Good morning and good afternoon, ladies and gentlemen. Before we kick off meetings at Shell, we always hold safety moments. In that spirit, I'd like to note that our Chief Executive Ben van Beurden is not in attendance today. Of course, while his attendance had been planned, he has unfortunately taken ill. Now he has tested negative for COVID, but in an abundance of caution, and in line with our priority interest of safety first, we have prudently determined that it's in our best interest and in his interest and our attendees' health not for him to attend either physically or virtually.
I think given that, which of course was a recent development, it's even more important today that our question and answer session focuses on the business of today's meeting. In that vein, please understand when I emphasize that questions should be kept short and to the point. Likewise on our side, we'll strive to keep our answers responsive, but crisp to ensure efficiency and to allow as many questions as possible on the subject of the meeting. Sorry, I've got this is on, and I'm getting the translations into my. I need to. Can I just give you that? Sorry about that.
For those of you who do not know me, I'm Andrew Mackenzie, and as Chair of the Board and of this meeting, I'm delighted to welcome each of you to the 2021 general meeting of Royal Dutch Shell plc. First, just allow me to describe the overall process for today's meeting. After I formally open it, we'll move to your questions, and following that, we will conclude with the voting outcome. Now for those shareholders wanting to ask questions, if you're participating online, please refer to the guide on the Lumi platform. If you're here in the room, please see one of the ushers at the two question points. When asking questions or making any comment, please do state your name and the name of your organization you represent, if indeed there is one.
Tjerk Huysinga is our Executive Vice President of Investor Relations, and he will facilitate the question portion of the meeting today. He'll read out all the questions submitted on the Lumi platform. Now, some questions may be moderated just to avoid unnecessary repetition and to make sure we have an orderly meeting. As I was hinting, this meeting is designed to focus solely on the formal business we set out in the notice of the meeting. We won't have any presentations, so let me remind you of the proposal. The board has proposed that we change Shell's articles of association in order to simplify the share structure of Shell.
The core proposal will enable Shell to change its dual A, B share structure into a single line of shares and align its tax residence with its country of incorporation in the U.K. This is a simplification that's designed to make Shell more competitive, to accelerate distributions to our shareholders, and to speed up our transition to a net zero emissions energy company. Through all this, of course, shareholders will retain all the rights in Shell that they do today. The company's shares will continue to be listed in Amsterdam, London and New York, and they will have FTSE U.K. and AEX index inclusion. Shell's corporate governance structure will also remain unchanged other than the location of its board and executive committee meetings.
Your board believes that this proposal is in the best interest of shareholders, and we strongly recommend all shareholders to vote in favor of the changes to the Shell articles. Now, so far, we have received positive feedback from our institutional shareholders, and the business case does seem to be well understood. But having said that, we can address and will address potential outstanding questions that you may have today. If the proposal is approved and after consultation with the relevant Shell staff councils, the board will make a final decision on whether to proceed with the simplification, and we will aim to execute this simplification soon thereafter. Now, with that introduction, I confirm that we have a quorum present to now declare the general meeting formally open and suggest with your permission that the notice convening the meeting is taken as read.
In accordance with the company's articles of association and as stated in the notice of the meeting and circular, the meeting will be held in English. For those watching via the Lumi platform, voting will be open throughout the meeting, and it will remain open for 15 minutes following the conclusion of the meeting. Once you've voted, you can change your vote, but when the voting closes, then it's your last choice that will of course be submitted. In accordance with the company's articles of association and as contemplated by the notice of meeting, I hereby call for a poll to be taken on the proposed resolution, and I'm appointing the company's registrars, Equiniti, to act as scrutineers. I hereby propose therefore the resolution that is set out in full in the notice of the meeting and circular.
The resolution is proposed as a special resolution, and therefore it requires at least 75% majority of the votes cast to be in favor in order for the motion to be passed. The poll is now open. Before I introduce the other board members who are with us today, please remember, for those shareholders wanting to ask questions, if you are participating online, do refer to the guide on the Lumi platform. If you're here in the room, as I said, see one of the ushers at one of the two question points. To allow sufficient time for other shareholders wanting to ask questions, please keep your questions and comments short and to the point and relevant to the business of today's meeting.
We'll do the same with our answers so we can hear from as many people as possible. For those choosing to ask their question here in person or via the teleconference facility, if I believe your question or statement is excessively long, please accept that I may ask you to bring it to a close. I do intend, though, that where possible, all questions or comments of a similar nature will be grouped together. Grouping questions and comments in this way can help avoid repetition, and it can make sure that we address as many questions as we possibly can. I also, however, request your patience if there's a lot of interest in one particular issue where we've grouped the questions.
As chair of the meeting, I have a duty to make sure that today's proceedings are conducted in a proper and orderly manner, and of course, I'll do my utmost to make sure that all shades of opinion are given a fair hearing. To help me fulfill these responsibilities, I would ask that you respect our procedures and the order of the meeting. For those watching the meeting via the Lumi platform, a copy of the notice of the meeting can be found under the Documents tab on your screen. For those watching on the webcast, it can be found within the General Meeting section of our website. Now, the nature of this meeting is very different to our usual annual general meeting, where we normally have all our directors joining us.
Those not on stage with us today have all contributed, each contributed fully to the discussions that have led us to this general meeting. They, in addition to those on stage, unanimously support the proposal, and many of them are following the meeting via the webcast. However, having all directors join us here today when they have no formal role in today's proceedings would, I think, go against the messages we provided to our stakeholders regarding physical attendance and one which we've put into practice with the Chief Executive. I am today joined by our Chief Financial Officer, Jessica Uhl, and our Company Secretary, Linda Coulter. Euleen Goh, our Deputy Chair and Senior Independent Director is joining us remotely from Singapore.
As I noted earlier, we also have our EVP Investor Relations, Tjerk Huysinga, who will be assisting us with the questions from those participating in the meeting remotely. It's a pleasure to see that we already have a good number of shareholders joining us online and indeed here in the hall. You may have read in the notice of meeting that not only is this meeting open to shareholders, but we also webcast the meeting. This opens the forum to the public and any other interested parties via the shell website. Therefore, we also welcome warmly those of you who are watching the meeting in this way. We've now come to that part of the meeting where you have the opportunity to ask questions.
If I could remind you to keep them short, preferably no longer than a couple of minutes, one or two, so that we can get through as many as possible. For those asking questions via the teleconference facility, I once again remind you to give your name, and if you represent an organization, the name of your organization when asking a question or making a comment. With this introduction, let us move to your questions. Tjerk, over to you, please.
Thank you, Chair. We will start today with questions on the audio line. Operator, can I have your first question, please?
Thank you. We will now take our first question from Sylvia van Waveren. Please go ahead.
Good morning, Chairman. I hope I'm being heard well. My name is Sylvia van Waveren from Robeco, and today I speak on behalf of a group of institutional investors, including NN Investment Partners and MN. To start with, Mr. Chairman, I would like to thank management and board of Shell for their ongoing discussions with us on several topics, including the energy transition, remuneration, and other important matters. On the agenda today is the adoption of the new articles of association. The company will adopt these in order to facilitate the simplification, and it will lead to a range of changes as indicated in your circular and during this today's EGM. We agree with you that a conventional single share structure will enable Shell to compete more effectively.
However, in this EGM, we would like to take the opportunity to make some reflections and provide you with our feedback around the following three topics. Firstly, the share simplification. Secondly, the energy transition. Thirdly, the Dutch heritage. Let me start with the share simplification. This is designed to strengthen Shell competitiveness and to accelerate both shareholder distribution and the delivery of its strategy to become a net zero emission business. Our reflection is the following. From an economic and strategic perspective, the rationale for the simplification is clear to us.
