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Shell, Microsoft find common ground in drive to reduce CO2 emissions

Microsoft and Shell have enjoyed a long and productive relationship, built on deep connections that stretch back decades. Shell was one of the first global businesses to adopt the Windows operating system across its entire enterprise. More recently, Shell has been a pioneer in digital transformation, embracing technologies that improve efficiency and safety, and accelerate development of cleaner energy sources. This includes major deployments of Azure, Microsoft 365 and the Power platform.

That relationship is growing even deeper to help meet the difficult and complex challenges of energy transition. Under a newly announced strategic alliance, the two companies aim to jointly develop technologies that will help them accelerate achieving their carbon reduction ambitions, while helping customers and other organizations reduce their own emissions. Microsoft will help build new artificial intelligence (AI) solutions that accelerate Shell’s digital transformation and Shell will supply products and services that help Microsoft in its drive to net zero carbon emissions.

“These complex challenges can’t be solved in isolation, or by doing business as usual,” says Judson Althoff, executive vice president of Microsoft’s Worldwide Commercial Business. “We are proud to play our role in a sustainable future, and we know that a successful energy transition depends on strong technology partnerships anchored in co-innovation and development with leaders in the energy sector.”

Advancing Shell’s digital transformation

Under the alliance, the two companies will continue advancing Shell’s digital transformation, building on an extensive technology portfolio. With technology flowing both ways, the companies can learn from each other and implement solutions together, which will also create new opportunities for their customers and suppliers to reduce their carbon footprints.

The alliance is expected help Shell suppliers decarbonize. Shell is already using Azure to develop a digital tool to track supplier emissions, show baselines, set targets and develop plans for its own operations to achieve these targets. Going forward, Shell and Microsoft aim to develop additional digital tools to help Shell’s suppliers reduce their carbon footprints.

Shell and Microsoft will also work together to provide tools and solutions that help customers manage their carbon footprint. They will collaborate on a digital platform to help small to medium sized companies calculate their carbon footprints, while exploring new ways for customers to find and access low-carbon solutions and products.

“Together we already develop, test and deliver technologies that push the boundaries of what can be achieved,” says Huibert Vigeveno, downstream director at Shell. “We are proud of our relationship. And today we are going further.”

Where digital transformation and energy transformation meet

As Shell supplies energy and products to Microsoft, the alliance will begin to merge digital transformation into energy transformation. Shell is innovating in large-scale renewable energy and advanced technologies that drive efficiency into industrial processes.

Microsoft’s plan is to become carbon negative by reducing its emissions and then removing more carbon from the earth’s atmosphere than it emits. Similarly, Shell’s ambition is to be a net-zero emissions energy business by 2050 or sooner in step with society and customers. Shell recognizes that becoming a net-zero emissions energy business is a huge task. The business plans Shell has today will not get it there, so its plans must change over time, as society and its customers also change.

Microsoft and Shell are not alone in these efforts. Under this new alliance, the two companies aim to offer practical solutions to those seeking to lower their carbon emissions. Shell and Microsoft also are exploring opportunities to advance the use of sustainable aviation fuels.

“We are seeing a cultural shift, not just internally, but everywhere. We have to change the way we do business,” says Dan Jeavons, Shell’s general manager of data science. “Microsoft and Shell each have customers across many industries and their needs are changing. Together, we are working to understand those needs and to find ways to address them. That will unlock tremendous value for Shell, Microsoft, our customers and beyond.”

Data helps drive decarbonization

Digital technology will play a key role in the energy transition, which is where the expertise of Shell and Microsoft align. Shell processes billions of data points each week from its global asset base. The company uses Microsoft’s Azure cloud platform alongside digital twin technologies from Kongsberg and AI platform technology from C3.ai to quickly aggregate and analyze that data to generate a virtual picture of what’s happening across its businesses.

