1、Shell plc#PoweringProgressAnnual Report and AccountsFor the year ended December 31,2023ContentsIntroductioniiiTerms and abbreviationsStrategic Report2Chairs message4Chief Executive Officers review6Powering Progress strategy6Who we are 7Our strategy10How we create value 12Progress against our longer-

2、term businesstargets 13Outlook for 2024 and beyond14Risk factors29Performance in the year29Performance indicators31Generating shareholder value32Group results34Financial framework38Market overview41Integrated Gas47Upstream55Oil and gas information63Marketing68Chemicals and Products75Renewables and E

3、nergy Solutions79Corporate81Other central activities82Our journey to net zero83Introduction85 Governance of climate-related risks and opportunities89Energy transition strategy100Climate risk management103Climate-related metrics and targets114Other regulatory disclosures116Respecting nature124Powerin

4、g lives125Contribution to society 128Our people 133Safety137Living by our values141Principal decisions&stakeholders(Section 172(1)statement)Governance147The Board of Shell plc155Executive Committee157Introduction from the Chair159Statement of compliance with the UK Corporate Governance Code160Govern

5、ance framework162Board activities166Board evaluation167Understanding and engaging with our stakeholders170Workforce engagement172Nomination and Succession Committee177Sustainability Committee179Audit and Risk Committee Report191Directors Remuneration Report194Annual Report on Remuneration211Director

6、s Remuneration Policy219Other regulatory and statutory informationFinancial Statements and Supplements229Independent Auditors Report related to the Consolidated and Parent Company Financial Statements244Consolidated Financial Statements317Supplementary information-oil and gas(unaudited)336Supplement

7、ary information-EU Taxonomy disclosure350Parent Company Financial StatementsAdditional Information361Shareholder information365Non-GAAP measures reconciliations373Appendix:Significant subsidiaries and other related undertakings(audited)vAbout this ReportviiFinancial calendarDesign and production:Fri

8、end Print:Toppan MerrillReports are available in all inclusive formats at S for allTerms and abbreviationsCurrencies$US dollareurosterlingUnits of measurement acreapproximately 0.004square kilometresb(/d)barrels(per day)bblbarrelboe(/d)barrels of oil equivalent(per day);natural gas volumes are conve

9、rted into oil equivalent using a factor of 5,800 scf perbarrelGJgigajouleGWgigawattkboe(/d)thousand barrels of oil equivalent(per day);natural gas volumesare converted into oil equivalent using a factor of5,800 scf per barrelkWhkilowatt-hoursmb/dmillion barrels per daymegajoulea unit of energy equal

10、 to one million joulesMMBtumillion British thermal unitsmtpamillion tonnes per annumMWmegawattMWhmegawatt hoursNm3normal cubic metreperdayvolumes are converted into a daily basis using a calendaryearscf(/d)standard cubic feet(per day)TWhterawatt hoursProducts GTLgas-to-liquidsLNGliquefied natural ga

11、sLPGliquefied petroleum gasNGLnatural gas liquidsMiscellaneousActUK Companies Act 2006ADSAmerican Depositary ShareAGMAnnual General MeetingAPIAmerican Petroleum InstituteAPMAlternative performance measureARCAudit and Risk CommitteeCCScarbon capture and storageCCS earnings earnings on a current cost

12、of supplies basisCFFOcash flow from operating activitiesCISOChief Information Security OfficerCMDCapital Markets DayCMFcarbon management frameworkCO2carbon dioxideCO2ecarbon dioxide equivalentCOP2828th meeting of the Conference of the Parties to the United Nations Climate Change ConferencesCRCCarbon

13、 Reporting CommitteeCRTCommercial Road TransportCSRDCorporate Sustainability Reporting DirectiveDE&IDiversity,equity,and inclusionECExecutive CommitteeEMTNEuro medium-term noteEPSearnings per shareEPSAexploration and production sharing agreementEPTBEnvironmental Products Trading BusinessETS24Energy

14、Transition Strategy 2024EVElectric vehicleFCFfree cash flowFIDfinal investment decisionGAAPgenerally accepted accounting principlesGHGgreenhouse gasHSSEhealth,safety,security and environmentIASInternational Accounting StandardsIEAInternational Energy AgencyIFRSInternational Financial Reporting Stand

15、ard(s)IOGPInternational Association of Oil&Gas ProducersIPCCIntergovernmental Panel on Climate ChangeIPIECAInternational Petroleum Industry Environmental Conservation Association IRMInformation Risk ManagementISOInternational Organisation for StandardisationKPIKey performance indicatorLGBT+Lesbian,g

16、ay,bisexual and transgenderLTIPLong-term Incentive PlanNBSNature-Based SolutionsNCFNet Carbon FootprintNCInet carbon intensityNGONon-governmental organisationNOMCONomination and Succession CommitteeNZENet zero emissionsOECDOrganisation for Economic Co-operation and DevelopmentOFCForganic free cash f

17、low OGCIOil and gas climate initiativeOMLoil mining leaseOPECOrganization of the Petroleum Exporting CountriesOPEC+12 members of the OPEC and 11 other non-OPEC membersOPLoil prospecting licencePSCproduction-sharing contractPSPPerformance Share PlanQRAQuarterly Results AnnouncementR&DResearch and dev

18、elopmentREMCORemuneration CommitteeRNGRenewable natural gasRTreal termsSEAMSafety,Environment and Asset ManagementSECUS Securities and Exchange CommissionSGBPShell General Business PrinciplesSIAIShell Internal Audit and InvestigationsSPsocial performanceSUSCOSustainability CommitteeTCFDTask Force on

19、 Climate-related Financial DisclosuresTRCFtotal recordable case frequencyTSRtotal shareholder returnWACCweighted average cost of capitalWTIWest Texas Intermediate iiiShell Annual Report and Accounts 2023 Strategic ReportWe measure our performance for the year by considering progress against our long

20、er-term strategy and against our annual operating plan.At Capital Markets Day 2023,we announced eight business targets forreporting progress against our Powering Progress strategy,which canbefound in the section Progress against our longer-term business targets.Performance against our operating plan

21、 for 2023 is assessed using arange of financial and non-financial indicators and can be found inthe section Performance indicators.In the How we create value section,we show the value that we have created in 2023 through our business activities for our different stakeholders and wider society.2Chair

22、s message4Chief Executive Officers review6Powering Progress strategy6Who we are 7Our strategy10How we create value 12Progress against our longer-term business targets 13Outlook for 2024 and beyond14Risk factors29Performance in the year29Performance indicators31Generating shareholder value32Group res

23、ults34Financial framework38Market overview41Integrated Gas47Upstream55Oil and gas information63Marketing68Chemicals and Products75Renewables and Energy Solutions79Corporate81Other central activities82Our journey to net zero83Introduction85 Governance of climate-related risks and opportunities89Energ

24、y transition strategy100Climate risk management103Climate-related metrics and targets114Other regulatory disclosures116Respecting nature124Powering lives125Contribution to society 128Our people 133Safety137Living by our values141Principal decisions&stakeholders(Section 172(1)statement)1Shell Annual

25、Report and Accounts 2023“For Shell,2023 was a pivotal year in our drive to achieve more value with less emissions.”Sir Andrew Mackenzie ChairMy geologists mind has always been intrigued by what lies beneath ourfeet,including the natural energy resources that have propelled theworlds economic progres

26、s for so long.But with the urgent need totackle climate change,I am just as fascinated by the technologies that will help the world deliver cleaner power and fuel the future,aswell assignificantly cut carbon emissions.Along with great challenges,the energy transition offers tremendous opportunities

27、to those eager to play their part.For well over a century,Shell has pioneered ways of providing energy to people.We are aleader in deep-water oil production,liquefied natural gas(LNG)andbiofuels,and we aim to become one of the largest providers ofcharging for electric vehicles.We aim to lead in the

28、energy transition where we have competitive strengths and see strong customer demand and clear support from governments.Our strategy is to create value for our shareholders,customers and wider society as we reduce our emissions and fulfil ourpurpose to provide more and cleaner energy solutions.For S

29、hell,2023 was a pivotal year in our drive to achieve more value with less emissions.It was the first year under our new Chief Executive Officer,Wael Sawan,who stressed the importance of enhancing our returns toshareholders,while staying firm on our target to become a net-zero emissions energy busine

30、ss by 2050.We did exactly that by maintaining a very healthy balance sheet,increasing our dividends andcontinuing to buy back shares,all while investing capital to reduceour Scope 1 and 2 emissions,and Scope 3 emissions relatedtothe use of the oil products we sell.People everywhere need a secure,sus

31、tainable and affordable energy supply.Shell can help to enable a balanced energy transition by keeping the world moving with oil and gas,while delivering the low-carbon alternatives our customers need to decarbonise.To this end,wehave made it clear that we plan to expand our LNG business and develop

32、 new low-carbon products and technologies,such as carbon capture and storage(CCS).I saw this when I visited Qatars North Field expansion project in January 2024.This project will support the delivery of much-needed supplies of natural gas around the world and I appreciated the opportunity to learn m

33、ore about how we are developing a CCS projectthere.I also visited Oman and saw how we are moving forwardwith ahydrogen project,enabled by CCS.More value,less emissionsShells 2023 earnings were strong and we reduced our total combined Scope 1 and 2 absolute greenhouse gas emissions from our operation

34、s by 31%A compared with 2016 levels.This positions us well as we continue to implement our strategy,guided by the free cash flow*,investment and cost reduction targets set in 2023.We will continue to create value for shareholders and lower emissions.A Reduced from 83 million tonnes carbon dioxide eq

35、uivalent(CO2e)in 2016 to 57 million tonnes CO2e in 2023*Non-GAAP measure(see page 365).Strategic ReportChairs message2Shell Annual Report and Accounts 20232Shell Annual Report and Accounts 2023Our energy transition update,published on March 14,2024,aims tokeep us on track tomeet our climate targets

36、and ambitions.As wecontinue to supply oil and gas,wemust continually work to lower carbon emissions from our own operations and offer our customers more low-and zero-carbon fuels tomeet their needs in a world on itsway to net zero.In November,I saw first-hand how committed our teams are to transform

37、ing the refinery in Rheinland,Germany,into an energy and chemicals park.We are building a renewable hydrogen electrolyser tohelp decarbonise our own operations and we will convert a hydrocracker into a base oils production unit.The teams have also almost finished building a plant to produce bioLNG f