It will lead to greater flexibility for strategic portfolio changes that might be needed to deliver Shell's Powering Progress strategy and an acceleration in distributions by way of share buybacks. However, the Board's decision to align Shell's tax residence with its country of incorporation in the U.K. instead of aligning Shell's registered office and corporate seat in the Netherlands seems to be mainly driven by dividend withholding tax consideration. This leads to my first question, has the Board, in its proposal to align Shell's tax residence with the U.K. instead of with the corporate seat in the Netherlands, considered or weighed other material factors than dividend withholding tax consideration? We could think of shareholder rights in the Netherlands versus the U.K., the inclusion in different European indices, and also the impact of the Brexit.
By doing so, which sectors were considered by the board, and which factors could lead to change the board's position in its final decision early 2022? This leads me to my second important topic, the energy transition, you call it the Powering Progress strategy. It would strengthen the company's ability to rise to the challenges posed by the energy transition. Moreover, Shell assured us that the simplification will have no impact on legal proceedings relating to the climate ruling issued by the district court in The Hague in May 2021. As we know, Shell has appealed against this climate ruling. The appeal court will review all issues raised by the parties in a process we call de novo. That means that both Milieudefensie and Shell may formulate new defense arguments, raise new issues, and introduce new information.
Our reflection to you is as follows. Our basic message that we have been articulating before, and have articulated before to you stays the same. Shell has an important role to play in mitigating climate change, and it is of the utmost importance that the company is clear on how it aims to achieve this energy transition by showing plans, actions, targets, and progress in the short, medium, and long term. It remains, however, unclear whether any perceived inaction or insufficient action by Shell regarding new information can be sufficiently considered by The Hague Court of Appeal, as Shell's corporate policy will no longer be determined in the Netherlands, but in the UK. This leads to my second question.
Can you please confirm to us that the simplification and the relocation will not have an impact on legal proceedings related to the climate ruling issues by the district court in The Hague in May 2021 or any other legal proceedings currently in progress?
S-Sylvia-
Lastly, our third one.
Can I interrupt please?
I hope I'm not overrunning.
Sylvia.
Yes.
You've been asking a very long question, and it's already way in breach of my suggestion of one to two minutes. A number of the members of the audience here feel that I'm not being very true to my opening statement. I wonder if we could stop there, and take your first two questions.
Yeah.
Maybe if you have another question, after other people have spoken, you could come back with that. Would that be acceptable?
That's fine.
Thank you very much.
I'll stop. Thank you.
I'm going to answer your questions basically on the drivers for simplification and indeed the moving of the tax headquarters to the U.K. I'll turn to your question on the impact, if you like, of this simplification on the Dutch court ruling. I think I'll deal with the second one first, and then I will answer some of the simplification question, but I'm going to ask Jessica to perhaps add to my answer. On the energy transition, look, thank you for your endorsement and encouragement of the aims of Powering Progress.
It's a strategy that we're very committed to and very excited about, and we do think it can not just lead Shell, but actually the Netherlands and indeed the rest of the world to the kind of just transition that we talk about. The straight answer to your question is that we do not believe that anything that we are proposing has any impact on the judgment of the Dutch court. You're correct that we have appealed this judgment, but we're also making best efforts to comply with its expectations.
I think you will have noted that in our Q3 results, we laid out how we would cut our Scope 1 and two emissions by 50% by 2030 relative to 2016, which is in excess of what we've been asked to do by the court, and that we will continue to use best efforts to do the same thing with Scope 3. You know, this kind of improvement speaks for Shell, our mantra of continuous improvement. We set out goals, but we always try to improve on them, and I think you will see that as we accelerate into Powering Progress.
I do not believe that the simplification will have any impact on the court judgment, and it will in fact, in our belief, accelerate our ability to move into the goals of the energy transition by thinking about some of the different ways we might restructure Shell more expeditiously than would otherwise have been the case. On simplification, all the factors that you suggested we should consider about both collapsing to a single line of shares and also moving to the U.K. were fully considered, and we did proper cost-benefit analysis on every issue, and I can assure you that it is not dominated by considerations about the dividend withholding tax. There are many factors that have come into play.
The board and management have looked at them from every angle, and we have concluded the course that we've laid out is unquestionably the one that offers the maximum benefit for the minimal cost or risk to Shell shareholders. Maybe, Jessica, you might want to add to that or not.
Thank you, Chair, and thank you, Sylvia, for your question, and it's very good to hear in your own words that you support the rationale for the simplification. In terms of the considerations, as the chair has mentioned, we considered, I believe, all relevant factors over the last several years when looking for the best path forward for the company. On balance, this is a decision that we believe is in the interest of our shareholders first and foremost, and also in the interest of the company.
A couple of factors I would mention. We are already a PLC, and so moving the tax domicile from the Netherlands to the U.K. is a relatively straightforward set of actions, whereas had we tried to do the inverse, which was to bring the incorporation to the Netherlands, it is a much more complicated and complex set of actions that are required. Importantly, our shareholder base is predominantly in the U.K., and had we chosen to move to the Netherlands, there would have been negative implications for our shareholders. That relates to the dividend withholding tax, which I'd like to make just a point of clarification. The dividend withholding tax on our dividends is a tax that affects our shareholders.
This is not a tax for the company, it's a tax on our shareholders, and for some of our U.K. shareholders, they are unable to offset it, whereas that's not the case for our shareholders here in the Netherlands. Had we moved here, there would have been a real material negative implication for many of our shareholders. In addition, we would have likely lost our indexation with the FTSE, which is significant for us as a company and significant for our shareholders. There are a host of reasons, but the dividend withholding tax element is primarily a shareholder issue and not a Shell issue. What I will say is that our corporate income tax position, we do not believe will change as we move from the Netherlands to the U.K.
If you look back in prior years, the amount of taxes that Shell pays, typically on average, our effective tax rate is higher than the OECD average. I just point that out. This is not about corporate income taxes at all, that we don't expect that to be impacted by this move. Thank you.
Well, thank you, Jessica, and thank you, Sylvia. We can come back later to you with some of the other questions, but I'd now like to see if there are any other questions.
Mr. Chair, I will now go for another question which is actually written in the Lumi platform, so I'll read that to you. Then we will go into the for some of the question points. If people want to raise a question, they can walk up to one of the question points, and then we'll come to you later. First we go online. This is a question submitted by MN Services, also on behalf of Pension Fund Metaal & Techniek, PMT. We thank you for the discussion of the proposal in our recent dialogue. As investors with long horizon, our assessment of the proposed move of Shell extends beyond this meeting and beyond the implementation of the proposal. With this proposal, Shell wants to increase the speed and flexibility of capital and portfolio actions.
It is the direction of this speed and flexibility that matters to us as long-term investors. We believe that Shell can and should play a leading role in the energy transition. When speed and flexibility are used to that end, we can be supportive, sorry. In our view, this transition is only possible when Shell operates as a whole, using the old energy to fund the transition to the green energy. We urge you to publish short, medium, and longer-term carbon reduction targets that are in line with a 1.5-degree pathway. Do you share this vision for Shell? Thank you, Martine Kruitbosch, who posted this question by MN Services. Back to you, Chair.
Yeah. Well, thank you, Martine. Look, first of all, you know, I appreciate your observations, if you like, on what I would call the sort of capital allocation process of the company. We’ve actually been very clear about this, I think, in the course of the last 12 months. I think in doing so, we’ve very much increased the capital discipline that we as a Board and management now apply to the decision about how every additional dollar, if I could put it that way, is used for the benefit of the short, medium, and long term in the way you described.
There will be absolutely no impact in many respects on that, if you like, that creed of capital discipline as a consequence of that. You're right that within that, we can actually exercise that discipline with greater flexibility and probably greater power as a consequence of the simplification you've proposed. I also acknowledge the comment you made about using old energy to fund the transition. Of course, you know, there are different views out there, but we certainly are very sympathetic to that approach. We'll listen to all views.
