SUSTAINABILITY REPORT Royal Dutch Shell plc Sustainability Report 2016 03 39 CONTENTS INTRODUCTION OUR PERFORMANCE 04 Introduction from the CEO 40 Safety 06 Topic selection for 2016 43 Security 08 About Shell 43 Environment 10 How sustainability works at Shell 48 Social performance 14 Sustainability governance 53 Embedding sustainability into projects COVER IMAGE The cover shows how collaborations and discussions with communities, 15 55 customers and partners worldwide ENERGY TRANSITION WORKING TOGETHER help Shell provide more and cleaner 16 Towards a low-carbon future 56 Living by our principles energy solutions. 18 Our work to address climate change 57 Environmental and social partners DIGITAL 24 Natural gas 60 Collaborations The Sustainability Report has moved to 25 Liquefied natural gas 61 Shell Foundation an online digital report 26 Research and development 62 Contractors and suppliers reports.shell.com. The digital version 28 Lower-carbon alternatives 63 Our people includes further information such as an interactive GRI index to enhance 64 Our business partners usability for and the experience of the 65 Tax and transparency readers of the report. In the event of 32 any conflict, discrepancy or MANAGING OPERATIONS inconsistency between the digital 33 Our activities in Nigeria 66 report and this hardcopy report of the 35 Oil sands DATA AND REPORTING Sustainability Report then the 36 Shales 67 Abour our reporting information contained in the digital report will prevail. This hardcopy 37 Decommissioning and restoration 68 Environmental data report is provided for the readers’ 38 Measuring the impact of earthquakes in 69 Social and safety data convenience only. Groningen 70 External Review Committee NEW LENS SCENARIOS CAUTIONARY NOTE (a) price fluctuations in crude oil and natural gas; (b) changes in This publication contains data from The companies in which Royal Dutch Shell plc directly and demand for Shell’s products; (c) currency fluctuations; (d) drilling Shell’s New Lens Scenarios. The New indirectly owns investments are separate legal entities. In this and production results; (e) reserves estimates; (f) loss of market Lens Scenarios are a part of an report, “Shell”, “Shell group” and “Royal Dutch Shell” are share and industry competition; (g) environmental and physical ongoing process used in Shell for 40 sometimes used for convenience where references are made to risks; (h) risks associated with the identification of suitable potential years to challenge executives’ Royal Dutch Shell plc and its subsidiaries in general. Likewise, the acquisition properties and targets, and successful negotiation and perspectives on the future business words “we”, “us” and “our” are also used to refer to subsidiaries in completion of such transactions; (i) the risk of doing business in environment. We base them on general or to those who work for them. These expressions are also developing countries and countries subject to international plausible assumptions and used where no useful purpose is served by identifying the particular sanctions; (j) legislative, fiscal and regulatory developments quantifications, and they are designed company or companies. “Subsidiaries”, “Shell subsidiaries” and including regulatory measures addressing climate change; (k) to stretch management to also consider “Shell companies” as used in this publication refer to companies economic and financial market conditions in various countries and events that may only be remotely over which Royal Dutch Shell plc either directly or indirectly has regions; (l) political risks, including the risks of expropriation and possible. Scenarios, therefore, are not control. Entities and unincorporated arrangements over which Shell renegotiation of the terms of contracts with governmental entities, intended to be predictions of likely has joint control are generally referred to as “joint ventures” and delays or advancements in the approval of projects and delays in future events or outcomes and investors “joint operations” respectively. Entities over which Shell has the reimbursement for shared costs; and (m) changes in trading should not rely on them when making significant influence but neither control nor joint control are referred conditions. No assurance is provided that future dividend an investment decision with regard to to as “associates”. The term “Shell interest” is used for convenience payments will match or exceed previous dividend payments. All Royal Dutch Shell plc securities. to indicate the direct and/or indirect (for example, through our forward-looking statements contained in this report are expressly 23% shareholding in Woodside Petroleum Ltd.) ownership interest qualified in their entirety by the cautionary statements contained or It is important to note that Shell’s held by Shell in a venture, partnership or company, after exclusion referred to in this section. Readers should not place undue reliance existing portfolio has been decades in of all third-party interest. on forward-looking statements. Additional risk factors that may development. While we believe our affect future results are contained in Royal Dutch Shell’s 20-F for the portfolio is resilient under a wide This report contains forward-looking statements concerning the year ended December 31, 2016 (available at www.shell.com/ range of outlooks, including the IEA’s financial condition, results of operations and businesses of Royal investor and www.sec.gov). These risk factors also expressly 450 scenario, it includes assets across Dutch Shell. All statements other than statements of historical fact qualify all forward-looking statements contained in this report and a spectrum of energy intensities are, or may be deemed to be, forward-looking statements. should be considered by the reader. Each forward-looking including some with above –average Forward-looking statements are statements of future expectations statement speaks only as of the date of this report, 12 April 2017. intensity. While we seek to enhance that are based on management’s current expectations and Neither Royal Dutch Shell plc nor any of its subsidiaries undertake our operations’ average energy assumptions and involve known and unknown risks and any obligation to publicly update or revise any forward-looking intensity through both the development uncertainties that could cause actual results, performance or events statement as a result of new information, future events or other of new projects and divestments, we to differ materially from those expressed or implied in these information. In light of these risks, results could differ materially from have no immediate plans to move to a statements. Forward-looking statements include, among other those stated, implied or inferred from the forward-looking net-zero emissions portfolio over our things, statements concerning the potential exposure of Royal Dutch statements contained in this report. investment horizon of 10-20 years. Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and This report contains references to Shell’s website. These references assumptions. These forward-looking statements are identified by are for the readers’ convenience only. Shell is not incorporating by their use of terms and phrases such as “anticipate”, “believe”, reference any information posted on www.shell.com. “could”, “estimate”, “expect”, “goals”, “intend”, “may”, “objectives”, “outlook”, “plan”, “probably”, “project”, “risks”, We may have used certain terms, such as resources, in this report “schedule”, “seek”, “should”, “target”, “will” and similar terms and that the United States Securities and Exchange Commission (SEC) phrases. There are a number of factors that could affect the future strictly prohibits us from including in our filings with the SEC. US operations of Royal Dutch Shell and could cause those results to investors are urged to consider closely the disclosure in our Form differ materially from those expressed in the forward-looking 20-F, File No 1-32575, available on the SEC website statements included in this report, including (without limitation): www.sec.gov. INTRODUCTION Welcome to the 2016 Shell Sustainability Report, which covers our performance in 2016 and significant changes and events during the year. The report includes an introduction from Shell’s Chief Executive Officer Ben van Beurden and an opinion from the External Review Committee. 70+ Countries Shell operates in 92,000 Average number of people employed by Shell in 2016 2% Our approximate share of world oil production 3% Our approximate share of world gas production 1% Our share of the global supply of energy INTRODUCTION FROM THE CEO “We need to fulfil the In 2016, the world took significant steps towards SHAPING SHELL growing demand for building a low-carbon energy future. The United Our business strategy includes creating a world-class Nations (UN) Paris Agreement and the UN's investment case for shareholders and strengthening our energy, with more sustainable development goals came into force, setting leadership in the oil and gas industry, while positioning the natural gas and new targets for tackling climate change, promoting company for growth as the world transitions to a low- cleaner energy sustainable economic growth and providing access to carbon energy system. modern energy. products.” From 2017, employee bonuses, including those of Shell’s It was also a significant year for Shell. Against a backdrop Executive Committee, will also