Shell icons discuss the challenges of the global energy transition

26 July 2023 Consultancy.eu 6 min. read
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As the world looks to promote renewable energy in response to the mounting climate crisis, two of Shell’s most influential figures in recent decades maintain the sector has an important role to play. Mark Moody-Stuart and Jeroen van der Veer sat down with UMS Group leader Ennio Senese to discuss how the oil and gas industry can adapt its business models to keep up with the times.

Mark Moody-Stuart is a former Chair of Shell and a director of HSBC and Accenture. In his almost 40-year spell with the oil giant, he worked through a number of historic challenges – from the energy crisis of the 1970s, caused by the peaking of oil production in major industrial nations and embargoes from other producers; to the oil price shock of 1990, caused by the Gulf War.

When he says the problems faced by the industry today are the biggest ever, then, it carries extra weight.

Mark Moody-Stuart, Jeroen van der Veer and Ennio Senese

Speaking to Ennio Senese, Chief Operations Officer at UMS Group, Moody-Stuart explained, “I think the present climate crisis – an existential crisis – is bigger than anything I faced in my career. It’s bigger than anything Shell has faced in its history, I think. While there have been many crises, they affected the company and industry – but global wars apart, they haven’t impacted everyone in such a way. That’s the difference.”

Further reading: Europe’s path to climate-neutral by 2050 costs roughly €28 trillion.

With such a pressing set of issues coming to the fore, however, Moody-Stuart believes that the response has been slower than it perhaps should have been. Society at large has struggled to provide a compelling answer to climate change because of “siloes between industry, civil society, governments, etc”, according to the former Shell stalwart.

Reflecting on his own career, Moody-Stuart suggested that there were things energy companies could learn from, in terms of building bridges to get around those siloes.

“Look at Shell’s reaction in the late 90s to an environmental and human rights crisis in our operations in Nigeria. Responding to the crisis, we went out, and asked our critics and others who supported us, what they thought about things, and what we needed to do – in a consultative way. We need more open consultation, and to set up more structures in which that discussion can take place.”

Moody-Stuart hastened to add he did not believe the ‘structure’ he was referring to is a Conference of the Parties (known as COP). “While we’ve seen that a COP has its advantages, it also carries many disadvantages”.

The United Nations Climate Change Conferences of recent years have drawn criticism, with activists, communities impacted by climate change, and even some scientists complaining that they are shut out of the dialogue at events – while critics add that world leaders are given platforms to speak about their concerns before delivering few solid commitments.

At the same time, Moody-Stuart added, energy companies need “persistence” that they have sometimes lacked when it comes to delivering change. Pointing at Shell as an example, he explained that Shell’s approach to renewables saw the company “start, then lose courage and slow down a bit, before starting again.”

But nothing worth building comes easily, so in the future, energy companies need to promote “a driving persistence, to really prepare ourselves for a steady marathon without pauses.”

“The present climate crisis is an existential crisis bigger than anything I faced in my career. It’s bigger than anything Shell has faced in its history.”

Building bridges

Jeroen van der Veer has enjoyed a similarly extensive career within the energy sector – spending over 35 years at Shell, including a spell as Chief Executive Office. Van der Veer was due to step down in 2007, but his time at the top was extended to the middle of 2009, while the firm sought to adapt amid the global financial crisis.

While he understands that people “want change faster”, he also is very well aware that various causes mean steady alterations are more sustainable, and achievable.

Pointing to one of the key spanners in the works, Van der Veer contended, “Geo-politics has always played a role in the history of oil and gas. This has become even more the case in recent years – and it is not only Ukraine, Russia and Europe, it is also China, US, all kinds of players.”

“So, for international companies used to crossing borders, this is a massive complication. This – along with our current ‘minestrone’ of problems – comes together to make any response more difficult. In that case, every company in Shell has to adapt in a rapidly changing environment.”

Illustrating why this could be a problem, Van der Veer pointed to a company he contacted “many years ago,” who “developed themselves, decided themselves on certain things, and then they announced their plans to society” before starting to execute. But while the company was technically doing something to respond to the demands of its market, doing so within the confines of its national context meant its efforts were isolated in an unhelpful way.

“In my opinion, I understand it, but it is not how to build trust with society,” Van der Veer expanded. “Like Mark said, there needs to be dialogue – you can establish what expectations exist, and work to meet the expectations you help create; and that builds a certain trust. That is vital because companies like Shell somehow have less trust than say ten years ago.”

Only once companies have obtained trust born out of collaboration, does Van der Veer believe firms can move ahead in a wider role. In that case, “explaining what your role in a future society” becomes more straightforward.

The future

Steering the conversation toward what roles oil and gas companies might play in the long-term renewable transition, Senese posed the question to both experts, “what would the future of oil and gas companies be?” Answering first, Moody-Stuart delivered a frank warning to industry players, that “some will survive, and some will not.”

“It’s fascinating,” he continued. “Watching each of the majors and the national oil companies, they each have different approaches. It’s an exciting game to see who has the leading solution and successful solution.”

With regards to Shell itself, Van der Veer believes the company is well positioned to adapt for the challenges of the transition – stating “whatever the energy transition brings, Shell’s train departs from a good station.” The changes will necessitate certain adaptations of its business model, however.

“I think there are three things in the DNA of Shell that mark the company out as a leader. We have a love of technology; we are good in building complex large projects, or small ones; and we are strong in running operations. Those aspects are applicable beyond fossil fuels, to the realm of renewable forms of energy as well!”

That’s why I believe Shell should see itself as a project company. We can build and run renewable initiatives. But combined with what Mark said, we do have to think how we combine that with our current business. The returns on wind or solar can be low, so the company should find an ideal balance between the interests of all stakeholders, including communities and the planet.”

The interview (watch on Youtube) was conducted during Shell’s global Alumni Conference held earlier this year.