We do think for it to be a steady transition that we have to slowly dial down the provision of the goods and services that our customers in Shell for over a hundred years have depended on us through fossil fuel sources, and dial up those from renewable or alternative supplies or indeed abated supplies, which actually give more and more of our goods and services with the same effect that our customers have enjoyed for over a hundred years, but with less and less carbon. We do indeed publish our short, medium, and long-term carbon reduction pathways that we think are leading to a 1.5-degree pathway.
That is part of Powering Progress. It was part of our energy transition plan that was approved by over 90% of shareholders at our last AGM. We've of course since improved on that, as I talked about in answer to an earlier question. We will at our next AGM, which comes up in May, provide an update to that, an update on progress. As I say, the extent to which this continuous improvement mantra at Shell could allow us to get, if you like, faster towards the outcome that would be best for a 1.5-degree pathway. I absolutely share your vision, and I look forward to sharing that with you more, as we come back in May.
Thank you, Chair. Let us now move to questions in the room. I think there is a question at question point number two. Why don't you start there?
Good morning. My name is Robert Vreeken of We Connect You, Public Affairs & Investor Relations. It's a pity that Ben van Beurden is not here today because Ben was in 1972, he was 13 years old, and at that time, the Club of Rome report was published. We already knew 50 years that the Earth is going to the dogs, and Shell was really aware of it about 40 years ago. We are now in the middle of a climate crisis. COVID-19 is climate crisis. Shell is, within the oil companies, one of the greenest energy companies. In 1 million animals and plants will disappear in the coming years. I advise you to work harder because you were working on hydrogen already 25 years, and you're still not really upscaling it. It's important to work harder.
I advise you to stay in the Netherlands because it's a wonderful, beautiful country, and all the Dutch people are closely watching you. I'm worried about ABP, the Dutch pension fund, which withdrew shares of Shell. That's a very bad signal. It's remarkable that now Shell is leaving the Netherlands, we have, for the first time, a sustainable advertising campaign. I advise you already five years ago to do that and to become the main, the strongest worldwide leader in the field of sustainable energy. Another advice is to create hydrogen oases in the Sahara and in other deserts worldwide with windmills and with solar panels, because then you can upscale the production of hydrogen very cheaply, and you can ship it very cheaply with hydrogen big ships.
Well, ARTIS is due to climate change, that's the Dutch zoo in big problems. Probably as a farewell gift, you can give them a huge amount to support ARTIS. ARTIS is a zoo in Amsterdam, an oasis, and it's a good signal if Shell helps it. Furthermore, we are creating light here in the Netherlands, and that's the car of solar panels. Another suggestion may be to support that car which we're making. There's a lot of work to do. Well, the Dutch investors now have to go to London, and maybe it's a good idea to organize a trip the first two or three years so that we will pay, but that you organize it so that we can come to the next AGM in London. All together, summarizing, please stay in the Netherlands.
That's very important for you and for the Dutch people. Speed up the process you're in, and taking the lead in sustainable energy worldwide. Thank you.
Well, thank you for your question. We will stay in the Netherlands. We like the Netherlands. I personally, as the Chair of this company, have a strong affection for the Netherlands. In order to make this company perform better for the Netherlands is part of the reason why we're making this change. I would remind you that we're only moving, if this were to happen and if you vote for it, the CEO and the CFO and the site of board meetings and executive committee meetings to establish a single line of shares, in a way that will allow us to be much more flexible and protect the interests of all shareholders.
We do expect that our engagement here in the Netherlands will show real leadership to the world about what's possible in the move towards a more sustainable energy future in the way in which you describe. Just in the last two years, we've committed over $4 billion, I think EUR 4 billion, excuse me, to energy transition projects here in the Netherlands, which we think will speak strongly to what's possible here, of course, but in the EU and in the world and worldwide. Of course, you're right. It's important people notice that, and therefore, we are proud of our advertising campaigns. Now, I can't speak to all the suggestions you make about where we might fund things going forward. We receive many ideas, and we're open to all.
We have a very rigorous process deciding which way to fund. We, as you know, are funding considerably in both solar power and hydrogen, and we are very aware of the connection you described. We expect to invest in hydrogen here in the Netherlands and Pernis going forward, as we've spoken about in the past. Yeah, I think we are broadly aligned. Of course, we will make provision virtually for you to attend our AGMs in London, and we hope you can do that, and we would, of course, welcome you if you would like to come to London.
I have one, there's one part of your question I'm not able to address, and I should have given Jessica a little bit of warning on that, and that's your concerns about the Shell pension fund. Do you know that, or is that something we need to go back to?
I believe that's in reference to the pension fund choosing to sell their shares. Is that correct? Is that the reference?
That's correct.
Indeed. That's disappointing for us as well, because we believe we are a responsible company towards the energy we produce today, that the world needs today, which is fossil fuels. 80% of all energy today comes from fossil fuels, and that fuels our lives today, and we're very responsible operator of those assets globally and proud of that role we play in energy system. But importantly, we believe we're a leader in the energy transition, and if you want to be investing in companies that are going to make a material difference at scale and at pace, I think there's few companies that are doing as much as Shell is doing today, and our entire strategy is behind the energy transition.
We prefer our shareholders to stay with us and particularly those that want to drive the energy transition. Thank you.
Yeah, I'm aware of that issue. I just thought it was something different. I would just echo Jessica's comments that we believe that Shell is designed to thrive in the energy transition, to lead the energy transition in the way you described, and therefore, people should be proud to invest in us, as a way of accelerating the energy transition. Clearly, not everybody sees that point, and that's why we need to advertise and do other things. Maybe we can have the next question.
Thanks, Mr. Chair. We're now gonna go back to the phone. Operator, can we have another question on the phone? Again, as the chair has said, can people keep their questions please brief, so we have enough time to answer them. Operator, over to you.
Jasper Jansen, your line is open. Please go ahead. Hello, can everybody hear me?
Yes.
Hello? Okay, very well. My name is Jasper Jansen of the Dutch Investor Association. Thanks for giving me the opportunity to ask some questions. Let me start by saying that we will vote in favor of the simplification today, as this is clearly in the best interest of all shareholders. However, we have two questions that are related to the potential dividend withholding exit tax. First of all, as you are well aware of, I can imagine, is that the proposed bill was amended on Wednesday and now works around some of the issues that were in place in the previous bill, such as the potential violation of tax treaties. Could Shell comment on this new bill and the impact from a cost-benefit perspective that was done in an earlier phase?
Are there any difference there? That's the first question. The second question is also related to the exit tax, potential exit tax, and it is that until today, Shell basically stated that the likelihood of such a tax that such a tax will be incurred is very low. However, a worst-case figure has not been provided yet. My question is, why isn't Shell disclosing this number, so the value of such a tax in a worst-case scenario? And basically, how could shareholder make an informed vote today if this information is not shared? Those are my two questions. Thank you.
Okay. Well, thank you for your question. I'm going to ask Jessica to handle the second question you ask. Let me refer you to, if you like, to the amendment that you spoke about in the Dutch Parliament on Wednesday. I don't think the view that we had in the circular has changed, that the board believes there is considerable uncertainty as to whether the proposed bill will be enacted with or without the amendment, and whether it will ever become law.
Therefore, we still believe, given that very high uncertainty and relatively low probability, that the balance is still very much that it's unlikely that this will happen and cause an increased charge to Shell, and therefore, the benefits of this transaction still far outweigh the possible costs. I don't think we've changed our mind on that. As regards to the reasons why we've not put sort of lots of numbers around it, and I mean, part of the reasons, Jessica will elaborate on that, is that there's a lot of unknowns here.
There's a lot of uncertainties and really trying to quantify things in the face of that is really extremely difficult to the point of misleading, in my view. Jessica, maybe you could say some more.
Thank you, Chair. The Chair's final point, I think is a really important one, which is we need to ensure that we provide information to shareholders that we think is helpful. Given the degree of uncertainty with respect to the final form of the bill, whether the bill would be passed, and then whether that bill would ultimately be deemed appropriate from a legal perspective, and deemed valid, there's a high degree of uncertainty around. If you compound all of that, I think it's quite difficult to provide a range of outcomes that are easily understood and would be helpful to shareholders.