38、or heavy-duty road transport.The use of bioLNG in this slower-to-decarbonise sector could be a game changer for accelerating the energy transition.The energy transition must be just and fair,and we are committed to respecting nature and powering lives in our activities.The Board visited LNG Canada i

39、n June,where we are building a major project designed to deliver a secure supply of energy.Our people there have worked closely with indigenous communities to help protect the environment.Innovating for net zeroTackling climate change will need new technologies.It will also demand collective action

40、from governments,businesses and consumers,even in the face of heightened instability caused by the Russia-Ukraine war and renewed major conflict in the Middle East.Innovation is vital to the energy transition and is close to my heart.In September,I met with students in China who had taken part in th

41、e Shell Eco-marathon by embracing the challenge to design and make energy-efficient vehicles.Their passion and perseverance should inspire usall to keep pushing the boundaries of what is technically possible.Shell is determined to help tackle climate change.We must do this with continued innovation

42、and we will lead where we have the expertise and experience.For instance,our Razen biofuels joint venture in Brazil and our renewable natural gas acquisition Nature Energy in Denmark,completed in February 2023,help us to be well placed to play an increasing role insupplying lower-carbon transport fu

43、els.Under Waels leadership in 2023,we began streamlining our business,set clear targets,tightened up on spending and reduced emissions.Theenergy transition is an evolution that we are proud to be part of.We are carefully choosing where we can make the biggest,mostpositive impact as we move forward t

44、o becoming a net-zero emissions energy business by 2050,purposefully and profitably.Shell has the drive,the ingenuity and the competitive edge to make things happen:to create value for investors,customers and society,andcontribute to a low-carbon world.Sir Andrew Mackenzie ChairPoweringProgress1.We

45、produced first gas from Omans Mabrouk North-East field in Block 10(Shellinterest 53.45%)in 2023.Block 10 is our first operated venture in Oman.2.In 2023,in China,we opened our largest electric vehicle charging station.The charging station is operated by Shell and BYD Electric Vehicle Investment Comp

46、any Limited.3.The Whale platform(Shell interest 60%)was built in Singapore and is expected tostartproduction in the Gulf of Mexico in 2024.Strategic ReportChairs message continued3Shell Annual Report and Accounts 20231.2.3.3Shell Annual Report and Accounts 2023“We will deliver more value forour shar

47、eholders,our customers and wider society,with less emissions.”Wael Sawan Chief Executive OfficerIn 2023,the Russia-Ukraine war continued and renewed conflict in the Middle East raised the spectre of another regional war.Too many lives have been destroyed and I hope for an end to these human tragedie

48、s soon.Geopolitical volatility and the fragmentation of our world are growing at a time when we should be working together to fight the global challenge of climate change.A balanced energy transition,which Shell supports,is one that maintains secure and affordable energy supplies,while the world bui

49、ldsthe clean energy system of the future.Billions of people depend on energy and hundreds of millions still hope to have access to it.Energy isvital for lives everywhere.The energy system has shown promising signs of progress,despite geopolitical,supply chain and regulatory challenges.Renewable powe

50、r has seen record growth in recent years and one-fifth ofall newcar sales in the world are now electric.In March,I saw the resultsof this growth first-hand on a Shell electric vehicle charging sitein Beijing serving around 1,000 customers a day.At Shell,we sharpened our Powering Progress strategy in

51、 2023 witharelentless focus on performance,discipline and simplification aswemove towards becoming a net-zero emissions energy business by 2050.We will deliver more value for our shareholders,our customers and wider society,with less emissions.At Capital Markets Day in June,we showed how we plan top

52、rofitably transform Shell through the strength of our portfolio,ourtechnological and trading capabilities,and our deep customer relationships.We will be guided by the financial and climate targets and ambitions we have set.Performance and disciplineIt was another strong year for Shell.One highlight

53、for me was QGC inAustralia,which had its highest ever liquefied natural gas(LNG)production in the fourth quarter and delivered its 1,000th LNG cargo.Another was the strong operational performance in our deep-water portfolio.Completing the acquisition of Nature Energy,which expanded the range of low-

54、carbon energy we can offer,also stood out.Cash flow from operations for 2023 of around$54 billion was the second-highest in our history,income was around$20 billion and Adjusted Earnings*around$28 billion.Ourperformance enabled usto return$23 billion to shareholders*through$15 billion in share buyba

55、cks and$8 billion in dividends.This is 42%*of cash flow from operations(CFFO)and around the upper end of our 30-40%of CFFO through the cycle target range.We continue to be disciplined in our investments,focusing on where wecan have the maximum impact in generating value or lowering emissions.In 2023

56、,cash capital expenditure*of$24 billion was atthelower end of our$23-27billion range.*Non-GAAP measure(see page 365).Strategic ReportChief ExecutiveOfficers review4Shell Annual Report and Accounts 20234Shell Annual Report and Accounts 2023Between 2023 and 2025,we plan to invest around$40 billion in

57、oiland gas.An example of more value with less emissions is the Vito platform(Shell interest 63.1%)in the Gulf of Mexico,which started production in 2023.Vito cost less to build because its topsides and hull are a third of the size of its original design and is expected to produce around 80%less emis

58、sions over its operating life.We are using the same concept for two more platforms:Whale(Shell interest 60%)andSparta(Shell interest 51%).SimplificationFrom July 1,2023,our smaller Executive Committee took effect with two clear business directorates,and a single finance,strategy,mergers and acquisit

59、ions and sustainability directorate.This simplification has already enabled more streamlined planning and improved decision-making.We are also in the process of moving to our new Safety,Environment&Asset Management Standards(SEAM),which will reduce the number of key requirements to around 500 from t

60、he current 1,800 and enable our people to focus on implementing our strategy more efficiently.By the end of 2023,we had achieved around$1 billion of structural cost reductions*,positioning us well to save the$2-3 billion we said wewould by the end of 2025.Less emissionsI am proud that by the end of

61、2023,we had achieved more than 60%of our target to halve emissions in our own operations by 2030,compared with 2016 levels on a net basis.We will work to continue reducing emissions from our own operations,including by powering oil and gas platforms with renewable energy.In August,our unmanned solar

62、-and wind-powered platform in the Timi gas field(Shell interest 75%)delivered first gas and we will continue to explore this concept.In support of a balanced energy transition,between 2023 and 2025,we will invest around$35 billion in Downstream and Renewables and Energy Solutions.In 2023,we invested

63、$5.6 billion in low-carbon energy,including the acquisition of Nature Energy and in the CrossWind joint venture off the Dutch coast,which will supply renewable power to the Holland Hydrogen 1 electrolyser.In China,we opened our largest electric vehicle charging station,while globally we continued to

64、 transform our refineries into energy and chemicals parks.Our strategy confirms our commitment to Integrated Gas,particularly LNG where we are growing our portfolio even more and will increase capacity by around 11 million tonnes per year in the second half of the decade that is an annual increase o

65、f more than a quarter of our current capacity.LNG plays a major role as a lower-carbon alternative to coal and as a partner to wind and solar for electricity generation.Aswe increase our LNG activities,we will continue work on reducing our methane emissions tonear-zero by 2030.We want to remain a le

66、ader in biofuels and as demand for low-carbon fuels grows,we expect to sell less oil products.We aim to lead inthe energy transition where we have competitive strengths,see strong customer demand,and identify clear regulatory support from governments.To help drive the decarbonisation of transport,we

67、 have set a new ambition to reduce customer emissions from the use of our oilproducts by15-20%by 2030,compared with 2021(Scope 3,Category 11)A.As we pursue more value with less emissions,we must remain disciplined.For example,last summer we pulled out of a tender for awind farm off the coast of Germ

68、any when it did not meet our test forcapital discipline.The importance of learningThe safety of everyone working for Shell is our top priority.I am deeply saddened by the death of five contractor colleagues in incidents that took place at Shell operations in 2023.One contractor in Malaysia and anoth

69、er in the Philippines died while at work.In Nigeria,two contractors were shot,along with four government security agents,in an appalling attack on a convoy.Also in Nigeria,a contractor injured in a tugboat fire late in 2023 died in early 2024.My heart goes out to all the families and friends of thos

70、e who have died.Our personal safety results fell short of what we achieved in 2022 and we are committed to doing better through learning from these and other incidents.Applying what we have learned in the past has helped us achieve our lowest number of process safety events on record in 2023.I visit

71、ed Oman in June for our Safety Day.This was significant for me because it is where I started at Shell 26 years ago.Talking to our people there brought back many memories my passion for the business,my hope for the future,but also how much I had to learn.Wemust always be open to new ideas.Being the b

72、est we can beOur strategy is also about respecting nature and powering lives.Wegive more detail on how we are progressing in these areas in this Annual Report(on pages 116 and 124)and in ourSustainability Report.In 2023,I visited a number of our teams,including in Abu Dhabi,Brazil,China,Kazakhstan,t

73、he Netherlands,Oman,Qatar and the United States.I never cease to be impressed by the calibre of people Imeet on these trips.Shells best asset is its people.Streamlining our organisation can harness their creativity by cutting bureaucracy and making processes more efficient.I want our people to focus

74、 their energies on making Shell the best it canbe.At Shell,we are guided by the clarity of our purpose to provide moreand cleaner energy solutions.We focus on what we can control.And,as we embed performance,discipline and simplification into Shells culture,Ibelieve we are the investment case through

75、 the energytransition.Wael SawanChief Executive Officer*Non-GAAP measure(see page 365).A Customer emissions from the use of our oil products(Scope 3,Category 11)were 517million tonnes carbon dioxide equivalent(CO2e)in 2023,569 million tonnes CO2e in2021 and 819 million tonnes CO2e in 2016.Strategic

76、ReportChief Executive Officers review continued5Shell Annual Report and Accounts 20235Shell Annual Report and Accounts 2023Shell is a global group of energy and petrochemical companies,employing around 103,000 people A andwithoperations in more than 70 countries.We seek to provide the world with the

77、 energy it needs today,while helping it build a sustainable energy future.Our competitive advantages are built upon our large and diverseportfolio,people who have outstanding talent,strong technological capability and deep customer reach,which we areleveraging to help enable a balanced energy transi

