thing to do. We agreed it was for the long-term benefit of Shell, it would preserve our financial resilience and set us up for success in whatever comes next.
For me, the most inspiring thing was not one single event, it was the resourcefulness of the whole organisation in the face of the COVID-19 pandemic. The way everyone came together and achieved remarkable things on all fronts. If you think about how people looked after each other, the amount of effort and time that went into it, the care. This makes me incredibly proud – and has even brought a tear to my eye. I also saw a business that really fought to deliver on everything with tremendous commitment. That was amazing too. As a group of people, working together, we showed up at our very best.
Was there one aspect of Shell’s response to the global pandemic that really stood out for you? And was there anything we could have done better?
It was the focus on care that stood out. I sensed that there was a tremendous pride in the organisation as well. The amount of focus and attention on just doing the right thing, keeping everything going without any major incidents. I thought it was beyond any expectation.
If you had asked me a year ago what would happen in a pandemic, when nobody could go to the office or travel easily to sites, or carry out improvements to facilities, I would have said: “I expect the worst.” But nothing of the kind happened. It was remarkable. And it was not down to luck. It was the quality and the focus of the organisation. From technical support, to business continuity and contributing to community projects. And the way we created the sense of togetherness and looking after each other had something to do with it. Not only did we show that we are resilient, but also, as a business, we really matter and we continue to provide energy to a world that needs it, even under the most difficult of circumstances.
Could we have done things better? I am sure we could. There is probably a whole list of things that we could do better, but I would like to focus on what we did well this time around, in a pandemic like this.
Along with COVID-19, climate change remained top of the global agenda. The postponed UN climate summit, COP26, is now taking place in the UK in November 2021. Could it be a turning point?
It did not look like it at the beginning of 2020, but then the summit had to be postponed. So perhaps the fact that we have more time, that this current phase has brought a lot of introspection to the world, that there is a deepening of convictions among many nations and populations as well, and that there is probably a different sense of political responsibility emerging as a result of all of that, I think, has to be seen as positive.
"I had a knot in my stomach on the day we had to announce it, even though, at a senior level, we all agreed that this was the right thing to do"
In April you announced Shell’s ambition to be a net-zero emissions energy business by 2050 or sooner, in step with society and our customers. How will this take shape in the coming decades?
It is important to say that this means much more than focusing on the oil and gas we produce. To achieve our ambition to be a net-zero emissions energy business by 2050 in step with society, we have to do three things. First, we have to be net zero in all our operations. That is a huge task, but it is actually the smallest of the three. Second, we have to reduce significantly the carbon intensity of the products we sell. This will mean selling more hydrogen, biofuels and renewable electricity.
The third part is then to help those customers who still depend on carbon-based energy products to address their emissions – sectors such as aviation, heavy freight and shipping. Whether it is helping them through the use of carbon capture and storage technology or by offsetting their emissions through nature.
We have to work with our customers because we cannot simply try to sell lower-carbon energy to customers who have no technical nor commercial use for it. We have to help our customers get to net zero. If they cannot get to net zero, we will not get to net zero.
The exact steps to get there are not yet totally clear, but what we do know is that you can figure it out best by working sector by sector. This is how we are going to think about this challenge and organise ourselves in future. Our ambition means dramatic change for Shell as our current plans will not get us there. So, over time, those business plans will have to change, as society and our customers also change.
Shell will provide an update in February on how it plans to achieve its net-zero ambition. What are your strongest hopes for Shell in the future?
Over the years, we have created a business with considerable resilience. We are the largest cash producer in the sector. We have amazing businesses with amazing results. So, we are actually set up quite well and what I like about the direction that we have chosen – or the direction we were on but have now chosen to accelerate – is a much stronger focus on that future of energy, which we know is going to be different than what we had before. Again, that future is created by our customers, that future is not created by our legacy strengths of developing resources or building plants or whatever else, and that of course, has a tremendous amount of excitement in it.