What I'd also add is that these conclusions are based on very careful consideration that we've taken over months of review, and we've brought in expertise here in the Netherlands, and we've brought in expertise in the UK, and of course, we have internal expertise as well from a legal perspective, from an accounting perspective, and it's based on high-quality advice and consideration that we've come to these conclusions that providing any ranges at this point in time would not be necessarily helpful because of the degree of uncertainty, the number of assumptions that would need to be made. Frankly, it would not be consistent with how we typically handle disclosure matters as a company when you have this degree of uncertainty. The important piece is what the Chair mentioned.
In conclusion, we don't believe that this will ultimately stand as a valid outcome, and therefore, on balance, we think the benefits outweigh the potential costs.
Thank you, Jessica. Can we have the next question?
Okay. Mr. Chair, I'm now gonna go online again because there are quite a few questions which are reaching us online. If I may, I'll go and do two questions online, and then we're gonna go back into the room. The first question, Mr. Chair, is from Joel Turbin. "How will A and B shares be simplified when both trade at different prices?" We'd like to thank Joel for a very brief and concise question.
Okay. Maybe Jessica, a brief and concise answer.
So two pieces to this. The first is that markets tend to be very efficient, and with the announcement in November, many of you may have noticed that the difference in price between the A and B shares collapsed and essentially became the same price, more or less. Now that's moving around a bit day by day, but I think for the most part, the market will take care of this. In terms of the final moment that this will happen, should it get approved today and should the board then choose to go forward, these types of transactions and movements with shares have been done in many different instances. There's other companies that have had to do similar things.
It would take place over a weekend, and any final difference will be addressed through the logistics of how we actually execute and make all of the shares one class of ordinary shares. I think the market will take care of most of it. The balance of it, though, we will rely on prior practices and ways of working, so I don't believe this will be an issue.
Okay.
Let me do the next question online, Mr. Chair, if I may. This is more a statement which is talking about the future meetings, AGMs, and EGMs. It's from Robert James and Michael Barnett. "May we have links to future meetings, whether AGM or EGM, by video or webcast or telephone?" "May we have online voting facilities during these meetings? I would really appreciate this." He has also provided us with a suggested answer, which is interesting. "We appreciate your feedback on the access to the meetings. This will be taken into account when considering how future meetings will be run." Over to you, Mr. Chair.
Okay. Well, I can agree with your suggested answer. I mean, of course, we are interested in people's inputs as to how we evolve the smooth functioning of EGMs and AGMs, and we will definitely think about the best way to do things, you know, ahead of our AGM. Any changes that you or others might have, you know, please relay them to us because this is your meeting, and we want them to be a meeting that you feel is well run.
Okay. Let me now suggest we go back into the room. Please, if there's someone in the room who wants to ask a question. Okay, go ahead.
Hello.
At question point number two.
Yeah. My name is Ruben Geerlings. I have two questions. The first one is, can you confirm that after the exchange of the instruments, the shares on the Amsterdam Exchange will still be traded free of stamp duty? The second question is about the options on the Amsterdam Exchange. I contacted the exchange, and they said they couldn't say what would happen to the options until they hear the decision that has been made. For me and I think a lot of Dutch investors, it's very important what will happen to the options. Will they be exchanged one-on-one to the new underlier, or will they be settled? Do you have any idea on that? Are you in contact with the exchange for this?
Well, I'm gonna pass that to Jessica Uhl, but it might be something that Tjerk Huysinga may want to comment on because he's probably closer to some of those conversations. If you want to start, Jessica Uhl.
We do not expect any negative impact from a stamp duty perspective in any of the jurisdictions. On the second piece, on the options, again, there should be no negative impact for our shareholders. All of these things have been considered, and I'm not aware of any potential negative impact from a shareholder perspective or from an options perspective. Tjerk, if you want to add anything to that.
No, I think we need to take it offline, and because I think the other point is actually we will work all through this when this vote actually has come and when actually people have approved it. The answer you've got from the AEX is logical at this moment because they can't actually talk about something which has not been approved and not been implemented by shareholders or by the company. By all means, we can talk later or you can send us an email, and then we'll deal with that in the coming days and weeks. There's no question that we will not answer your question. Thanks.
Okay. Yeah. Thank you for your question. Thank you, Jessica and Tjerk, for your answers. Next question.
Yeah. Let's go, indeed into the room, and we welcome Mr. van Baal at point number two.
Thank you, Tjerk. Mr. Chairman, members of the board. Mr. Mackenzie, nice to meet you in person finally. My name is Mark van Baal, Follow This. We are a group of green shareholders in big oil. Follow This has supported Shell to drive the energy transition since 2015. Last May, our climate resolution, which supports Shell to set targets, emission reduction targets that are truly in line with the Paris Agreement, got the support of one-third, almost one-third of your shareholders. In May 2022, our resolution will come to vote again at your AGM then obviously in the U.K., in London, I suppose. Today, you have our support to move to a single share structure in the U.K.
In your announcement, you assert that a single share structure, and I quote, "Will strengthen Shell's ability to rise to the challenges posed by the energy transition." That's what we want Shell to do. For us, and I think for the world, the single most important challenge posed by the energy transition is to almost halve emissions, global emissions in the next eight years. Global greenhouse gas emissions have to be reduced by approximately 45% by 2030 to have any chance to reach the Paris Climate Agreement. We support Shell to play a leading role in that. According to the Paris Accord, the IPCC, the Glasgow Pact, the Dutch ruling, Dutch District Court of The Hague, and almost one-third of your shareholders, absolute emissions have to go down by approximately 45% in 2030.
Please be aware this is in the next eight years. These decisions to achieve this enormous overhaul of the entire global energy system has to be taken in the next couple of years in your tenure, Mr. Mackenzie. In your tenure, you have to take very bold and brave decisions to drive the energy transition to achieve the Paris Agreement. We Follow This and an increasing number of shareholders therefore need an answer to the following question. This question is. Will Shell's current targets reduce your net absolute emissions by around 45% by 2030?
Okay. Well, great to meet you as well in person, Mr. van Baal. I'm certainly aware that some of the biggest challenges in energy transition will be faced within the next, as you put it, eight, nine, 10 years. In accepting the job of chair at Shell and thinking about that, it's part of the reason why I wanted to do it, because I believe that what Shell does in the next that period will define a lot of progress for not just Shell, but for the rest of the world. I feel it's a real privilege to be given the opportunity to Shell to chair Shell at this very important time. I think you've described it very well.
No issues there. You know, I think you're well aware of our approach, that you know and I've talked about continuously trying to do better than we think. It could be possible today. Maybe we can do more tomorrow, provided we can bring, importantly, other stakeholders along with us, governments, and most importantly, our customers. I hope you've noted what I mentioned earlier that we now, I know, is perhaps not quite as quick as the way you're describing it, but relative to 2016, we expect to halve our Scope 1 and 2 emissions by 2030, and we continue to work extremely hard on our Scope 3 emissions.
I think Shell has pioneered the approach of working sector by sector to show how we can change our offer to our customers so that they can continue to do their business but do it with emitting less and less carbon. We have a wide range, and I've been incredibly impressed by the amount of conversations that are happening sector by sector by sector on our Scope 3 emissions to bring that about. I'm excited in two ways, 'cause one, I do believe that is where the game will be won or lost in your language. We're absolutely on par, playing to win, and there's lots of great ideas.
You know, the fascinating thing is for shareholders in Shell is it now gives us to actually play in many markets that we're not currently present, and therefore open up new profit pools for our company in a way that really makes me extremely optimistic about Shell's future. Thank you for your question. I think we're in many ways aligned, maybe not in precise numerical terms, but directionally, we most certainly are. I thank you for your support of this change because you are right. The pace that we have to move, the way that we are going to have to, if you like, pull back from some businesses, get in much larger into new businesses, into new sectors, will require a lot of change.