78、tion.Shells stakeholders include our customers,investors,employees and contractors,pensioners,our strategic partners and suppliers,the communities where we work,civil society,academia and think tanks,governments and regulators.We expect our employees and contractors to maintain our focus on safety a

79、nd abide by our core values of honesty,integrity and respect for people.A At December 31,2023.Our operating businessesIntegrated Gas and UpstreamDownstream,Renewables and Energy Solutions Integrated Gas and Upstream(IGU)explores for and extracts crude oil,natural gas and natural gas liquids.It deliv

80、ers hydrocarbon products from conventional oil and gas operations,deep-water exploration and production,liquefied natural gas(LNG)activities,and converts natural gas into gas-to-liquids(GTL)fuels and other products.The marketing,trading and optimisation of LNG are included in IGU.IGU provides the se

81、cure energy customers need and weaim to do this with lower emissions.Downstream,Renewables and Energy Solutions(R&ES)provides products and services to more than 1 million business customers.Itincludes Chemicals and Products,and Marketing,which includes Mobility a business that serves around 33millio

82、n retail customers a day at more than 47,000 service stations.Marketing also includes Lubricants,and Sectors and Decarbonisation activities.Downstream and R&ES,underpinned by Trading and Supply,aims to meet the evolving energy needs of our customers.Reporting segmentsReporting segmentsIntegrated Gas

83、|UpstreamMarketing|Chemicals and Products|Renewables and Energy SolutionsInnovationTechnological innovation is integral to our pursuit of more and cleaner energy solutions as we work towards becoming a net-zero emissions energy business by 2050.Projects&Technology(P&T)manages major projects,driving

84、innovation,while delivering technical services to our businesses.P&T provides essential functional leadership across Shell,addressing safety and environment,contracting and procurement,and greenhouse gas emissions management.Our research and development activities also encompass safety,performance p

85、roducts,and automation and artificial intelligence.Strategic Report|Powering Progress strategyWho we are6Shell Annual Report and Accounts 20236Shell Annual Report and Accounts 2023Our Powering Progress strategy is to generate more value for our shareholders,customers and wider society as we work to

86、become a net-zero emissions energy business by2050.Our purpose-to provide more andcleaner energy solutions drives our strategy.Our strategy is built upon:generating shareholder value,achieving net-zero emissions,powering lives and respecting nature.At our Capital Markets Day in June 2023,we announce

87、d how we will put our strategy into action with a relentless focus on performance,discipline and simplification as we aim to deliver more value with less emissions.We are building on our strengths in Integrated Gas,Upstream and Marketing.We will invest around$40 billion in leading Integrated Gasand

88、advantaged Upstream assets over 2023-2025.This will help drive significant and resilient cash delivery,while helping to provide energy security.Over the same period,investment in Downstream andRenewables and Energy Solutions will be around$35 billion,ofwhich$10-15 billion will be inlow-carbon energy

89、 solutions,aswehelp to enable the energy transition.Achieving net zeroThe Paris Agreement aims to strengthen the global response tothe threat of climate change by holding the increase in the global average temperature to well below 2C above pre-industrial levels andpursuing efforts to limit the temp

90、erature increase to 1.5C above pre-industrial levels.Shell supports the Paris Agreement goal to limit the rise in global average temperature this century to 1.5C abovepre-industrial levels.Toachieve this,urgent action is needed to reduce emissions across allsectors.We are working to become a net-zer

91、o emissions energy business.Thismeans net-zero carbon emissions from our operations.Italso means net-zero carbon emissions from the energy products wesell(including those produced by others),which currently accountfor over 90%of thetotal emissions we report.Wesupport a balanced energy transition whe

92、re the world maintains asecure and affordable supply ofenergy,while building the clean energy system of the future.We want to play our part in the energy transition,purposefully and profitably.We aim to partner with our customers,suppliers and governments to help decarbonise the energy system.Our in

93、tegrated assets and supply chains are designed to provide a secure supply of energy for our customers,while also delivering low-and zero-carbon alternatives.Strategic Report|Powering Progress strategyOur strategy7Shell Annual Report and Accounts 2023Our PurposeTo power progress together by providing

94、 more and cleaner energy solutionsPowering ProgressGenerating Shareholder ValueGrowing value through a dynamic portfolio and disciplined capital allocationRespecting NatureProtecting the environment,reducing waste and making a positive contribution to biodiversityPowering LivesPowering lives through

95、 our products and activities,and supporting an inclusive societyAchieving Net-Zero EmissionsWorking with our customers and sectors to accelerate the energy transition to net-zero emissionsUnderpinned by our core values of honesty,integrity,respect for people,and our focus on safety7Shell Annual Repo

96、rt and Accounts 2023Generating shareholder valueWe aim to generate more value for shareholders through disciplined capital allocation and a focus on performance.We aim to generate more value for shareholders through disciplined capital allocation and a focus on delivering strong performance.Weseek t

97、o provide enhanced distributions through our progressive dividend policy and share buyback programmes,which together target shareholder distributions*of 30-40%of cash flow from operations through the cycle.In 2023,total shareholder distributions*amounted to$23 billion,comprising$8 billion in cash di

98、vidends and$15 billion in share buybacks,and we generated$54 billion in cash flow from operating activities.This resulted in total shareholder distributions*of 42%of cash flow from operating activities*,around the upper end of our target range.Our capital expenditure was$23 billion and our cash capi

99、tal expenditure*was$24 billion.We reduced our total debt to$82 billion and our net debt*to$44 billion as of December 31,2023.We aim to grow our price-normalised free cash flow*by more than 6%per year through 2030 and grow price-normalised free cash flow per share*by 10%per year through 2025.In 2023,

100、we increased ourdividend to$0.344 per share in the fourth quarter of2023.We are focusing on operational,financial and carbon performance,while maintaining our balance sheet strength.We take a disciplined approach to our portfolio and capital spending,aiming to invest where we have an enduring compet

101、itive advantage.In 2023,we announced capital expenditure targets of$22-25 billion peryear in 2024 and 2025 and targeted structural cost reductions*of$2-3 billion by end-2025.By the end of 2023,we had made$1billion in structural cost reductions*.*Non-GAAP measure(see page 365).Achieving net-zero emis

102、sionsWe aim to become a net-zero emissions energy business by 2050 and will work with customers to help them decarbonise.We have a target to become a net-zero emissions energy business by 2050,purposefully and profitably.Our net-zero target covers emissions from our operations(Scope 1),emissions fro

103、m the energy we buy to runour operations(Scope 2)and emissions from our customers use ofthe energy products we sell(Scope 3).We have a target to halve Scope 1 and 2 absolute emissions from assets and activities under our operational control by 2030,compared with 2016 levels on a net basis.By the end

104、 of 2023 we had reduced our absolute emissions by 31%A.Our energy transition update includes an ambition toreduce customer emissions from the use of our oil products by 15-20%by 2030,compared with 2021(Scope 3,Category 11)B.Our net carbon intensity reduction targets are:9-12%by2024,9-13%by 2025,15-2

105、0%by 2030,100%by 2050 compared with a 2016 baseline.We place a high priority on combatting methane emissions.Our target is to maintain methane emissions intensity below 0.2%for operated oil and gas assets(including liquefied natural gas)and to reach near-zero methane emissions by 2030.In 2023,we ach

106、ieved this with methane emissions intensity at 0.05%.We have a target to end routine flaring from upstream operations by 2025,subject to the completion of the sale of The Shell Petroleum Development Company of Nigeria Limited(SPDC)C.We are transforming our business and selling more low-carbon produc

107、ts and services,and will work with our customers across sectorsto accelerate the energy transition.We engage with governments and other stakeholders,including international organisations and industry associations,and participate in global events,such as COP28.Through this engagement we seek tosuppor

108、t robust policies,legislation and regulations designed to generate the demand for investment in the low-carbon energy system.A Reduced from 83 million tonnes of CO2e in2016to 57 million tonnes of CO2e in 2023.B Customer emissions from the use of our oil products(Scope 3,Category 11)were 517million t

109、onnes CO2e in 2023 and 569 million tonnes CO2e in 2021.C In January 2024,Shell announced an agreement to sell SPDC.Completion of the transaction is subject to approvals by the Nigerian government and other conditions.Strategic Report|Powering Progress strategyOur strategy continued8Shell Annual Repo

110、rt and Accounts 20238Shell Annual Report and Accounts 2023PoweringlivesWe work to power lives through our products andactivities,and by supporting aninclusive society.We seek to make a positive impact on the lives of people around theworld.We help to power lives and livelihoods by providing vitalene

111、rgy for homes,businesses,and transport.We support livelihoods by providing employment and training in thecommunities where we operate,and buying goods and services from local suppliers,contributing to a more inclusive economy.In2023,we spent around$49 billion on goods and services fromsuppliers*arou

112、nd the world.Our activities generate revenues forgovernments through the taxes and royalties we pay,and thetaxes we collect on their behalf.In 2023,taxes paid and collected*were$67 billion.This helps governments fund health care,education and other essential services.Around 760 million people A in t

113、he world have no electricity and over half the world population has insufficient energy to lead a good life B.We deliver energy commercially,by investing in businesses that supply energy access in emerging markets;and socially,by investing funds,expertise and resources in access to energyprogrammes.

