A little less Royal, much less Dutch… Yesterday, oil titan Royal Dutch Shell said it planned to move its HQ from the Netherlands to the UK and to shorten its name to Shell, ditching “Dutch” after 114 years. Dutch officials were “unpleasantly surprised,” but investors seemed pleased: Shares jumped 3% yesterday on the news.
A Shell of its former self… Shell’s under pressure from investors and courts to transition to renewable energy. Last summer Dutch courts ordered Shell to reduce emissions. Last month activist investor Third Point asked Shell to split its oil and renewable energy businesses to facilitate greener investment. Shell’s not the only oil bigshot feeling pressure:
Exxon is spending $1B+/year to develop emissions-reducing tech after activist investors joined its board. BP spends $5B/year to develop low-emissions fuel alternatives. 450 finance firms including JPMorgan Chase, Citi, and BlackRock committed to hitting net-zero emissions in their investments by 2050 at the UN climate summit last week.
Corporate transitions can be messy… and sometimes it helps to draw cleaner lines. Shell’s reorg could make it easier for backers to invest in its transition to renewables, even if Shell hasn’t committed to splitting. As shareholders demand increasingly specific ways to invest, some companies have started splitting up to attract focused funding. Just last week: General Electric, Johnson & Johnson, and Toshiba announced plans to split into smaller companies to spur more targeted investment.