We want to do that transparently with our shareholders and look after shareholder returns. What's on the table today is a mechanism that will allow us to do that in the way that you would like, but also in a way that protects our ability to offer a decent return to our shareholders and preserves our desire to exert a huge level of capital discipline. Thank you.
Again, the question was, will your total emissions be down by 45% in 2030? I take this answer as a no or an I don't know. Luckily, there's an Australian research institute who went through your Powering Progress program, through all your publications, and they projected your emissions in the next 10 years. Their conclusion, and I advise you and all shareholders to read this report. It's published by Global Climate Insights. It's an Australian research institute. They concluded that your emissions in 2030, based on your current strategy, that these emissions will not be down. No, they will be up by 4%. That's an issue your shareholders have with you right now. Mr. Mackenzie, somebody has to tell you the truth.
Yeah, yeah. No, but let me. Look, I mean.
Your shareholders are losing their patience.
No.
Shareholders are losing their patience. You need to decrease your emissions.
Well, I know.
You have this.
I know we're talking about absolute versus relative emissions. I don't think you can take it as a no. I think we are trying very hard to substantially reduce the carbon content of the products that we offer while continuing to serve the markets and do provide all the services that Shell have provided for over 100 years. To the extent that we're able to do that, we will have shown the world what is possible in moving towards decarbonization. We may measure it differently. We may feel more strongly about the carbon intensity of our products than you do. I don't think you can take it as a no.
I'm sure we'll have this debate again when we come to our AGM, when we publish our update on Powering Progress, and I will make sure your concerns are properly addressed to the satisfaction of all shareholders. Thank you.
You're right. Looking forward to see you in May.
Okay
in London.
Thanks, Mark. We will now go back online again because we've got a couple of questions online which I'd like to re-read. We will do two questions online, then we will go onto the phone again because we still have Sylvia waiting. The first question online is from Maureen Ann Brightsyn. We have listened to several questions which major on the move to green energy, which we feel is not really relevant to the purpose of this meeting. We encourage Shell not to be deflected by such pressure, for pressure is what this is. Please can you be encouraged to consider special dividends or increased dividends instead of share buybacks? These are more value to the small private investor. Thank you.
Well, thank you, Maureen. In principle, I agree with what you're saying, that this is, there's quite a narrow purpose for this meeting about, you know, about the collapse of the A/B line and the move of our tax residence to the U.K., or changes to the Articles of Association that enables the board to consider that as a possibility. You know, we will not be deflected by pressure to actually in some way harm the returns to our shareholders. That, of course, is important to us, as is capital discipline.
However, we do believe that if we get the energy transition right, we will be able to do it in a way that is enhancing to shareholder returns, as well as clearly doing the right thing, by the way, of where some of that pressure is coming from. Hopefully this will be, if you like, a marriage made in heaven, and that's very much our intention. You're right. This meeting should focus on the simplification that will allow us to drive faster into the energy transition while looking after returns to shareholders.
Now, I'm well aware that the right way to return and we should return in this environment excess cash to shareholders is always a matter of some debate between different classes of shareholders and some prefer buybacks and some prefer dividends. We always have to figure out what is right. At the moment, of course, we feel that our shares are relatively undervalued, and therefore, buying them back is a very sensible thing to do as we are able to return more money to shareholders. You know that that's our intention. We've already announced that.
Now we've received the proceeds from the sale of our Shell business in the United States that we will return the vast bulk of those proceeds via a buyback in the coming months. Of course, if we agree with this proposal and we enact it, we can return them much quicker than would be the case if we're doing it through, with still the two lines of shares intact. We have, I think, moved quite quickly in recent past as we've restored the balance sheet to health to increase our dividend by nearly 40%. We've also, I think, committed to a 4% annual increase in dividend per share.
In that way, I think we're doing our best to look after the small investor who thinks the way you do, as well as some of the other considerations and value for money from buying back our shares. I don't know, Jessica, if you want to add to that. I said a bit more than I thought I would, but
I think that's been well covered. What I'd say is that we again consider each of these options we have in terms of returning cash to shareholders and the different ways we can do that. Of course, in the second quarter, we did increase our dividends. We thought that was an important piece of our shareholder distribution story. And so we recognize dividends are important, and that's why we made the change in Q2, that's why we have a progressive dividend. Looking forward, we will continue to consider what is the best way of returning cash to our shareholders and increasing total shareholder returns, and I expect dividends will continue to be an important piece of that.
Thank you.
Thanks, Mr. Chair. Thanks, Jessica. I will go now to another question on the line. We have a question from a Dutch shareholder, Jos van Eeren, he's a private investor: If the resolution is adopted, will there still be a shareholder meeting in the Netherlands? If not, will there be a link to the big screen in the circus theater or something else? We just want to keep close to this wonderful company. Thanks in advance.
Well, well, well. Thanks, Jos. I mean, and look, we have to take account of all these suggestions as we design if we go ahead with if the vote is won and we go ahead with the things that we're talking about today. You know, because we do want to keep this wonderful company close to this wonderful country. You know, it's important to us. You know, we do really believe that the future of Shell will be far better if we retain a strong Dutch or Netherlands heritage and we fully intend to do so. We want to remain alongside you and you alongside us. I welcome these suggestions, and we'll certainly take them very seriously because we absolutely share your desire.
Thanks, Mr. Chair. Can we now go back onto the audio line, and then we'll come back to question number two. First the audio line, because I know Sylvia is still waiting. Operator, back to you.
Sylvia van Wavere n, your line is open. Please go ahead.
Thank you, Mr. Chairman, for giving me a second chance to raise the third question that we have, and I would call it the Dutch heritage. We also noticed there's a new development around the exit tax charge, and you already received earlier in this meeting a question about that. You say there's a lot of uncertainty around this tax charge, and we agree. It's difficult for us to make an estimation what the effect of the amendment is, and we can only speculate at this moment. When we do that, a potential tax liability risk of EUR 1.15 billion might persist pending approval of the bill in Dutch Parliament and possible court proceedings. This amount is much lower than we previously estimated before the amendment.
However, we understand from fiscal expert whom we spoke that the chance of materialization of the claim has increased by the amended bill. My question is, can you confirm to us that you will well balance this exit tax charge and all the developments around it in your final decision, the beginning of 2022, when the board will make a final decision of installing a more streamlined corporate structure of Shell? Before you answer this last question, I would like to take the opportunity to thank you, Chairman, and to wish beterschap for your CEO. Thank you very much.
Okay. Well, thank you, Sylvia. Yes, of course, we all, I think, I'm sure everybody here would wish Ben beterschap as well, yeah, you know, and yeah, a fast recovery. I think to your point, yes is the answer to your question. You know, today we're voting simply on a change to the articles that will give the board the chance to decide as to whether we move forward. Now, clearly, under current circumstances and the way we're having this debate is that we feel as a board pretty strongly that we're likely to move forward.
When that time comes, you know, we absolutely will look at circumstances as they are when we come to make that decision, and we'll weigh all the things that you've mentioned very much in the balance before we actually take that decision. You have my commitment to do that. It would always have been the case. I mean, you know, we as a board like to be fully up to date when we make any decision. Right now, of course, the direction is clear. Today we're only voting on giving us the power to make that decision sometime in the future. Thank you.
Okay, now let's go back into the room. Question point number two. I know someone is waiting there eagerly.
[Non-English content]
[Non-English content]
[Non-English content]
[Non-English content]
[Non-English content]
[Non-English content]
Mr. Chair, did you get the translation?
Yeah, no, I'm fine.
Okay.
Look, I mean, clearly. Just a minute. I need to switch this off. It gives me feedback. Good. Look, I mean, clearly, this is a subject that is well outside the remit of this meeting. You know, there is no impact through this change in the administration of the shares and the location of the CEO and the CFO and Board meetings, I believe, you know, on some of the matters that you described. That's not that I'm not sympathetic to them. Of course I am.