114、Shell aims to become one of the most diverse and inclusive organisations in the world.Our focus is on gender;race and ethnicity;lesbian,gay,bisexual and transgender(LGBT+);and disability.In 2023,representation of women in senior leadership C grew to32%.Our 2023 Shell People Survey showed a result of

115、 83 points out of 100 for all questions relating to diversity,equity and inclusion(DE&I).This suggests that overall our people feel ours is a workplace in which they belong,feel safe and respected,and have equal opportunities to progress and grow.We seek to respect human rights in all parts of our b

116、usiness.Since 2022,we have implemented practices to improve and maintain worker welfare for employees and contractors.A International Energy Agency,SDG7:Data and Projections,2023.B UN Human Development Index,Approximately 75 GJ final energy per capita is the threshold where populations reach 0.8 on

117、the UN Human Development Index which can be considered a good life.C Senior Leadership is a Shell measure based on compensation grade levels.This measure is distinct from senior manager as per statutory disclosure requirements.See Our people on page 128.Respecting natureWe aim for a positive impact

118、on biodiversity,zero waste and using water,other resources and materials efficiently.In 2023,we reviewed our progress and performance on respecting nature.We consolidated our respecting nature ambitions announced as part of our Powering Progress strategy in 2021 into the following themes:having a po

119、sitive impact on biodiversity,aiming for zero waste and using water,other resources and materials efficiently.We have already achieved some of the respecting nature commitments we set when we launched Powering Progress.Our commitment to reduce fresh-water consumption in highly water-stressed areas b

120、y 15%was achieved ahead of the target date of 2025.We have also conducted detailed assessments to inform our approach to fresh water and waste,which will be tailored to local conditions.We have concluded that our ambition to use 1 million tonnes of plastic waste a year in our global chemical plants

121、by 2025 is unfeasible due to lack of available plastic waste feedstock,slow technology development and regulatory uncertainty.The remaining commitments announced in 2021 have either been incorporated into our new Safety,Environment and Asset Management(SEAM)Standards,which take effect from mid-2024,

122、orare included in the relevant business objectives and processes.When planning new major projects,we conduct detailed environmental,social and health impact assessments.At the end of 2023,89%of major installations operated by Shell were certified against the ISO14001:2015 Environmental Management Sy

123、stem,orwere in compliance with equivalent environmental frameworks required by local regulations.We are pursuing certification for theremainder.Air quality continues to be embedded in our environmental standards.We are developing a range of lower-emission choices for customers,from electric vehicle

124、charge points to biofuels,to help people and companies use lower-emission modes of transport.We continue to explore how we can source responsibly in our supply chain.*Non-GAAP measure(see page 365).Strategic Report|Powering Progress strategyOur strategy continued9Shell Annual Report and Accounts 202

125、39Shell Annual Report and Accounts 2023 Our inputs ABusiness activitiesFinancial capitalEquity attributable to Shell plc shareholders($billion)B:187 2022:190Total debt($billion)B:82 2022:84Net debt*($billion)B:44 2022:45 Average capital employed($billion)B:273 2022:270Cash capital expenditure*($bill

126、ion):24 2022:25OperationsRefining and chemicals availability:91%2022:96%Oil&gas production available for sale(kboe/d):2,791 2022:2,864LNG liquefaction volumes(million tonnes):28 2022:30Human capitalNumber of employees(thousands)B:103 2022:93Number of training days(thousands):295 2022:266Relationship

127、sRanking in the Global 500 list most valuable oil&gas company C:1 2022:1Customers,joint arrangements,government relations,suppliers.Operating countries B:70 2022:70Intellectual capitalResearch and development expenses($million):1,287 2022:1,075Number of patents BD:8,829 2022:8,647Natural resourcesPr

128、oved oil and gas reserves(million boe)B:9,787 2022:9,578Energy consumed(million MWh)E:205 2022:209*Non-GAAP measure(see page 365).A In 2023 unless stated otherwise.B At December 31.C Source:Brand Finance Global 500.D Includes patents granted and pending patent applications.Number of patents in2022 h

129、as been revised.E 2022 figure restated,following the review of data.Strategic Report|Powering Progress strategyHow we createvalueWe aim to meet the worlds growing need for more and sustainable energy solutions in ways that are economically,environmentally and socially responsible.Through our busines

130、s activities we create value for our shareholders,customers and wider society.10Shell Annual Report and Accounts 2023Our outcomes and impacts forourstakeholders ACash flow from operating activities($billion):542022:68Free cash flow*($billion):362022:46Shareholder distributions*($billion):232022:26Ad

131、justed Earnings*($billion):28 2022:40Absolute emissions(Scope 1 and 2 million tonnes of CO equivalent):57 2022:58|2016:83Net carbon intensity(grams of CO equivalent per megajoule):742022:76|2016:79Methane emissions intensity 0.05%2022:0.05%Women employees in senior leadership positions B:32%2022:30%

132、Taxes paid and collected*($billion):672022:68Total spend on goods and services*C($billion):49 2022:48Fresh water consumed by four major facilities in high water-stressed areas(million m):172022:18|2018:25Total waste disposed(million tonnes):22022:2Operational spills of more than 100 kilograms(thousa

133、nd tonnes):0.37 2022:0.06*Non-GAAP measure(see page 365).A In 2023 unless stated otherwise.B At December 31.C 2022 comparative has been revised following a new reporting methodology.Strategic Report|Powering Progress strategyHow we create value continued11Shell Annual Report and Accounts 2023Energyu

134、seCustomersectorsEnergy solutionsAssets and capabilitiesSUPPORTING THE DELIVERY OF INTEGRATED ENERGY SOLUTIONSCommercialMarineAviationIndustrialMobilityElectricityGas-to-liquidsLiquefied natural gasFuelsChemicalsBiofuelsHydrogenNatural gasLubricantsTechnology and operational excellenceOilLNG and GTL

135、Energy and chemicals parksRenewablesGasTransportBiomassPowerPeopleCarbon removals and offsetsValue enhanced by trading and optimisationCommercialroad transport1011Shell Annual Report and Accounts 2023Shell Annual Report and Accounts 2023In 2023,we made good progress on the longer-term business targe

136、ts that we announced at Capital Markets Day inJune 2023.All other business targets have been retired in our drive for simplification and focus on performance.More valueShareholder distribution 30-40%of CFFO*through thecycle A%Price-normalised FCFgrowth*6%per year through2030 B$billionPrice-normalise

137、d FCF growth/share*10%per year through2025 B$/shareStructural cost reduction*vs.2022($2-3 billion)by end of2025 C$billion*Non-GAAP measure(see page 365).A CFFO:cash flow from operating activities.B FCF:free cash flow.C 2025 target reflects annualised savings achieved by end-2025.Less emissionsNet-ze

138、ro emissions by 2050(Scope 1,2 and 3)Dmillion tonnes of CO2eHalving Scope 1&2 emissions by 2030 under operational control(2016 baseline)D,Hmillion tonnes of CO2eEliminate routine flaring from upstream operations by 2025 D,Emillion tonnesMethane emissions intensity maintained below 0.2%until 2025 D,F

139、 and achieve near-zero methane emissions by 2030D,G%D See Our journey to net zero section.E Subject to completion of the sale of SPDC.F In view of the methane emissions intensity target of below 0.2%having been met thereference to thetarget year of 2025 has been removed as part of the energy transit

140、ion strategy update.G Methane emissions were 41thousand tonnes in 2023(2022:40,2021:55)H 2030 target is on a net basis.Strategic Report|Powering Progress strategyProgress againstour longer-termbusiness targets12Shell Annual Report and Accounts 20231,6451,2401,2202320500.220210.10.12022020

141、25202383585742320300.05%0.06%0maintain below 0.2%0.05%202220240%38%42%202220231.02-32023202520252022203020232.93.820222025202312Shell Annual Report and Accounts 2023Delivering our strategy will require clear and deliberate capital allocation choices.We intend to focus on invest

142、ing in businesses where we believe we have an enduring competitive advantage.The outlook for cash capital spending in 2024 and 2025 is in the$22-25 billion per year range.Additionally,we aim to reduce structural costs by$2-3billion by the end of 2025,compared with 2022.Our target for shareholder dis

143、tributions is 30-40%of cash flow from operations through the cycle.We may return cash to shareholders through a combination of dividends and share buybacks.We increased our dividend per share in 2023 and it is now 25%higher than the dividends for 2022.Subject to Board approval,we aim to grow the div

144、idend per share by around 4%every year.When setting the level of shareholder distributions,the Board looks at a range of factors,including the macro environment,our underlying business earnings and cash flow,the current balance sheet,future investment,acquisition,and divestment plans and existing co

145、mmitments.In 2023,we renewed our focus on performance,discipline and simplification.We intend to demonstrate delivery of our targets,whilestrengthening the foundation of our lower-carbon businesses.Recent times have been a stark reminder that energy security cannot betaken for granted.We support a b

146、alanced energy transition,where the world does not dismantle the current energy system faster than the clean energy system of the future can be built.We are committed to our liquefied natural gas(LNG)business and growing it with some of the lowest emissions in our industry.We will increase capacity

147、for our LNG portfolio by around 11 million tonnes per year in the second half of the decade that is an annual increase of more than a quarter of our current capacity.LNG plays an important role as a lower-carbon alternative tocoal and as a partner to wind andsolar power for electricity generation.Ou

148、r Upstream business aims to keep liquids production levels flat,while producing oil with lower emissions.We will be transforming our Downstream,Renewables andEnergy Solutions business to offer more low-carbon solutions,whilereducing sales of oil products.The statements in this Outlook section are fo

149、rward-looking statements basedonmanagements current expectations and certain material assumptions and,accordingly,involve risks and uncertainties that couldcause actual results,performance or events to differ materially from those expressed or implied herein.Financial framework Balanced Capital Allo

150、cationEnhanced shareholder distributionsTargeting total shareholder distributions of30-40%ofcash flow from operating activities through the cycleAround 4%annual growthin dividend per share,subjectto Board approvalStrong balance sheetTargeting AA credit metrics throughthecycleDisciplined investmentCa

151、sh capex within$22-25 billionper annum for 2024 and 2025Strategic Report|Powering Progress strategyOutlookfor 2024 and beyond13Shell Annual Report and Accounts 202313Shell Annual Report and Accounts 2023The risks discussed below could have a material adverse effect separately,orin combination,on our

152、 earnings,cash flows and financial condition.Accordingly,investors should carefully consider theserisks.Further background on each risk is set out in the relevant sections of this Report,indicated by way of cross references.The Boards responsibility for identifying,evaluating and managing our signif

153、icant and emerging risks is discussed in Other regulatory and statutory information on pages 219-227.Strategic risksWe are exposed to macroeconomic risks,including fluctuating prices ofcrude oil,natural gas,oil products and chemicals.See Market overview on page 38.Risk descriptionThe prices of crude

154、 oil,natural gas,oil products and chemicals can be volatile and are affected by supply and demand,both globally and regionally.Under high oil andgas prices,our entitlement to proved reserves under some production-sharing contracts has been,and could continue to be,reduced.Higher prices could also re

155、duce demand for our products which could result in lower profitability in certain businesses in the Group,particularly in our Chemicals and Products,and Marketing businesses.Some of the reduction in demand could be permanent.Higher prices can also lead to more capacity being built,potentially result