Our oil and gas fields, our assets and our technology bring great value to Shell, but so does having the best position with customers. And I am really excited about the capabilities Shell has: the foundations that we have, the platform of commerciality, the quality of the people we have. We have the financial power of the businesses we have built, we have the infrastructure in the middle to really make change happen and we have the businesses that will grow as we change.
You also announced plans to reorganise Shell, including cuts of between 7,000 and 9,000 jobs by the end of 2022. How can you transform Shell while cutting back on some of the people you might need to do it?
Our net-zero ambition means changing the way we think and the way we are organised. The strategy we are setting is transformational. If you plan to be the type of organisation that works with customers on products and technologies that are not yet well established, you have to be more entrepreneurial, more nimble, more simple. Now, of course, we also have to reduce cost, but that is actually a consequence of having a simpler organisation. Cutting jobs is an extremely tough process, but we have to do it if we want to change.
Following the Black Lives Matter protests around the world and the death of George Floyd, you said that “society has a problem with racism, it remains a deep flaw, and Shell is part of that society”. What should Shell do to address racism?
Even if Shell has made great advances in diversity and inclusion over the years, these events – and the debate that followed both inside and outside Shell – made me realise that there is plenty of room to do much better. It was a big wake-up call for me. And if you want to do something about racism, if you feel it is unacceptable or reprehensible, then you have to start by looking at yourself. So for Shell, for me and the Executive Committee, it made us seek a deeper personal exposure to racial injustice in Shell. As a company we cannot take a stand in society nor be a force for good if we do not fix ourselves first.
So, we will focus on employee experiences. Understand what is happening on the ground. Address instances of racial inequity in the same way we deal with safety and environmental incidents. We want to know when they are happening, why and how we stop them happening again.
We also need better reporting and more transparency of data. We have to do things like reporting on the ethnicity pay gap, as we have just done in the UK with the Diversity Pay Gap Report. We have to publish our ambitions, make much more progress, show where we need to do even more.
It really is time we tackle this issue. We have to create an environment where everybody feels included. If you are, like me, a middle-aged, white male, who has grown up in a north-western European society, you do not feel the tension, you do not feel the problem and you do not even feel how privileged you are. You have to find a way to see it from another perspective. And that is what the George Floyd experience did for me. It is not good enough to say: “I am not a racist.” The only correct thing to say is: “I am anti-racist.”
"As a company, we cannot take a stand in society nor be a force for good if we do not fix ourselves first"
How do you see society evolving in the near future – and what will you change personally? Will you fly less than you used to, for instance?
You do not have this sort of massive upheaval and big communal experience, and then when it is all over, snap back to where you were before. Life will be different – how big and how much is hard to say. The gradual reset back to conditions we knew before will mean we adjust to our new realities more permanently. And personally, I have found it really valuable to be able to spend more time with my family this year, so I hope I will travel less!
In this year of all years, if you could invite six people for dinner from any time in history, who would they be and why?
I would have three categories: discovery, courage and perseverance, and geopolitics. If I think of discovery and knowledge, the first person is Albert Einstein. I would definitely have him at any dinner party. The second is one of the great explorers, although he has become a controversial figure these days. It is Christopher Columbus. I would ask them both how they conceived their ideas and undertook their discoveries. How much was brilliance, perseverance or luck?
Courage and conviction also fascinate me. The two people I chose took on what seemed to be insurmountable challenges. They did this in the face of tremendous adversity, but also with tremendous intellect and wisdom. They are Mahatma Gandhi and Rosa Parks, and I would like to know how they found the courage and conviction to overcome what they faced.
Geopolitics was the most difficult. In the end, the two figures I picked represent times of empire, times of dramatic change. The first is Cleopatra. I would ask her how people viewed the world then, about the fall of the Pharaohs and how statecraft was deployed. How did she make things happen in a vast empire without modern communication tools? And I would ask the same questions to Queen Victoria, my sixth guest. How did she experience the vast influence she had over the UK, the Commonwealth and the rest of the world? And if I could, I would also add Stacey, my wife, because there are no good dinner parties without her!