I can assure you that the board gets regular updates on the situation in Nigeria and the Ogoni, and, you know, we have just this week had a board meeting. We had a special session on this. When I say in the answer to the previous question that all factors will be considered when we make the final decision about whether to enact the power we're asking for through these changes to the articles, then I can tell you these thoughts will be present, but I think, with some confidence, I could say that the impact is not material or even exists on the matter that you described.
That's not to be unsympathetic towards it. This is just a higher level administrative change that is important for the flexibility of Shell. If some of that flexibility means that we can be sympathetic to the issues you're raising, then of course we will be.
Thank you, Chair.
Okay.
Question point number two. [Non-English content] I have a question here online. Richard Trevethick has asked a question here: given the huge investment needed and short timescale available to transition to renewable energy, would it not make sense to reinvest the remaining $5.5 billion proceeds from the Permian disposal to accelerate the transition to renewable assets? And could this be put to a shareholder vote?
Well, look, the reality is that your company at the moment is in great shape. We have very strong cash generation, and we do have the cash resources as required to accelerate the transition to renewable assets, and that the ability to do that is in no way affected by our decision to return the proceeds of the Permian disposal to our shareholders. You know, we obviously have many shareholders online or in the room who are interested in the value of their shares and the cash returns from their shares. We look after them in two ways.
We provide strong cash returns and we invest for the future and our capital discipline and our ability to do that is honored by making this return to shareholders. Our ability to thrive in the energy transition is also honored, I assure you.
I will do one more question here on the screen. It's a follow-up question from Meneer de Vries from the VEB. It actually is based on similar sort of question as we had earlier. Given the low valuation of the shares, can Shell promise to accelerate the $7 billion buyback program immediately after finishing the simplification up from the $1.5 billion tranche that was announced recently? What is the expected date of announcing this? Mr. Chair.
Well, I believe so, but I would certainly defer that to the Chief Financial Officer. What do you think, Jessica?
The simplification, one of the main benefits of it and objectives of it is to facilitate the most efficient way of returning cash to our shareholders through share buybacks and other means. Should we go forward with the simplification, we'll have greater ability to execute share buybacks, and we are looking to do that as quickly as possible, of course, subject to board approval. This vote today is in service of our ability to, as quickly as possible and as efficiently and low-cost as possible, return cash to our shareholders. We believe at this price it is absolutely the right thing for us to do as a company.
Thank you, Jessica.
Okay. I will now go back into the room. I think there's another question at question point number two. I see. Is there a question at question point number one as well? Yeah. Is there someone at question number one? Okay. I'll go first to question two, and then we go to question point number one. Thanks.
Good morning. [Non-English content]
[Non-English content]
Well, thank you for your question. Of course, I'm aware that there are many groups of stakeholders beyond the shareholders who are affected by Shell and may wonder if they're affected by the decisions that we might take if the resolutions are passed today. I don't expect the protesting or the concerns that you raise to become any quieter as a result of this change. I fully anticipate that we will meet the things that you're talking about in London and continue to meet the things that we see here in the Netherlands for a long time. We, you know, we live in a democracy.
You know, we believe in democratic processes. We believe in the right to protest. We believe that we should listen to those things, and we try and build them in as far as possible into our strategies, into how we talk about Powering Progress, which also talks about powering lives, if you would like to read it in full. We feel that we have an important role to play in showing the world how we can justly move towards a lower carbon future. Therefore, we believe that Shell should remain a strong company to provide that leadership. We're undoubtedly stronger by hearing those protests and changing as we go along. We will not always agree every way, everywhere, but we may well find compromises. That's
I don't think there's more I can say than that. We do listen, but we have lots of people who have different ideas that we have to triangulate to find the best way to move forward, to keep Shell strong for the future, which we think is critical, for the world, to achieve a just transition in towards lower carbon energy. Thank you.
Well, let's see what happens.
Thank you very much. I think we're gonna go to question point number one here now in the room. We will continue, I think at question point number one as well, because there's another question there, isn't there? Okay. Thank you very much. Sir, you can go ahead.
Thank you very much, Mr. Chairman. I'm Michiel Hardon. I'm the founder of Gast aan Tafel , and that's Guest on the Table. That's an organization which helps to integrate the refugees in the Dutch society. I had the pleasure some almost 50 years ago as an alderman of the city of The Hague to provide you with the building permit for your head office. That was in the late 1970s, and I could not imagine that I would stand here at this meeting with a change of articles for moving your head office to England. I very much support that move because I think it makes sense. I'm very concerned about the publicity around this concern, this move because the publicity of Shell in the Netherlands, and the earlier speaker actually said the same, is not very good.
You gave her a very nice but very general response, and I would like to give you a chance to give a very much more much more basic response with something really which could change. That is because of my organization helps the refugees that are the so-called statushouders, the refugees which have a status in the Netherlands. Many of the young statushouders belong to the poor part of the Netherlands, and they very much need education.
What would be nicer for Shell, just in the whole framework of this move, that you say, "I want to establish something for the young people in the Netherlands, and university for the future, and Shell University for the Future to give, deprived people, young people a chance to get a nice job maybe with Shell or with other companies or in other places." That would be very concrete, and I'm most happy with my organization to help you form that and use your great interest. You said you're a very great friend of the Netherlands. Here you can show, Mr. Chairman, your friendship for the Netherlands.
Well, thank you very much for that suggestion. What would be helpful is, of course, we get many such suggestions and we take them all seriously. If you were able to write to me with that proposal, then I would certainly put it in front of the people in Shell who consider the possibilities for funding opportunities like that. But I would just add that, to remind you that, you know, we will be a very significant part of The Hague, as we have been and as we will be going forward. It is not really affected, in my view, by this change.
We're leaving our global headquarters of our upstream business, of our integrated gas business, of all of the work we're doing in the energy transition in The Hague. Our projects and technology headquarters will be there. Of course, we have a large research activity which stays in Amsterdam. They will be, I would imagine, serious employers well into the future, right across the strata of Dutch society, where there'll be roles for young Dutch scientists, engineers, and people from all backgrounds, including in the arts and humanities, people with high levels of education, people with not so high levels of education.
I don't think that changes, and nor do we want it to change because this company has been built by these people along with other people around the world, and we want its future to be built by these people. We will, I think, stay warm and friendly, and I will be a regular visitor to The Hague because of that. If you could write to me with your proposal, then we will give it fair consideration. Thank you for your suggestion.
Yeah, if you can leave your details with the lady there or one of my team is here, Mr. Van Loon, he will take your details, and then we'll reach out to you, and then we can take it from there. Thank you, mister, for your question. We will now go. I actually think, is there someone else here on question point number one? Yes. Okay. Go ahead, please.
Thank you, Mr. Chair, for the ability to ask questions over here. You've just expressed that you take these general meetings very seriously, as well as the democratic process that's associated with it. However, I would like to know if you already have assured the 75% of votes in advance of this meeting. The reason I'm asking that is that at least Mr. van Beurden, who is unfortunately ill today, has given the impression that it's a done deal since already a week and a half ago. It became clear in the Dutch media that he has put his house for sale.
I'm sure that's a private matter, but as the CEO of Shell, that's very visible and not very helpful in advance to this meeting.
Okay. It is a private matter, and you know, as private individuals, we make changes about where we want to live and where we want to invest through the course of our lives. That is, in my view, a private matter. I think if you wouldn't mind, I'd rather not comment on it.
However, the question was if you have already assured 75% of the votes in advance of the meeting.
We will reveal the proxy votes once we've heard from you, and then we will reveal the full outcome. I'll cover this at the end of the meeting when we bring your votes together with the proxy votes in the next day or two.
Thank you.
Do you want to?