156、ing in an oversupplied market which would negatively affect our businesses.In the past,ahigh oil and gas price environment has generally led to sharp increases in costs and this could continue.In addition,macroeconomic,geopolitical and technological uncertainties have affected,and could continue to

157、affect,production costs and demand for our products.Government actions may affect the prices of crude oil,natural gas,oil products and chemicals.These include price caps on gas,the promotion of electric vehicle sales or the phasing-out of future sales of new diesel or gasoline vehicles(asannounced i

158、n the UK and due to come into force in 2035).Oil and gas prices can also move independently of each other(as seen with European gas prices in 2022).Factors that influence supply and demand include operational issues,natural disasters,weather,pandemics such as COVID-19,political instability,conflicts

159、,such as Russias full-scale invasion of Ukraine and the conflict in Gaza,economic conditions,including inflation,and actions by major oil-and gas-producing countries.In a low oil and gas price environment,we have generated,and could continue to generate,less revenue from our Upstream and Integrated

160、Gas businesses,and parts of those businesses could become less profitable or incur losses.Low oil and gas prices have also resulted and could continue to result in the debooking of proved oil or gas reserves,if they become uneconomic in this type of price environment.Prolonged periods of low oil and

161、 gas prices,or rising costs,have resulted and could continue to result inprojects being delayed or cancelled.Assets have been impaired in the past,and there could be impairments in the future.Low oil and gas prices have affected,and could continue to affect,our ability tomaintain our long-term capit

162、al investment and shareholder distribution programmes.Prolonged periods of low oil and gas prices could adversely affect the financial,fiscal,legal,political and social stability ofcountries that rely significantly on oil and gas revenue.Accordingly,price fluctuations could have a material adverse e

163、ffect on our earnings,cash flows and financial condition.How this risk is managedWe maintain a diversified portfolio to manage the impact of price volatility.We test the resilience of our projects and other opportunities against a range of prices and costs for crude oil,natural gas,oil products and

164、chemicals.We prepare annual strategic and financial plans that test different scenarios and their impact on prices on our businesses and organisation as a whole.Through this process,we identify potential interventions that would preserve cash levels.We also aim to maintain a strong balance sheet thr

165、ough the cycle to provide resilience against weak market prices.Our ability to deliver competitive returns and pursue commercial opportunities depends in part on the accuracy of our price assumptions.See Market overview on page 39.Risk descriptionWe use a range of commodity price and margin assumpti

166、ons,which we review on a periodic basis.Theseranges help us to evaluate the robustness of our capital allocation for our evaluation of projects and commercial opportunities.If our assumptions prove to be incorrect,this could have a material adverse effect on our earnings,cash flows and financial con

167、dition.How this risk is managedThe range of commodity prices and margins used in our project and portfolio evaluations is subject to a rigorous assessment of short-,medium-and long-term market drivers.These drivers include the extent and pace of the energy transition.Our ability to achieve our strat

168、egic objectives depends on how we react to competitive forces.See Outlook for 2024 and beyond on page 13.Risk descriptionWe face competition in all our businesses.We seek to differentiate our services and products,though many of our products are competing in commodity-type markets.Accordingly,failur

169、e to manage our costs and our operational performance could result in a material adverse effect on our earnings,cash flows and financial condition.We also compete with state-owned hydrocarbon entities and state-backed utility entities with access to financial resources and local markets.Such entitie

170、s could be motivated by political or other factors in making their business decisions.Accordingly,when bidding on new leases or projects,we could find ourselves at a competitive disadvantage because these state-owned entities may not require a competitive return.If we are unable to obtain competitiv

171、e returns when bidding on new leases or projects,this could have a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedWe continually assess the external environment-themarkets and the underlying economic,political,social and environmental drivers that

172、shape them-to evaluate changes in competitive forces.We define multiple future potential scenarios and business environments by identifying drivers,uncertainties,enablers and constraints to our competitiveness.These scenarios help us to find issues which affect our operating environment andhave impl

173、ications for our strategy.Strategic ReportRisk factors14Shell Annual Report and Accounts 202314Shell Annual Report and Accounts 2023 Strategic risks continuedRising concerns about climate change and effects of the energy transition could lead to a fall in demand and potentially lower prices for foss

174、il fuels.Climate change could also have a physical impact on our assets and supply chains.This risk has resulted in adverse litigation and regulatory developments which may recur in the future,resulting in project delays or cancellations,potential additional litigation,operational restrictions and a

175、dditional compliance obligations.See Our journey to net zero on pages 82-115,Climate change and energy transition on pages 259-269,Renewables and energy solutions on pages 75-78 and Legal proceedings and other contingencies on pages 312-314.Risk descriptionSocietal demand for urgent action on climat

176、e change has increased,especially since the Intergovernmental Panel on Climate Change(IPCC)Special Report on Global Warming of 1.5C effectively made the more ambitious goal of the Paris Agreement to limit the rise in global average temperature this century to 1.5C the default target.This increasing

177、focus on climate change and drive for an energy transition have created a risk environment that is changing rapidly,resulting in a wide range of stakeholder actions at global,local and company levels.The potential impact andlikelihood of the associated exposure for Shell could vary across different

178、timehorizons,depending on the specific components of the risk.We expect that a growing share of our greenhouse gas(GHG)emissions will be subjectto regulation,resulting in increased compliance costs and operational restrictions.Regulators may seek to limit certain oil and gas projects or make it more

179、 difficult to obtain required permits.Additionally,climate activists are challenging the grant of newand existing regulatory permits,and protesting at some of our facilities and projects.Weexpect that these challenges and protests are likely to continue and could delay or prohibit operations in cert

180、ain cases.Our journey to achieving our target of becoming anet-zero emissions energy business has resulted in and could continue to require additional costs.We also expect that actions by customers to reduce their emissions will lower demand and potentially affect prices for fossil fuels,as will inc

181、reasing levels of GHG emissions regulation through taxes,fees and/or other incentives.This could be a factor contributing to additional provisions for our assets and result in lowerearnings,cancelled projects and potential impairment of certain assets.The pace and extent of the energy transition cou

182、ld pose a risk to Shell if we decarbonise our operations and the energy we sell at a different speed relative to society.If we are slower than society,customers may prefer a different supplier,which would reduce demand for our products and adversely affect our reputation besides materially affecting

183、our financial results.If we move much faster than society,we risk investing intechnologies,low-carbon products or markets for which or where demand fails to materialise.The operating margins for our low-carbon products and services have been,and could continue to be lower than the margins we have ex

184、perienced historically in ouroil and gasoperations.Changes in climate-related regulations may also impact ourreturns.The physical effects of climate change such as,but not limited to,increases intemperature and sea levels and fluctuations in water levels could also adversely affectour operations and

185、 supply chains.Certain investors have decided to divest their investments in fossil fuel companies.Ifthiswere to continue,it could have a material adverse effect on the price of our securities and our ability to access capital markets.Stakeholder groups are also putting pressure on commercial and in

186、vestment banks to stop financing fossil fuel companies.Some financial institutions have started to limit their exposure to fossil fuelprojects.Accordingly,our ability to use financing for these types of future projectsmay be adversely affected.This could also adversely affect our partners ability to

187、 finance theirportion of costs,either through equity or debt.In some countries governments,regulators,non-governmental organisations and individuals have filed lawsuits seeking to hold fossil fuel companies liable for costs associated with climate change.Losing climate change lawsuits that have been

188、 filed against us could have a material adverse effect on our earnings,cash flows and financial condition.For example,in May 2021,the District Court in The Hague,the Netherlands,ruled that by end 2030,Shell must reduce its aggregate net Scope 1,2 and 3 emissions by 45%,compared with 2019 levels.The

189、Scope 1 component is a results-based obligation and the Scope 2 and 3 components are a significant best-efforts obligation.As new technologies are developed to more accurately measure emissions,we may be required to revise our emissions estimates and reduction targets.Even if we meet our targets,our

190、 efforts may be characterised as insufficient.In summary,rising climate change concerns,the pace at which we decarbonise ouroperations relative to society and effects of the energy transition pose multiple challenges toour business.These could,individually or collectively,result in,for example,finan

191、cial penalties,additional provisions or payments of financial damages,and have a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedOur response to the evolving risk outlook requires transparency and clarity around our plans and actions to achieve our

192、climate target.Our climate change risk management approach is supported by standards and manuals as part of our Health,Safety,Security and Environment and Social Performance(HSSE&SP)Control Framework.Climate change and risks resulting from GHG emissions are reviewed and managed in accordance with ot

193、her significant risks through theBoard and the Executive Committee.We have established several dedicated internal forums related to climate change and the energy transition.These are at different levels of the organisation and seek to address,monitor and review climate change issues.Our strategy to

194、assess and manage risks and opportunities resulting from climate change includes considering different time horizons and their relevance to risk identification and business planning.We actively monitor societal developments,such as regulation-driven carbon-pricing mechanisms and customer-driven pref

195、erences for products.We incorporate these into potential scenarios which provide insights into howthe energy transition may unfold in the medium and long term.These insights and those from various other external scenarios(such asthose prepared for the IPCC Sixth Assessment Report)guide how we set ou

196、r strategic direction,capital allocation and carbon emission reduction targets.Overall,we mitigate climate-related risks through our Powering Progress strategy to deliver more value with less emissions.With our focus on performance,discipline and simplification,we believe that we are in a better pos

197、ition to achieve both our financial and climate-related targets and ambitions.This approach includes:reducing the GHG emissions from our operations(Scope 1 and 2)byimproving our energy efficiency,deploying renewable electricity,managing flaring,and reducing methane emissions in our assets andproject

198、s;growing our world-leading liquefied natural gas(LNG)business while decarbonising our LNG portfolio in two main ways:by growing our portfolio with a lower carbon intensity,and by focusing on reducing emissions of methane;managing our Upstream portfolio to support a balanced energy transition by cut

199、ting emissions from oil and gas production,while keeping oil production stable.Oil production is increasingly from ourdeep-water business which,through innovation,produces higher-margin and lower-carbon barrels;andtransforming our businesses in Downstream and Renewables and Energy Solutions to offer

200、 more low-carbon solutions,while reducing sales of oil products.Our investments in low-carbon solutions are subject to financial modelling and stress-testing,due diligence and risk assessments to ensure that ourcapital is allocated to the most attractive low-carbon projects and opportunities.In addi

