By Ron Bousso
LONDON (Reuters) - Royal Dutch Shell (LON:RDSa) 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.
In its first review of its association with 19 key industry groups, the company 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 also the latest sign of how investor pressure on oil companies is leading to changes in their behavior around climate.
"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.
Shell said it also disagreed with AFPM's opposition to a price on carbon and action on low-carbon technologies.
AFPM Chief Executive Chet Thompson thanked Shell for its "longstanding collaboration."
"Like any family, we aren't always fully aligned on every policy, but we always strive to reach consensus positions on policies," Thompson said in a statement.
"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."
AFPM counts around 300 U.S. and international members including Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), BP (LON:BP) and Total that operate 110 refineries and 229 petrochemical plants, according to its 2018 annual report.
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."
WALK AWAY
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 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.
It will continue to engage with the API and other groups over climate policies and monitor their alignment, Shell said.
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.
"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.
"We must be prepared to openly voice our concerns where we find misalignment with an industry association on climate-related policy. In cases of material misalignment, we should also be prepared to walk away."
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.