The Business Strategy’s 3 Main Pillars
Shell’s business strategy is based upon three main pillars: growth, transition, and upstream. Each pillar describes the plan the company has in place to reach net-zero emissions. The €117.38 billion ($142.05 billion) company has laid out one of the most in-depth plans from any major oil company.
“Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society,” said Royal Dutch Shell Chief Executive Officer Ben van Beurden.
The first pillar of growth places a large emphasis on marketing and renewable resources and energy solutions, such as investing in low-carbon fuels, nature-based solutions, electricity, and hydrogen. To achieve this, the company will improve marketing efforts by $6 billion on the lubricants business to increase customers to 40 million by 2025, compared to the 30 million customers the company currently has.
In addition, the company plans to accelerate the amount of EV charging stations to 500,000 by 2025, compared to 60,000 EV charging locations today. The EV charging station market is expected to grow at a CAGR of 39.28% between 2020 and 2027. Furthermore, the EV market is becoming more lucrative because an EV produces less emissions in its lifetime than average gasoline-powered vehicles.
Shell’s transition pillar focuses on integrated gas, chemicals, and products. The company stated it plans to invest and lead in the liquified natural gas (LNG) market and support customers with the same ambitions of net-zero emissions. Moreover, the business plans to reduce production of traditional fuels by 55% by 2030.
Upstream, the last pillar for the new business strategy, is the business looking ahead at gradually reducing oil production by around 1% to 2% per year.
This extensive plan has created large expectations that the business will have to work diligently to meet. That said, the overall mission of reducing emissions through the use of renewable resources, creating more EV stations, and researching other non-carbon fuels is a bit surprising coming from an oil giant.
However, the implementation of all of these strategies, and the other ones not discussed, can have a major impact on the world. In fact, a study from Harvard University revealed that in 2018, 8 million people died from fossil fuel pollution, which is nearly the 9.5 million cancer-related deaths in the same year.
If the company can deliver on the plan and make the transitions, it will be a small step toward reducing fossil fuel emissions and would prove that it is possible for the businesses to find sustainable, renewable energy resources.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.