201、tion,we are working to effectively adapt our assets and activities to enhance our resilience to the physical risks related to climate change where needed.We are also working with governments on their climate policy to help establish regulatory frameworks that will enable society to reach the goalsof

202、 the Paris Agreement.We signed up to the Oil and Gas Decarbonization Charter announced at COP28,within which organisations have pledged to achieve near-zero methane emissions by 2030 and zero routine flaring by no later than 2030.We also intend to contribute to the World Banks Global Flaring and Met

203、hane Reduction Fund,which was launched at COP28.In relation to the ruling delivered bythe District Court in The Hague in May 2021,we have appealed the ruling but continue to implement our Powering Progress strategy to become a net-zero emissions energy business by 2050,regardless ofwhether we win or

204、 lose the appeal.Strategic ReportRisk factors continued15Shell Annual Report and Accounts 202315Shell Annual Report and Accounts 2023 We operate in more than 70 countries that have differing degrees of political,legal and fiscal stability.This exposes us to a wide range of political developments tha

205、t could result in changes to contractual terms,laws and regulations.We and our joint arrangements and associates also face the risk of litigation and disputes worldwide.See Other regulatory and statutory information onpage 225.Risk descriptionDevelopments in politics,laws and regulations can and do

206、affect our supply chains and operations.Potential impacts,whichwe have experienced in the past,include:forced divestment of assets;expropriation of property;cancellation or forced renegotiation of contract rights;delay of new projects;additional taxes,including windfall taxes(especially during perio

207、ds of prolonged high oil and gas prices experienced in recent years,such as 2022),restrictions on deductions and retroactive tax claims;antitrust claims;changes to trade compliance regulations;price controls;local content requirements;foreign exchange controls;changes to environmental regulations;ch

208、anges to regulatory interpretations and enforcement;and changes to disclosure requirements.Many parts of the world are facing economic and fiscal challenges and growing pressure on cost-of-living standards.These issues impact our business as governments,in response to political and social pressures,

209、pursue policies that could have a material adverse effect on our earnings,cash flows and financial condition.The world is also facing continued geopolitical instability,including Russias full-scale invasion of Ukraine,which impacts market conditions and our operations.The broader consequences of the

210、 conflict in Gaza remain uncertain and a wider regional escalation could have greater impacts on our operations in the Middle East and beyond.From time to time,social and political factors play a role in unprecedented and unanticipated judicial outcomes that could adversely affect Shell.Noncomplianc

211、e with policies and regulations could result in regulatory investigations,litigation and,ultimately,sanctions.Certain governments and regulatory bodies have,in Shells opinion,exceeded their constitutional authority by:attempting unilaterally to amend or cancel existing agreements or arrangements;fai

212、ling to honour existing contractual commitments;and seeking to adjudicate disputes between private litigants.Certain governments have also adopted laws and regulations that could potentially conflict with other countries laws and regulations,potentially subjecting us to criminal and civil sanctions.

213、Such developments and outcomes could have a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedWe continually monitor geopolitical developments and societal issues relevant to our interests.Our Legal and Tax functions are organised globally and support

214、 our business lines in seeking to ensure compliance with local laws and fiscal regulations,and filing proactive claims where warranted to protest unfair practices.Our Corporate Relations department liaises with governments in countries where we operate to understand and engage on local policies and

215、toadvocate Shells position on topics relevant to ourindustry.We are prepared to exit a country ifwe believe we can no longer operate there in accordance with our standards and applicable law,and we have done so in the past.With regard to the conflict in Gaza,we have made adjustments to our operation

216、s in the Middle East to reduce our exposure and are closely monitoring the risk of a wider regional escalation.An erosion of our business reputation could have a material adverse effect on our brand,our ability to secure new hydrocarbon or low-carbon opportunities or access capital markets,and on ou

217、r licence to operate.See Living by our values onpage 137.Risk descriptionOur reputation is an important asset.The Shell General Business Principles(SGBP)govern how Shell andits individual companies conduct their affairs,and the Shell Code of Conduct tells employees andcontract staff how to behave in

218、 line with the SGBP.Our challenge is to ensure that all employees and contract staff comply with the Principles and the Code of Conduct.Real or perceived failures of governance or regulatory compliance or a perceived lack of understanding of how our operations affectsurrounding communities could har

219、m our reputation.Societal expectations of companies are increasing,with a focus on business ethics,quality of products,contribution to society,safety and minimising damage to the environment.There is increasing focus on therole of oil and gas in the context of climate change and the energy transitio

220、n.Non-governmental organisations(NGOs)continue to challenge Shells social and legal licence to operate through activities to block or delay projects and by bringing legal actions,diverting our resources.In key markets,we are seeing an increasing number of protests at external events such as the Annu

221、al General Meeting,claims brought by NGOs and our brand communications have been subject to bans from advertising regulators in the UK and the Netherlands,following complaints received from members of the public.During prolonged periods of high oil and gas prices,the oil and gas industry could be ac

222、cused of profiteering from higher fuel and electricity prices and therefore impacting living costs.This could negatively affect ourbrand,reputation and licence to operate,which could limit our ability to deliver our strategy,reduce consumer demand for our branded and non-branded products,harm our ab

223、ility to secure new resources and contracts,and restrict our ability to access capital markets or attract staff.Many other factors,including the materialisation of other risks discussed in this section,could negatively affect our reputation and could have a material adverse effect on our earnings,ca

224、sh flows and financial condition.How this risk is managedThe SGBP set out our responsibilities to shareholders,customers,employees,business partners and society.They set the standards for how we conduct business with integrity,care and respect for people.All Shell employees and contractors,and those

225、 at joint ventures we operate,are expected to behave in line with these business principles.We undertake a range of activities to help embed the SGBP throughout the organisation.This involves training,encouraging people to discuss the dilemmas they face in their work.We continually assess and monito

226、r the external environment for potential risks to our reputation.Weengage in dialogue with our key stakeholders,such as investors,industry and trade groups,academics,governments and non-governmental organisations to gain greater insights into societal expectations of the Shell Group of companies.Wea

227、lso take proactive steps when warranted,through legal means to protect our reputation fromunwarranted accusations.We have mitigation plans for identified individual risks at the Group,country and line of business level.Our country chairs are responsible for implementing country plans which are updat

228、ed annually.We continually develop and defend our brand in line with Shells purpose and promises and target our efforts to drive brand differentiation,relevance andpreference.Strategic risks continuedStrategic ReportRisk factors continued16Shell Annual Report and Accounts 202316Shell Annual Report a

229、nd Accounts 2023 Operational risksSome of the consequences of Russias full-scale invasion of Ukraine remain unpredictable.The evolving geopolitical situation,including sanctions and export controls,has caused challenges to our operations,the security of our people,and has created new reputational ex

230、posure,both of which are likely to continue in the medium to longer term.See Other regulatory and statutory information onpage 225.Risk descriptionThe Russia-Ukraine war continues to pose challenges to our operations and commercial decisions.Thesubsequent sanctions and export controls imposed by cou

231、ntries around the world are continuing tohave a material impact on a number of our activities,including supply,trading and treasury activities.More sanctions and export controls could be expected.This continuing war could give rise to additional events that could materially impact our operations,whi

232、chmay be temporary or more permanent in nature.These risks and future events could impact the security of our people,our supply chain,commodity prices,credit,commodity trading,treasury and legalactivities.In addition,there are potential reputational risks associated with how Shells decisions inrespo

233、nse toevolving challenges are perceived.The tensions also create heightened cyber security threats to our information technology(IT)infrastructure.Any of these factors,individually or in aggregate,could have a material adverse effect on our earnings,cash flows and financial condition.How this risk i

234、s managedIn response to the invasion,a Group Crisis Teamwas set up to assess the situation,consider potential scenarios of how events may further develop and coordinate responses accordingly.Theteam continues to play an oversight and cross-coordination role across Shells different lines ofbusinesses

235、.Care for our people remains Shells top priority.We continue to closely monitor and respond to thesanctions that have been imposed and follow international guidelines where relevant to our business activities.Shell no longer participates in any joint ventures with Gazprom and related entities with o

236、ngoing operations inside Russia.Shell has also exited all itsdownstream business(including service stations,fuels supply and lubricants)in Russia.The estimation of proved oil and gas reserves involves subjective judgements based on available information and the application ofcomplex rules.This means

237、 subsequent downward adjustments arepossible.See Supplementary information-oil and gas(unaudited)on pages 317-335.Risk descriptionThe estimation of proved oil and gas reserves involves subjective judgements and determinations based on available geological,technical,contractual and economic informati

238、on.Estimates can change over time because of new information from production or drilling activities,changes in economic factors,such as oil and gas prices,alterations in the regulatory policies of host governments,or other events.Estimates also change to reflect acquisitions,divestments,new discover

239、ies,extensions of existing fields and mines,and improved recovery techniques.Published proved oil and gas reserves estimates could also be subjectto correction because of errors in the application of rules and changes in guidance.Downward adjustments could indicate lower future production volumes an

240、d could also lead to impairment of assets.This could have a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedA central group of reserves experts undertakes the primary assurance of the proved reserves bookings.A multidisciplinary committee reviews an

241、d endorses all major proved reserves bookings.Shells Audit and Risk Committee reviews all proved reserves bookings and Shells CEO is responsible for final approval.The Internal Audit function also provides further assurance through audits of the control framework,from which information disclosed inS

242、upplementary information oil and gas(unaudited)is obtained.Strategic ReportRisk factors continued17Shell Annual Report and Accounts 202317Shell Annual Report and Accounts 2023 Operational risks continuedOur future hydrocarbon production depends on the delivery of large and integrated projects and ou

243、r ability to replace proved oil and gas reserves.See Oil and gas information on pages 55-62.Risk descriptionWe face numerous challenges in developing capital projects,especially those which are large and integrated.Challenges include:uncertain geology;frontier conditions;the existence and availabili

244、ty ofnecessary technology and engineering resources;the availability of skilled labour;the existence of transport infrastructure;project delays;the expiration of licences;delays in obtaining required permits;potential cost overruns;and technical,fiscal,regulatory,political and other conditions.These

