Shell's Q4 Results: Big Oil Won't Deliver the Green Transition

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Shell's Q4 Results: Big Oil Won't Deliver the Green Transition

Executive Summary

Today, Shell announced record profits of over £32 billion for 2022 — an incredible 107% increase on the year prior. This figure has rightfully made headlines, but an equally urgent question is not just how much profit Shell has made, but how they are using their vast earnings.

Common Wealth analysis of Shell’s published Q4 results finds that the firm has been doubling down on the status quo, at the expense of both people and planet. Additional figures and underlying data can be found in the Appendix.

Key Takeaways

  • In Q4 of 2022, Shell spent nearly double (1.85x) the amount on marketing as it invested through its “Renewable and Energy Solutions” (RES) division, at £1.7bn and £0.9bn, respectively.
  • Importantly, these figures likely greatly overstate the firm’s actual investment in renewables, as an investigation by Global Witness suggests the majority of this business segment’s operations relate to trading and marketing gas. [1]
  • Over the full course of 2022, Shell’s distribution to shareholders (combined share buybacks and dividends) totalled £20 billion — roughly 7.5 times their cumulative investment in RES (£2.8bn). Their fossil fuel capex, meanwhile, was £10bn (based on combined Capex in Upstream and Integrated Gas segments, as per Shell’s accounts).

[.img-caption][.img-caption-header]Figure 1[.img-caption-header][.img-caption-text]Source: Common Wealth analysis of Shell Q4 published results.[.img-caption-text][.img-caption]

As millions struggle to pay their energy bills, these results reflect an extraordinary transfer of wealth from households on ordinary incomes to the shareholders of the energy giants. Crucially, while the line is often repeated that these vast shareholder payouts are to the benefit of, and necessary for, UK pensions, in reality the picture is very different.  

In our report with the TUC and the High Pay Centre based on ONS data, Common Wealth found that UK pensions hold just 6% of UK-listed shares, whether directly or indirectly via intermediary firms such as asset managers. [2] By another measure, the Pension Protection Fund states that UK Defined Benefit pensions’ exposure to UK-listed equities is just 2.4%. [3] If we consider that the FTSE100 accounts for approximately 80% of the value of the FTSE All Share (comprising all companies listed on the London Stock Exchange), and Shell represents approximately 8.4% of the value of the FTSE100, then proportionate allocation would suggest exposure to Shell’s shares should represent roughly 0.16% of the average UK pension portfolio. [4]

This, in combination with substantial inequalities in pension assets relative to income deciles, means any benefits experienced by middle and lower-income pension holders would be trivial, particularly relative to the soaring bills contributing, in part, to these exceptional profits.

The for-profit corporation exists to maximise profits for the benefit of shareholders. In this sense, Shell (and its peers such as BP whose results we expect next week), are functioning exactly as they are designed to. They were not designed to deliver a just transition to a decarbonised energy system, nor one that guarantees secure and affordable energy for all, and we cannot rely on them to do so. Instead, it is time to embrace strategic public planning and investment to deliver a thriving future for all.   


[.img-caption][.img-caption-header]Table 1[.img-caption-header][.img-caption-text]Shell Q4 and 2022 Annual Results (All figures £mn)[.img-caption-text][.img-caption]

Note: All figures rounded. Capex does not sum to Total figure as Chemical Segment have been omitted from this table.

[.img-caption]Figure 2[.img-caption]

[.img-caption]Figure 3[.img-caption]

[.img-caption]Figure 4[.img-caption]

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Full Text
Shell's Q4 Results: Big Oil Won't Deliver the Green Transition

[#fn1][1][#fn1] Oliver Milman, "Shell’s actual spending on renewables is fraction of what it claims, group alleges", The Guardian, 01/02/2023. Available here.

[#fn2][2][#fn2] "Do Dividends Pay Our Pensions", TUC, Common Wealth, High Pay Commission, January 2022. Available here.

[#fn3][3][#fn3] "Purple Book", Pension Protection Fund, 2021. Available here.

[#fn4][4][#fn4] Based on analysis of FTSE 100 constituents in Refinitiv Eikon database.