On February 1, 2023, Global Witness, an environmental justice-focused non-profit organization and a Shell shareholder, filed a complaint with the SEC’s Climate and ESG Task Force requesting the Agency investigate claims Shell has made regarding its renewable energy sources. The complaint alleges that Shell has materially misstated its financial commitment to renewable resources of energy by inflating the content of its new report, “Renewables and Energy Solutions” (“RES”), reporting segment regarding fossil fuel activities.
Global Witness believes statements in the RES exaggerate the extent to which Shell is reducing its reliance on fossil fuels and investing in renewable energy sources. The non-profit states that while Shell claims to spend 12% ($2.4 billion) of its annual expenditure ($19.7 billion) on “Renewables and Energy Solutions,” actually, the company spends only 1.5% ($288 million) of its annual expenditure on true renewables (e.g., solar and wind power generation). The complaint asserts that much of the RES designation is actually being diverted to investments in natural gas, which is neither renewable nor an energy solution.
In its complaint, Global Witness requests an SEC investigation into the following:
- Whether the activities included in the RES segment have been properly reported under relevant accounting standards.
- Whether including natural gas in RES without reporting how much spending Shell directs to gas has caused Shell to omit material facts necessary to its investors’ clear understanding of Shell’s purported energy transition.
- Whether Shell’s reported capex on RES includes so much natural gas spending that labeling the segment “Renewables and Energy Solutions” constitutes a materially misleading misstatement.
- Whether Shell is adequately disclosing its renewable energy investments in accordance with Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which make it unlawful to issue materially misleading statements or omissions in connection with the purchase or sale of any security.
Global Witness further requests that if SEC finds that Shell is misstating or omitting material facts in its financial filings, the Commission issue appropriate enforcement action to ensure that Shell’s investors have access to the clear and comprehensive information they rely upon to inform their investment decisions.