Shell has built a data and analytics platform called Shell.ai which provides machine learning and software engineering capabilities to scale AI solutions across the company. That helps Shell to automate processes like robotic inspection of facilities that can improve maintenance, safety and efficiency. Shell and Microsoft are working together to build out those technologies and share them with customers and suppliers. Both Shell and Microsoft are working to accelerate innovation across the energy industry through the development of open data standards. This is demonstrated through membership in OSDU and Open Footprint Forum.

“The cloud creates a common fabric, but it only works if you have a common data exchange. That makes it much easier to innovate on top of that,” Jeavons says.

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Shell and Microsoft form alliance to help address carbon emissions

Both companies will expand their deep existing technology collaboration to create and deliver new solutions to help customers, suppliers and other businesses lower emissions.

Redmond, Washington – 22 Sept. 2020 – Shell International Petroleum Company Limited and Microsoft Corporation, building on a history of three decades of working together, are embarking on a new strategic alliance to support progress towards a world with net-zero emissions. This builds on the strong foundation of decades of technology collaboration between the two companies. This type of strategic alliance is a model for how companies can work together to achieve their net-zero ambitions.

Shell logo“Microsoft and Shell both have rich histories of innovation and bold ambitions to decarbonise,” said Huibert Vigeveno, Downstream Director of Shell. “We are proud of the work we have already done together. Our strategic alliance will enable us to push the boundaries of what can be achieved. We believe we can unlock tremendous progress for Shell, Microsoft, our customers and beyond.”

“We are building on our work with Shell by establishing a deeper alliance to further accelerate innovation in support of decarbonization and energy industry transition,” said Judson Althoff, executive vice president of Microsoft’s Worldwide Commercial Business. “Cross-industry collaborations like this are fundamental to help society reach net-zero emissions by 2050, and digital transformation is key to tackling this important issue, within the energy sector and beyond.”

This strategic alliance will support Shell’s ambition to be a net-zero emissions energy business by 2050, or sooner, in step with society and its customers. Shell’s supply of renewable energy will help Microsoft deliver on its renewable energy supply goals and its broader ambition to be carbon negative by 2050.

It is expected that over time the alliance will enable the two companies to achieve even more together.

Highlights of the expanded alliance include:

  • Shell will supply Microsoft with renewable energy, helping Microsoft to meet its commitment to having a 100% supply of renewable energy by 2025;
  • The two companies will continue working together on artificial intelligence (AI), which has already driven transformation across Shell’s operations through access to real-time data insights, contributing to worker and onsite safety, and delivering efficiencies that have helped reduce Shell’s carbon emissions;
  • Shell and Microsoft will work together on new digital tools so Shell can offer its suppliers and customers effective support in reducing their carbon footprints;
  • Shell and Microsoft will explore working together to help advance the use of sustainable aviation fuels; and
  • The companies will use Microsoft’s Azure cloud computing system and data from Shell assets to strengthen operational safety, by improving risk analysis, prediction and prevention.

Shell and Microsoft have already achieved important results through their long-standing technology collaboration:

  • Shell and Microsoft have been working together on AI for three years. So far this year, 47 AI-powered proprietary applications have been deployed across Shell’s businesses. Technologies such as Real-Time Production Optimisation have already shown potential to reduce CO2 emissions in Shell’s liquefied natural gas (LNG) operations. The companies are committed to accelerating their AI work together to drive efficiencies and reduce emissions.
  • Shell and Microsoft have worked together to develop technologies that help keep Shell’s workers and sites safe. For example, Microsoft Azure powers Shell’s Autonomous Integrity Recognition (AIR) system, which uses image recognition algorithms to detect when equipment or parts of a site are susceptible to corrosion.

The alliance will deepen the co-operation that has existed between the two companies for more than three decades. It will enable Microsoft and Shell to accelerate the progress they are making on reducing carbon emissions.

