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What is the impact of one of the world's largest oil companies? 🤔
A deep dive into Shell's environmental and social impact 🛢️

This week’s read time: 6 minutes
You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.
OUR APPROACH
Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.
While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.
THIS WEEK’S COMPANY
Shell

This week we dive deep into Shell’s environmental and social impact.
Shell is one of the world’s largest energy and petrochemical companies with operations in more than 70 countries.
Some interesting facts:
Shell fueled the first 20,000 km flight, which happened in December 1926 – from Zurich to Cape Town.
The company was also the first to successfully capture CO₂ (in 2015) via Carbon Capture and Storage technology – at its Quest CCS site in Canada.
It has faced various legal and environmental challenges over the years, including criticisms and lawsuits over environmental practices, particularly in Nigeria.
COMPANY’S IMPACT
Shell’s overall impact score

Shell has a general impact score of -2.31 (on a scale from -5 to +5). Its impact is spread across 11 different UN Sustainable Development Goals (SDGs) and 10 different topics, split between positive and negative analyses.
In the socio-economic sphere,
the company serves more than 1 million commercial and industrial customers, and around 33 million customers daily at more than 47,000 Shell-branded retail service stations. Shell employs roughly 103,000 people and offers salaries above the industry average. Annually, the company reports a significant number of serious injuries and fatalities, with 12 in 2023 and 9 in 2022. Shell has a higher than industry average representation of women, comprising 35% of the workforce and 42% on the Board of Directors. From 2020 to 2022, it also paid a cumulative corporate tax exceeding $25 billion.
The company has repeatedly exceeded the emission limit for harmful and hazardous air pollutants, endangering thousands of people with diseases such as cancer, lung damage, and asthma. In Nigeria, Shell has been accountable for over 1,000 oil spills since 2011, discharging hydrocarbons laden with toxic chemicals like benzene and toluene. Consequently, benzene pollution in the Niger Delta's groundwater is 900 times higher than WHO standards, leading to thousands of newborn deaths every year in nearby communities, and causing many others to suffer from brain disorders.
Environmentally,
Shell emits a massive 1.2 billion tonnes of CO2 equivalent, including indirect emissions (equal to over 157 million homes’ energy use for a year). The company also withdraws a significant amount of water (162 million m3 in 2023), and 4 of its major facilities are located in high water-stressed areas. Shell is also responsible for approximately 0.25% of global plastic production and generates over 2.2 million tonnes of operational waste annually. The company's oil spills have also caused environmental degradation, contaminating drinking water and farmland, causing bird deaths, disrupting aquatic life, and more, while it operates in about 29 protected areas.
*The impact score is current as of May 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology at the end of this email.
ESG VS IMPACT SCORE
What is Shell’s ESG rating?

Source: MSCI
For comparison, Shell has an AA rating in MSCI's ESG evaluation.
However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors!
SCORES BY SDG
Shell’s impact scores by SDG

Now, back to Shell’s impact score:
Positively (and by weight), the company scores the highest in Industry, Innovation, and Infrastructure SDG (3.05), followed by Partnership for the Goals (2.45), and Decent Work and Economic Growth (0.26).
Negatively, the company scores the worst in Responsible Consumption and Production SDG (-3.12), followed by Good Health and Well-being (-3.69), and Climate Action (-3.96).
*the analysis takes into account the weight of the SDGs

The company also influences one SDG (8 - Decent Work and Economic Growth) both positively and negatively, which effectively balance each other out. Positively, because it employs over 103,000 people, contributing to economic growth and social stability. Negatively, because it registers a considerable number of serious injuries and fatalities annually.
PEER GROUP COMPARISON
Shell’s scores by ILG Theme and compared to its competitors

The Investment Leaders Group (ILG) is a global network of pension funds, insurers, and asset managers, with over $12 trillion under management. They came up with a framework to analyze impact that uses the SDGs as a reference point but with 6 broader themes, 3 of them related to Social (Basic Needs, Decent Work, Well-being), and the 3 others to Environmental (Climate Stability, Healthy Ecosystems, Resource Security). Each analysis is linked to one particular ILG Theme.
Shell scores negatively in all of the themes, except for Well-being. Compared to its competitors, Shell also performs worse in five of the six themes, when considering the peer group average.

CONCLUSION
Final words

So, Shell’s key social and environmental impact lies in …
its essential role in providing energy and fueling transportation to millions of people across 70 countries, creating thousands of jobs, and contributing billions of dollars in taxes.
On the flip side, Shell has a profound impact through its substantial emissions, water usage, and waste and plastic production. The company is also accountable for oil spills, which have led to environmental degradation and health issues for communities nearby its operations.
Its negative -2.31 score is a balance of all of these factors and topics.
If you want to delve deeper into Shell’s impact, you can explore it here.
Next week, we will analyze the impact of the company that encourages us to 'just do it', Nike. đź‘ź
Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]
METHODOLOGY & SCORES

Crafted from rigorous, fact-based data, our impact scores are powered by Impaakt, a pioneering Swiss-based financial data provider focused on tangible impact over mere intentions. Impaakt scores are powered by stakeholders, ensuring corporates, investors and consumers receive robust, impartial insights to make informed decisions on where to allocate their resources.
Key Features of Our Impact Analysis:
Comprehensive Research: Our analyses span thousands of companies across various sectors, focusing on the tangible impacts of their business operations, products, processes, and innovations.
Live, Dynamic Scores: Reflecting the latest in reports and research, our impact scores are continually updated, providing a current view of each company's footprint.
Zero Tolerance for Greenwashing: By including stakeholders in assessing actions only once the impact occurs, we ensure our assessments reflect the voice of global society, free from greenwashing, and from empty promises and intentions.

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