245、 challenges are particularly relevant in certain developing and emerging market countries,in frontier areas and in deep-water fields,such as off the coast of Namibia.We may fail to assess or manage these and other risks properly.Such potential obstacles could impair our delivery of these projects,ou

246、r ability to fulfil the full potential value of the project as assessed when the investment was approved,and our ability to fulfil related contractual commitments.This could lead to impairments and could have a material adverse effecton our earnings,cash flows and financial condition.Future oil and

247、gas production will depend on our access to new proved reserves through exploration,negotiations with governments and other owners of proved reserves and acquisitions,and through developing and applying new technologies and recovery processes to existing fields.Failure to replace proved reserves cou

248、ld result in an accelerated decrease of future production,potentially having a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedWe continue to explore for and mature hydrocarbons across our Upstream and Integrated Gas businesses.We use our subsurface

249、,project andtechnical expertise,and actively manage non-technical risks across a diversified portfolio of opportunities and projects.This involves adopting anintegrated approach for all stages,from basin choice to development.We use competitive techniques and benchmark our approach internallyand ext

250、ernally.Oil and gas production available for saleMillion boe A202320222021Shell subsidiaries9379381,047Shell share of joint ventures and associates82108134Total1,0191,0461,181A Natural gas volumes are converted into oil equivalent using a factor of 5,800 scf per barrel.Proved developed and undevelop

251、ed oil and gas reserves ABMillion boe CDec 31,2023Dec 31,2022Dec 31,2021Shell subsidiaries8,2838,3178,456Shell share of joint ventures and associates1,5041,261909Total9,7879,5789,365Attributable to non-controlling interest of Shell subsidiaries378 365 267A We manage our total proved reserves base wi

252、thout distinguishing between proved reserves from subsidiaries and those from joint ventures and associates.B Includes proved reserves associated with future production that will be consumed in operations.C Natural gas volumes are converted into oil equivalent using a factor of 5,800 scf per barrel.

253、Strategic ReportRisk factors continued18Shell Annual Report and Accounts 202318Shell Annual Report and Accounts 2023 Operational risks continuedThe nature of our operations exposes us,and the communities in which we work,to a wide range of health,safety,security and environment risks.See Safety on p

254、ages 133-136 and Living by our values on pages 139.Risk descriptionThe health,safety,security and environment(HSSE)risks to which we and the communities in which we work are potentially exposed cover a wide spectrum,given the geographical range,operational diversity and technical complexity of our o

255、perations.These risks include the effects of natural disasters(including weather events and earthquakes),social unrest,pandemic diseases,criminal actions by external parties,and safety lapses.If a major risk materialises,such as an explosion or hydrocarbon leak or spill,which we have experienced in

256、the past,this could result in injuries,loss of life,environmental harm,disruption of business activities,loss or suspension of permits,loss of our licence to operate and loss of our ability to bid on mineral rights.Accordingly,this could have a material adverse effect on our earnings,cash flows and

257、financial condition.Our operations are subject to extensive HSSE regulatory requirements that often change and are likely to become more stringent over time.Governments could require operators to adjust their future production plans,affecting production and costs.We could incur significant extra cos

258、ts in the future because of the need to comply with such requirements.We could also incur significant extra costs due to violations of orliabilities under laws and regulations that involve elements such as fines,penalties,clean-up costs and third-party claims.If HSSE risks materialise,they could hav

259、e amaterial adverse effect on our earnings,cash flows and financial condition.How this risk is managedWe have internal standards and a clear governance structure tohelp manage HSSE risks and avoid potential adverse effects.Our governance structure and standards also help us to develop mitigation str

260、ategies aimed at ensuring that if an HSSE riskmaterialises,we avoid the worst possible consequences and have ways to remediate any environmental damage.Our standards describe how key control processes need to be implemented,for example,to ensure safe production and equipment care.When planning new m

261、ajor projects,we conduct detailed environmental,socialand health impact assessments.We routinelypractise our emergency response plans forpotentialevents,such asspills or fire,which poseasignificant risk.Our standards and governance structure are currently defined in our Health,Safety,Security,Enviro

262、nment and Social Performance(HSSE&SP)Control Framework and supporting guidance documents.We are in the process of transitioning tonew Safety,Environment and Asset ManagementStandards as part of the ShellPerformance Framework.The Shell Internal Audit and Investigation team provides assurance on the H

263、SSE&SP controls totheAudit and Risk Committee.A further erosion of the business and operating environment in Nigeria could have a material adverse effect on us.See Upstream on page 52 and Legal proceedings and other contingencies onpages312-314.Risk descriptionIn our Nigerian operations,we face vari

264、ous risks and adverse conditions.These include:security incidents affecting the safety of our people,host communities and operations;sabotage and crude theft;ongoing litigation;limited infrastructure;challenges presented by delayed government and partner funding and budget delays;and regional instab

265、ility created by militant activities.Some of these risks and adverse conditions,such as security issues affecting the safety of our people and sabotage and theft,have occurred in the past and are likely to continue in the future,with a potential material adverse effect onourearnings,cash flows and f

266、inancial condition.How this risk is managedWe test the economic and operational resilience ofour Nigerian projects against a wide range ofassumptions and scenarios.We seek to proportionally share risks and funding commitments with joint-venture partners.When we participate injoint ventures in Nigeri

267、a,we require that they operate in accordance with good industry practice.We monitor the security situation,and liaise with host communities,governmental and non-governmental organisations to help promote peaceful and safe operations.Upon completion of the announced sale(subject toregulatory approval

268、s and other conditions)ofouronshore Nigeria business,our exposure to these risks is expected to reduce.Shell has other businesses in Nigeria that are outside the scope ofthe announced transaction.Strategic ReportRisk factors continued19Shell Annual Report and Accounts 202319Shell Annual Report and A

269、ccounts 2023 Operational risks continuedWe rely heavily on information technology systems in our operations.See Other central activities on page81.Risk descriptionOur continued focus on digitalising our business processes,and our increasing dependence on information technology(IT)systems for our cor

270、e operations,mean that we are heavily reliant on secure,affordable and resilient IT services provided both in-house and by third parties.Externally,we observe several developments impacting our IT and cyber risk profile:deterioration of the cyber security threat landscape represented by increasing v

271、olumes of attacks by sophisticated cyber actors,technology developments(such as artificial intelligence),geopolitical conflicts and increases inregulations across the markets in which Shell operates.We have observed an increase in social engineering(manipulation of individuals)as a method of financi

272、ally driven cyber crime.Threat actors aretargeting bank account changes,invoice settlement and identity fraud to extract money from corporations.Ransomware attacks on corporations continue to be widespread.These contribute to potential breaches and disruptions of critical IT services,such as the sec

273、urity incident involving the transfer of files which Shell experienced in 2023.If breaches are not detected early and responded to effectively,they could impact our operations and the safety of our staff and/or harm our reputation and/or result in material regulatory fines.This could have a material

274、 adverse effect on our earnings,cash flows and financial condition.How this risk is managedOur global integrated Information Risk Management(IRM)and cyber defence teams arestaffed with cyber security professionals that monitor,assure and defend our global IT landscape.Our cyber security capabilities

275、 are embedded into our IT systems,and our IT is protected by various detective and protective technologies.A structured approach to identify,assess and mitigate the IT and cyber security risks is built into our support processes and aligns to industry best practices.We continuously track cyber attac

276、ks,threat intelligence and vulnerabilities in our IT landscape and have a well-structured incident management and escalation process in place.The security of IT services,where operated by external IT companies,is managed through contractual clauses and additionally through formal supplier assurance

277、reports for critical IT services.Shell engages an external party to perform periodic benchmarking of Shells approach to cyber security risk management in comparison to industry and peers.We develop our cyber security capabilities,based on external dynamics,benchmarking outcomes and assurance results

278、 andtake a risk-based approach in our investment decisions related to cyber security risk strategy.Our information risk management practices,and cyber security risks and strategy are regularly discussed by and among our Chief Information Security Officer,Shells Information and Digital Technology lea

279、dership,the Executive Committee,the Audit and Risk Committee and the Board of Directors.These discussions involve consideration ofchanges in the external environment,how Shellisresponding to cyber security risks and implementation of further remedial actions as appropriate.In 2023,these reviews were

280、 supplemented by dedicated deep dives into areas such as the emerging risks(and opportunities)associated with generative artificial intelligence.Our business exposes us to risks of social instability,criminality,civil unrest,terrorism,piracy,cyber disruption and acts of war that could have a materia

281、l adverse effect on our operations.See Safety on page 136.Risk descriptionAs seen in recent years,these risks can manifest themselves in the countries where we operate and elsewhere.These risks impact people,our operations and assets.Risks which have materialised in the past include:acts of terroris

282、m;acts of criminality,including maritime piracy,sabotage and tapping into our pipelines in Nigeria;cyber espionage or disruptive cyber attacks;conflicts,including war-such as Russias full-scale invasion of Ukraine;civil unrest such as the 2023 political unrest in Pakistan;malicious acts carried out

283、by individuals within Shell,such as data exfiltration during divestments;and environmental and climate activism(including disruptions by non-governmental organisations)especially in the USA and north-west Europe,where,for example,activists boarded and protested during the sailing of the Penguins flo

284、ating production and storage and offloading(FPSO)vessel to Norway.The above risks can threaten the safe operation of our assets and the transport of our products.They canharm the well-being of our people,inflict loss of life and injuries,and disrupt our operational activities.They can also damage th

285、e environment and negatively impact our reputation.These risks could have a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedWe seek to obtain the best possible information to enable us to assess threats and risks.We conduct detailed threat and risk

286、assessments for Shell-operated venture assets,facilities,businesses,projects and activities,so that security risk mitigations achieve the principles of deter,detect,delay and respond.Further mitigations include strengthening the security of assets,reducing ourexposure as appropriate and using journe

287、y management plans.We also invest in information risk management capabilities and crisis management and business continuity measures.Welearn from incidents,in order to continually improve our security risk management in Shell.Strategic ReportRisk factors continued20Shell Annual Report and Accounts 2

288、02320Shell Annual Report and Accounts 2023The Groningen region in the Netherlands continues to experience earthquakes induced by historical gas production activities,affecting local communities.See Upstream on page 49 and Legal proceedings and other contingencies on page313.Risk descriptionShell and