Yeah. I would just add one point that the proxy votes do not become final until the deadline for the proxy votes, which was just on Wednesday. We don't get final proxy votes until then. Of course, the final votes of the meeting are not tallied until we take into account the votes at the meeting, both online and present in the room. Thank you.
Thanks. I'm just checking in for the room now. Is there anyone else at question point number two? Yes, there is someone at question point number two. Why don't you go ahead, and then I'll have one more question here online, and then we'll check the room again. Question point number two.
Thank you. Dear Mr. Chair, dear members of the board, thank you for having me. Forgive me if there's a slight degree of repetition in my question because my question was sort of just asked two questions ago while I was sitting here. I've slightly adjusted it, but it ties back into the issue of share buybacks. I'll read my original question first, and then I'll have some additions to it. To my...
In light of your recent announcement, saying that a single line of shares will allow Shell to become more effective as a company, as a competitor, but also in their challenge to play a leading role in the energy transition, I imagine that for some shareholders, returning money back to shareholders in the short term may be seen as a lack of imagination to create new business models. Therefore, in light of long-term value creation, I wonder to what extent has Shell considered investing part of the $7 billion or the billions of dollars generated from the sale of Permian assets in the United States, in, for instance, the energy transition before it decided to return that money to its shareholders by way of share buybacks?
I'm not sure there's much I can add to the answer in the previous question. I mean, we do have ambitious plans to invest in the energy transition. We have a strong balance sheet now, and we're strongly cash generative. We are able to fund these in the way that we believe is appropriate, and I've talked about that in answers to other questions. Therefore, we think it's appropriate in our relationship with our shareholders to return the proceeds from the sale of the Permian in the United States to our shareholders.
In this case, as you've heard, we feel that the most efficient way for all shareholders to do that because of our view of the Shell share price is to do it through a buyback.
Thank you for your answer.
Eric, can I just.
Yeah. Yeah.
I'll add a couple points to it as well.
Well, maybe I can add.
Just to-
Just quickly. I'll just quickly, and then you can go back.
Go ahead.
The other point to keep in mind with the share buybacks and the return to shareholders with the sale of a large asset like the Permian is we've basically sold future cash flows, and those cash flows would be used to fund distributions to shareholders in the future. There's a logic around buying back some portion of the shares when you've divested a large asset. That's also part of the thinking that those cash flows you've essentially accelerated, and to use that to reduce your share count is a reasonable thing to do for as a company.
The other piece I would say is that our entire strategy is behind the energy transition, and there's not a part of Shell where either our CapEx or our OpEx is not being directed towards making the company a net zero emissions company by 2050. We just finished our planning process with the board this week. If you look at our total spend as a company in terms of CapEx and OpEx, the largest growing area for us as a company-wide, is our spend on energy transition. In the next five years, that's looking to grow by some 80%. We're. There's a lot of imagination in this company in terms of how to drive the energy transition.
Across the board, whether it be our upstream business, reducing methane emissions, our LNG business looking to deliver low carbon, lower carbon tons to the world, or in our downstream business, repurposing them, such as Pernis, to make them the largest biofuels or one of the largest biofuels producer in Europe. Across the board, we are investing significantly in the energy transition. I think we can achieve both in terms of what's right for our shareholders, what's right for the financial framework for the company, as well as to drive the energy transition.
Thank you. That's very helpful. Last thing I was wondering is just in your considerations, and I'm sure you've considered everything very well, you have all the expertise, just in light of criticism that has sometimes been uttered in consideration of share buybacks, when it relates to a large share of allocated capital, have you just considered that it can show a lack of faith in long-term progress in a sense? I understand that this may be repetitive, but I'm just asking if you can clarify.
No. Indeed.
Yeah.
I think those are. Sorry.
No, go ahead.
Sure.
Go ahead. No, you go ahead.
Sorry.
Go ahead, Jessica. No, go ahead.
Sorry. Apologies. Those are fair questions to ask, and that is consistent with kind of capital allocation principles you should take into consideration what's the best use of this cash. I did try to further illuminate the considerations. One is around future cash flows and therefore future demands for dividends in the future and to take that into consideration in terms of how you balance that. Then you look overall in terms of where do you need resources at the moment. As the chair has mentioned, we're doing very well as a company this year. We're producing the most cash in our sector quarter on quarter, so we have the resources to invest significantly in the energy transition.
As a company, we do need to balance these various demands or these various objectives as a company. We need to reward our shareholders, we need to be compelling for them to invest in us, and we also need to drive the energy transition, and we need to have a strong balance sheet. I think what we're achieving with our capital allocation is achieving all three of those objectives. Thank you.
Thank you.
Yeah. I would add that, you know, I understand where you're coming from and, of course, I hear these debates all the time. This is a company that is now investing with huge prudence and discipline, you know, $20 billion of capital and some per year. We have enormous imagination and of course challenges to where we invest that. I don't think the way that you characterize the buybacks as being a sort of evidence of a lack of imagination, I think if I've caught you right, is correct in the case of Shell.
I didn't say that they were. I was saying whether you considered that some shareholders may see it as such.
I accept that some shareholders may see it as such, and I'm saying I would encourage you to see it differently in the way that Jessica and I see it.
Thank you both.
Thank you for the question. I think there's one more question in the room there, but let us go online first, because there's one or two questions here online which I'd like to read first. We've got another question from Michael Barrett, Robert James. I notice in columns of lists of quoted companies that Shell has negative price-earnings ratios. Is Shell depreciating the value of its reserves? Otherwise, it appears as if dividends are really not being covered. While Shell tries to apply a progressive dividend policy, will it try to cover the dividends?
I'm gonna pass this to Jessica, but we do cover our dividends splendidly if I may say so, and are hugely disciplined about that. Jessica.
Robert, thank you for your question. I must admit, I'm not familiar with the data that you're looking at, so I would suggest that we follow up with IR. Let me be clear, we have a positive P/E ratio as a company. We have the earnings and the cash and the distributable reserves to pay our dividends and to pay it for some time. There's no concern around the strength of the financial framework or our capacity to meet our dividends now or any time in the kind of the near future based on our forecast. Absolutely no issue in terms of earnings and cash to cover our dividends.
Thank you. I'll do another question online, and then we'll go to question point number two. This is from Jennifer Fitzgerald Edwards. Will our company meet the environmental standards that would be required if its headquarters remained in the Netherlands, particularly those required as a result of the recent court ruling? Chair.
Well, look, I can't comment on standards in detail, but believe me, that this proposed change has no impact on our obligations under the recent court ruling or on any environmental standard around the world. We have considerable operations here in the Netherlands and we continue to operate them to the highest standards, and that will not be changed one bit by the possible change in location.
Okay, we take the question from question point two then.
Yeah. Thank you very much for the ability to ask a question. Mr. Chairman, members of the board, my name is Rose Riker, and sadly enough, I didn't learn out of my head the question, so I'll read it. The first question of this general meeting already addressed the concerns related to the court case, the Dutch court case, and the move to England, so I already understand your answer on this. I would like to add a question on this matter of legal risk. The Dutch court case indicates increasing climate litigation risks. As such, climate litigation constitutes a significant risk for the company and its investors. Taking the necessary steps now will mitigate this risk and limit future liability.
Therefore, my question is: Can you elaborate on the future climate-related legal risk for the company and its investors, and does this change due to the move to England?
I don't think so. Our move has nothing to do with the considerations that you're talking about there. We're a global company. We operate in many countries, and in all of those countries we obviously face local standards and local challenges. We also have plenty of plaintiffs who seek to address through many courts in many places, and through protesting, which I've said is fine, the perceived, if you like, outcomes from Shell. This is not about any of that. It's simply about being able to become a more dynamic company with a more transparent relationship with its shareholders.
I would argue, on balance, by doing that, we'll be able to even better protect our assets and to reduce our liabilities and risk, in some cases through, I think, going faster into the energy transition.
