Shell reported profits of $9.6 bn (£7.6 bn) in its quarter one results, compared to nearly $9.13 bn (£7.26 bn) for the first quarter of 2022. New analysis from the think tank Common Wealth, by Senior Analyst Chris Hayes, finds that Shell’s shareholders are benefitting from a historic windfall during a period of sky-high energy costs.

Today’s new figures show Shell’s investment in “Renewable and Energy Solutions” is dramatically below both the sums it invests in fossil fuels and what it pays out to its shareholders. In Q1, Shell spent over 14 times as much on shareholder compensation as on investments in its “Renewable and Energy Solutions Division”.

According to Shell's own definition, this division also includes “the marketing and trading and optimalisation of power and pipeline gas”, as well as clean energy. The energy giant invested six times as much in fossil fuels as it invested in its “Renewable and Energy Solutions Division”.

The analysis from Common Wealth also reveals Shell and BP distributed £176 bn to shareholders between 2013 and Q1 of 2023. This comprised a cumulative £63.6 bn of dividend payments and net share buybacks from BP, and a cumulative £112.1 bn of dividend payments and net share buybacks from Shell.

New investment in fossil fuels goes against the recommendations of key global organisations like the International Energy Agency, who argue any new oil and gas development would be incompatible with climate goals.

Analysis conducted by Common Wealth also finds that pension funds’ allocation to UK quoted shares has fallen to just 13% (including both defined benefit and defined contribution pensions). For defined benefit pensions, which hold almost 80% of all UK pension assets, this exposure is less than 2%. The analysis finds BP and Shell account for around one tenth of this.

The surge in energy company profits and vast shareholder payouts raise questions about the structure and role of the for-profit corporation.

The for-profit corporation is failing to deliver a timely or effective transition to clean and secure energy, jeopardising climate targets and leaving households more exposed to spikes in global energy prices.

Instead, deep and lasting change is needed to reimagine the corporation and deliver an energy system organised around meeting the needs of the public and the planet.

[.quote][.quote-text]This week, both BP and Shell have again reported vast profits — chanelling money from the public to private investors at a time when living standards are in crisis. This pattern isn’t new. Since 2013, Shell and BP have distributed over £176 bn to shareholders. This is a phenomenal windfall, indicative of an energy system geared toward maximising shareholder returns rather than public value. With Shell investing six times as much in fossil fuels as in ‘renewable and energy solutions’ — a division of the company that includes gas trading and other fossil fuel ventures — there is little sign the company is pivoting toward a greener future. Public investment and coordination are needed if we are to move toward an energy system that is clean, affordable and secure.[.quote-text][.quotee]Adrienne Buller, Director of Research at Common Wealth[.quotee][.quote]

[.quote][.quote-text]Shell has again reported outrageous profits, with almost £10 bn set to be distributed to shareholders over the next six months. As people up and down the country face sky-high energy bills, this represents a huge transfer of income from households to private investors. This quarter for every £1 Shell spent on ‘Renewables and Energy Solutions’ they spent £6 on fossil fuels and channelled £14 to shareholders. A much steeper windfall tax, with the loopholes removed, is a start. But the business patterns of the Oil Giants make one thing crystal clear: the for-profit corporation is poorly equipped to deliver a timely or efficient transition to net zero.[.quote-text][.quotee]Sophie Flinders, Data Analyst at Common Wealth[.quotee][.quote]