289、 ExxonMobil are 50:50 shareholders in Nederlandse Aardolie Maatschappij B.V.(NAM).Animportant part of NAMs gas production comes from the onshore Groningen gas field,in which EBN,a Dutch government entity,has a 40%interest and NAM a 60%interest.The Dutch government issues annual gas production instru

290、ctions for the Groningen field.As per the latest instruction,production ceased on October 1,2023.However,the Dutch government has indicated to NAM it could decree a restart of minimal production in exceptional circumstances during the current gas year,which occurred on January 8-10,2024,for a cold s

291、pell of several days.The region is still experiencing earthquakes induced by historical gas production.This has resulted in damaged buildings in the region,which has led to complaints and lawsuits from the local community and promises of compensation from the Dutch government to the region.The Dutch

292、 State has taken over the handling of damage claims from NAM for all claim categories,as well as activities to strengthen buildings in the region,while NAM remains financially responsible insofar as the costs correspond to NAMs liability.While we expect the cessation of production from the Groningen

293、 gas field on October 1,2023,to further reduce seismicity,any additional earthquakes,or the government passing on costs to NAM beyond NAMs liability,could have further material adverse effects on our earnings,cash flows and financial condition.How this risk is managedNAM is working with the Dutch go

294、vernment and other stakeholders to fulfil its obligations to residents of the area.These include compensating for damage caused by the earthquakes and paying to strengthen houses where this is required for safety.In 2022,NAM started arbitrations with the Dutch government to have its financial liabil

295、ity determined for costs which the Dutch government compensated to claimants and subsequently charged to NAM.Shell and ExxonMobil intend to reach a final,all-encompassing settlement with the Dutch government on the new design of the Dutch Gasgebouw and the winding-down of natural gas production in G

296、roningen.Shell,ExxonMobil and the Dutch government reached agreements in 2018(Heads ofAgreement)and 2019(Interim Agreement),andsubsequently have been engaged in discussions on the interpretation and implementation of these agreements and on a final and all-encompassing settlement.However,as these di

297、scussions have notled to such a settlement,in December 2023,theNAM shareholders asked an independent arbitration panel to rule on the interpretation andimplementation of the agreements made in 2018/2019.The purpose of this arbitration is for aneutral third party to assess the situation and provide c

298、larity.The arbitration is expected to take several years,and the judgment will be binding.Thearbitration does not preclude a final and all-encompassing settlement,provided Shell,ExxonMobil and the Dutch government agree topursue such a settlement.Operational risks continuedStrategic ReportRisk facto

299、rs continued21Shell Annual Report and Accounts 202321Shell Annual Report and Accounts 2023 We are exposed to treasury and trading risks,including liquidity risk,interest rate risk,foreign exchange risk and credit risk.We are affected bythe global macroeconomic environment and the conditions of finan

300、cial and commodity markets.See Financial framework on page 34.Risk descriptionOur subsidiaries,joint arrangements and associates are subject to differing economic and financial market conditions around the world.Political or economic instability affects such markets.We use debt instruments,such as b

301、onds and commercial paper,to raise significant amounts of capital.Should access to debt markets become more challenging,the impact on our liquidity could have a material adverse effect on our operations.For example,some financial institutions have started to limit their exposure to fossil fuel proje

302、cts.Group financing costs could also be affected by interest rate fluctuations or any credit rating deterioration.We are exposed to changes in currency values and to exchange controls as a result of our substantial international operations.Our reporting currency is the US dollar,although,to a materi

303、al extent,we also hold assets and are exposed to liabilities in other currencies.While we undertake some foreign exchange hedging,we do not do so for all our activities.Evenwhere hedging is in place,it may not function as expected.Commodity trading is an important component of our businesses.Process

304、ing,managing and monitoring many trading transactions across the world,some of which are complex and,depending on the terms of our commodity contracts,exposes us to operational and market risks,including commodity price risks.Weuse derivative instruments such as futures,options and contracts for dif

305、ference to hedge market risks.Due to differences between derivative instruments available in the market to hedge market risks and the actual market risks we are exposed to,perfect hedging is not always achievable.Therefore,our hedging has from time to time not functioned as expected and may not func

306、tion as expected in the future.We undertake commodity trading to optimise commercial margins or to profit from expected market price movements.Even with sound risk management procedures and controls in place,this activity involves forecasting and hence we are exposed to the risk of incurring signifi

307、cant losses if prices develop contraryto management expectations.We are exposed to credit risk;our counterparties could fail or be unable to meet their payment and/or performance obligations under contractual arrangements.Our pension plans invest in government bonds,so they could be affected by a so

308、vereign debt downgrade or other default.If any of the above risks materialise,they could have a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedWe use various financial instruments for managing exposure to foreign exchange and interest rate movement

309、s.Our treasury operations are highly centralised and seek to manage credit exposures associated with our substantial cash,foreign exchange and interest rate positions.Our portfolioof cash investments is diversified to avoid concentrating risk in any one instrument,country or counterparty.Other than

310、in exceptional cases,the use of external derivative instruments is confined to specialist trading and central treasury organisations that have the appropriate skills,experience,supervision,control and reporting systems.In effecting commodity trades and derivative contracts,we operate within procedur

311、es and policies designed to ensure that market risks are managed within authorised limits and trading can only be performed by staff with the appropriate skills and experience.We closely monitor developments in sanctions and export controls toensure compliance with applicable laws and regulatory gui

312、dance.Senior Management regularly reviews mandated trading limits.A department that is independent from our traders monitors our market risk exposures daily,using value-at-risk techniques alongside other risk metrics as appropriate.We have credit risk policies in place which seek to ensure that prod

313、ucts are sold to customers withappropriate creditworthiness.These policies include detailed credit analysis and monitoring ofcustomers against counterparty credit limits.Where appropriate,netting arrangements,credit insurance,prepayments and collateral are used to manage credit risk.We maintain comm

314、itted credit facilities.Management believes it has access to sufficient debt funding sources(capital markets)and to undrawn committed borrowing facilities to meet foreseeable requirements.Operational risks continuedStrategic ReportRisk factors continued22Shell Annual Report and Accounts 202322Shell

315、Annual Report and Accounts 2023Our future performance depends on the successful development and deployment of new technologies that provide new products and solutions.See Other central activities on page 81.Risk descriptionTechnology and innovation are essential to our efforts to help meet the world

316、s energy demands competitively.If we fail to effectively develop or deploy new technology,products and solutions,orfail tomake full,effective use of our data in a timely and cost-effective manner,there could be a material adverse effect on the delivery of our strategy and our licence to operate.We o

317、perate in environments where advanced technologies are used.In developing new technologies,products and solutions,unknown or unforeseeable technological failures or environmental and health effects could harm our reputation and licence to operate or expose us to litigation or sanctions.The associate

318、d costs of new technology are sometimes underestimated.Sometimes the development of new technology is subject todelays.If we are unable to develop the right technology and products in a timely and cost-effective manner,or if we develop technologies,products and solutions that harm the environment or

319、 peoples health,there could be a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedShells Projects and Technology organisation and therelevant business lines work together to determine the content,scope and budget for developing new technology that su

320、pports our activities.The new technology is developed using a robust technology maturation process,to systematically de-risk both technical and commercial risks,while ensuring portfolio alignment with Shells strategic ambitions and deployment commitments.A significant proportion of Shells technology

321、 contributes to our emissions reduction targets.We benefit from collaborations with leading academic research institutes and universities,and from providing access to mentors and subject matter expertise to start-ups.Inour Shell GameChanger programme,we help start-ups and businesses on unproven earl

322、y-stage ideas to mature early-stage technologies.In our Shell Ventures scheme,we invest in and partner with start-ups and small and medium-sized enterprises that are in the early stages of developing new technologies.We have substantial pension commitments,the funding of which is subject to capital

323、market risks and other factors.See Financial framework on page 34.Risk descriptionLiabilities associated with defined benefit pension plans are significant,and the cash funding requirement of such plans can also involve significant liabilities.They both depend on various financial and demographic as

324、sumptions.Volatility in capital markets or government policies could affect investment performance,inflation and interest rates,causing significant changes to the funding level of future liabilities and/or short-term liquidity requirements.Changes in assumptions for mortality,retirement age or pensi

325、onable remuneration at retirement could also cause significant changes to the funding level of future liabilities.We operate a number of defined benefit pension plans and,in case of a shortfall,we could be required to make substantial cash contributions(depending on the applicable local regulations)

326、.This could result in a material adverse effect on our earnings,cash flows and financial condition.How this risk is managedA pensions forum chaired by the Chief Financial Officer oversees Shells input to pension strategy,policy and operation.A risk committee supports the forum in reviewing the resul

327、ts of assurance processes with respect to pension risks.Local trustees manage the funded defined benefit pension plans and set the strategic asset allocation for the plans,including the extent to which currency,interest rate and inflation risks are hedged,and the contributions paid are based on inde

328、pendent actuarial valuations that align with applicable local regulations.Pension fund liquidity is managed by holding appropriate liquid assets and maintaining credit facilities.Where appropriate,transactions to transfer pension liabilities to third parties are also considered.Operational risks con

329、tinuedStrategic ReportRisk factors continued23Shell Annual Report and Accounts 202323Shell Annual Report and Accounts 2023 We mainly self-insure our hazard risk exposures.Consequently,we could incur significant financial losses from different types of risks that are not insured with third-party insu

330、rers.See Corporate on page 80.Risk descriptionOur Group insurance companies(wholly owned subsidiaries)provide insurance coverage to Shell subsidiaries and entities in which Shell has an interest.These subsidiaries and entities may also insure aportion of their risk exposures with third parties,but s

331、uch external insurance would not provide any material coverage in the event of a large-scale safety or environmental incident.Accordingly,in the event of a material incident,we would have to meet our obligations without access to material proceeds from third-party insurers.We have in the past incurr

332、ed adverse impacts from events,such asHurricane Ida in 2021.We may,in the future,incur significant losses from different types of hazard risks that are not insured with third-party insurers,potentially resulting in a material adverse effect on our earnings,cash flows and financial condition.How this

333、 risk is managedWe continually assess the safety performance ofouroperations and make risk mitigation recommendations,where relevant,to keep the risk ofan accident as low aspossible.Our insurance companies are adequately capitalised and they maytransfer risks to third-party insurers where economical,effective and relevant.Many of our major projects and operations are conducted in joint arrangement