All right. Thank you very much for your answer. I hope you will truly put all your pressure in front of the energy transition. Because Shell's not yet truly aligned with Paris in this moment, I think you should really be afraid of these legal risk. Such risk can only be avoided by taking bold and brave decisions related to the energy transition. I think Shell is really able to do this, but doesn't show it yet. Thank you.
Okay. I appreciate your views. I think we are going to be bold and brave.
Thank you.
Thank you at question point number two. Is there any other question in the room? I think there's another question at question point number two. Go ahead, question point number two. I don't see anyone at question point number one. If people want to ask because we're getting to the end here, which I think is appropriate. We now first go to question point number two. I don't have anyone online, and I don't have anyone on the phone anymore. Let's conclude here with question point number two. Go ahead, sir.
Thank you, Mr. Chairman and board. I would like to raise a different point from what has been raised before. My name is Peter Bonk, and I have been involved on and off with this company for more than 40 years from personal experience, and my family have been involved a considerable more than that. We have some experience behind us. In the Financial Times, two days ago, there was an article about actually getting young people interested to work at energy majors. That article said actually that it's met with considerable resistance at the leading universities, where the students no longer want to work at majors.
That brings me to my question, because it's all well that you actually restructure your company and make it more efficient from a capital sense of view, and in my belief, this should have been done years ago rather than now. Better late than never. The biggest challenge in the energy transition is not actually financial capital, it's human capital. Shell lacks in that area. From personal experience, I can say that the employee value proposition is not very good at Shell, and I urge you to reconsider that. I've also written to you personally on October the twelfth, and I urge you to actually reconsider my letter as well in that respect.
What I think is needed here is that you will not be able, as most experts say, to get all that new staff from new resources. You need actually to transform your existing staff to drive the energy transition forward. Otherwise, you will lack human capital, and you will not actually reach your goals, which I, as well as other investors, would like you to reach. I think that is the main challenge by Shell. Because it's all very well to speak about capital and to speak about rationalization. It makes it easier to run the company, I understand that. But the real strength of the company is not only from the top, it's actually at the middle management level, where things make or break, if you understand my meaning.
Mr. Chairman, I would say that this is only a small step, and I would urge you to make a big step forward and to stop your constant reorganization for the sake of reorganization in this company, and actually lead it on a more streamlined road to transition and redeploy your people wherever possible. As well as advertising to the outside world what the real value proposition of Shell is. Because the current understanding, as this Financial Times article actually mentions, is that the best way for young people with much talents would be just join Shell for a few years, learn everything there is to learn and get the hell out of there.
That is not the road to the future, because then we'll end up with a company with a heap of capital that needs to be broken up and distributed elsewhere. Thank you.
Okay. Well, thank you for your question or your comment. Look, I agree with you. You know, we're only good as the people who work for us, and it's only when these people can grow that the company can grow. We had a board meeting this week. We actually had a couple of sessions on this. I've read the article in the Financial Times to which you refer. I think it was a little bit exaggerated as it affects Shell, and as somebody who's worked in the energy industry all my life.
I don't dispute that it's harder perhaps to attract talent than it might once was because of the concerns, if you like, that are driving us to be so thoughtful and so determined around the energy transition. In the reviews this week, what I did learn, and the board learned, is that graduate recruitment is going well in Shell. The one thing couple of things where I would disagree with you is that, of course, I get to meet a lot of Shell staff. There's a lot of them who've spent their whole lives working for Shell. I don't think we lack that keeping power, if you like, as well as attracting. These people are phenomenal people.
They are so committed to the energy transition. They're so committed to doing it in a socially responsible way. They're encouraged in Shell to bring all those values through the door, not to check them at the, you know, on the way in, and to make them play out fully in the way in which we do our business and develop our strategy in Shell, and long may that continue. I also agree with you that to win in the energy transition, we are going to have to create a new class of employee, one that has a whole new set of skills that you can't just buy on the marketplace. The great thing about Shell is by having such a strong graduate recruitment, such strong people, we can and will retrain people who previously would've been looking for oil.
They'll now be looking for places to store carbon. Previously who were selling molecules, they'll now be selling electrons. That is perhaps in many ways the most exciting part of the journey 'cause frankly, even if some of those people do leave, then that may be another one of the gifts that Shell can give to the world. I appreciate. I haven't read your letter. If you'd like to resend it, then I would read it, but we're aware of the risks, but we are on top of them, and I think relative to the Financial Times, we're doing okay, but we're not complacent, and there's lots to do, and it's very important.
Thank you. Again, we have one of my team walking around here. We can make sure that you have the right details, so we can actually get your letter to the chair. Thank you for your question.
I think I should now.
I'd like now to wrap up. Sorry, Chair.
I should now conclude the meeting. Then we'll get to some of the more formal parts of it. I think we've covered all the questions presented, that brings us as well as to the end of the meeting onto the voting. Look, many of you will have already sent in your proxy cards, and so you don't need to vote again. As I mentioned earlier, voting has been open throughout the meeting, and it's going to remain open for a further 15 minutes following its conclusion. If you are still unsure how to vote, there are instructions which are on the circular if you've got it with you, and they're on page 26.
You know, as a reminder, we did earlier on take the notice of the meeting, which is in the circular, as read, and so I'm not gonna read out the resolution in full. I can now that we've concluded this meeting, tell you about the outcome of the proxy votes, which were submitted in advance of today's meeting. We received 4.45 billion votes, and that represents approximately 57.95% of the company's issued share capital. 99.78% of these votes support the resolution. For those of you here in the room who still would like to vote, Linda Coulter, the Company Secretary, will now explain the voting procedure. Linda.
Thank you, Chair. Thank you for your attention in the room, ladies and gentlemen. Please cast your vote by completing your white paper poll card that was handed to you at registration. If you agree with the resolution, place an X in the box marked for, and if you do not agree, place an X in the box marked against. If you wish to abstain, place an X in the box marked vote withheld. Please note that the vote withheld option is not a vote in law and will not be counted in the calculation of the votes for or against the resolution. The scrutineer will establish, from the register, how many shares you hold and will assume that you wish to vote all your shares in the way you have indicated.
If you do wish to split your vote, please speak to a member of staff at the registration desk. If you have lodged a proxy form, as the chair noted earlier, you do not need to complete a poll card unless your proxy is not present or you wish to change the way your shares are voted. Please do remember to sign your card and add today's date, which of course is December 10th, 2021. If you do not sign your card, your votes will not be counted. Please deposit your card in one of the ballot boxes, which you will find clearly marked as you leave the auditorium. These boxes will be removed in 15 minutes or earlier if I'm satisfied that the voting process has been completed.
The final results of the poll votes, including the tally of votes cast by the shareholders attending online today, will be sent to the Amsterdam, London, and New York Stock Exchanges, filed with the U.S. Securities and Exchange Commission, and shown on the Shell website tomorrow morning or later today if time permits. Thank you for your time and your votes, and back to you, Chair.
Well, thank you, Linda. I'm sure that's very clear. That, ladies and gentlemen, brings us to the end of the meeting, and I'll now leave you to your voting. I formally declare this 2021 general meeting closed. I would like to note that while the consultation with the relevant staff councils needs to be completed and the board still needs to take a formal decision on whether to proceed with the simplification, your board and I would like to take this opportunity again to emphasize how important the Netherlands has been and will continue to be so to Shell.
We've always been, and will continue to be, very proud that the Netherlands is part of our heritage, and we certainly, as I explained in some of my answers, plan to retain a major presence here. Should this meeting end up being our final general meeting held in the Netherlands, we would also want to thank you for the years of hospitality and the spirit of engagement clearly present in every general meeting held here, including today. Should simplification proceed, we certainly hope you will join all future Shell general meetings, and I take all the contributions and suggestions you put in front of us today, and we'll look at them all in a constructive way so that we can continue to engage with you, and you engage with the board notwithstanding the location of those meetings.
Thank you all for attending and may you all have a safe and happy holiday season. Thank you.