Enquiries:

Shell Media Relations

International: +44 207 934 5550

US & Brazil: +1 832 337 4355

Microsoft Media Relations

WE Communications for Microsoft

(425) 638-7777

[email protected]

About Royal Dutch Shell plc

Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges.  Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects. For further information, visit www.shell.com.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Cautionary note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this release “Shell”, “Shell Group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Royal Dutch Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this release refer to entities over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

It is important to note that as of September 22, 2020, Shell’s operating plans and budgets do not reflect Shell’s net-zero emissions ambition. Shell’s aim is that, in the future, its operating plans and budgets will change to reflect this movement towards its new net-zero emissions ambition. However, these plans and budgets need to be in step with the movement towards a net zero emissions economy within society and among Shell’s customers.

This release contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Form 20-F for the year ended December 31, 2019 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this release and should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, September 22, 2020. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this release.

We may have used certain terms, such as resources, in this release that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.

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Progress on our goal to be carbon negative by 2030

In January, Microsoft’s CEO Satya Nadella, President Brad Smith, and Chief Financial Officer Amy Hood launched a bold new environmental sustainability initiative focusing on carbon, water, waste and biodiversity. We began this work by announcing one of the most ambitious carbon commitments put forward by any company: Microsoft will be carbon negative by 2030 and remove from the environment more carbon than we have emitted since our founding by 2050. We outlined a detailed plan to get there and committed to providing updates on our progress. We have been working hard to turn our commitments into action and, today, we are announcing seven important new steps on our path to be carbon negative by 2030.

Enabling cross-sector business transformation

Together with eight other corporations leading the way to a climate-stable future, we have launched a new coalition, Transform to Net Zero. Guided by science and transparency, the coalition will work to accelerate business action toward a net zero carbon economy. Once an organization sets sustainability goals, the hard work of transforming its business to meet them begins. We have heard from both those with carbon goals and those that want to engage but don’t know where to start that they need information and tools to close the gap between intention and transformation. The coalition will begin by bringing together industry leaders with some of the world’s most ambitious carbon goals and will work to create playbooks on how to achieve net zero. The founding members are A.P. Moeller – Maersk, Danone, Mercedes-Benz AG, Microsoft, Natura & Co., Nike, Starbucks, Unilever and Wipro. The Environmental Defense Fund is the founding NGO member and BSR will serve as secretariat.

The Transform to Net Zero coalition will focus on moving beyond commitments to business transformation. Working together, members will work to enable all businesses to achieve net zero emissions by: sharing the business transformation each company is undertaking to achieve net zero emissions by 2050; delivering robust emission reductions across the business and value chains; working jointly with our partners across supply chains; innovating and investing at scale in products, services and business models that amplify impact; and engaging with policymakers to incentivize progress toward net zero. Importantly, the coalition will also focus on ensuring that the coming transition to a low-carbon economy is an equitable and just one.

Empowering our customers

Today, we’re also announcing the private preview of a new product offering, the Microsoft Sustainability Calculator. It’s challenging to make and meet meaningful carbon reduction goals without the ability to measure carbon emissions. The Microsoft Sustainability Calculator provides our cloud customers transparency into their total carbon emissions – Scopes 1, 2 and 3 – resulting from their cloud usage. Microsoft is the only cloud provider to provide full transparency to customers across all three scopes of emissions.

Using AI and advanced analytics, the Microsoft Sustainability Calculator provides actionable insights on how to reduce emissions, the ability to forecast emissions, and simplifies carbon reporting. It uses consistent and accurate carbon accounting to quantify the impact of Microsoft cloud services on your environmental footprint. It calculates how moving additional applications and services to the cloud will help further reduce your emissions. It easily identifies and compiles reports for voluntary or statutory reporting requirements.

Reducing our own carbon emissions

To reduce our Scope 1 and 2 emissions to near zero, we need to change how we operate. We’re on the path to obtaining renewable energy power purchase agreements for 100% of the day-to-day power of our data centers by the middle of this decade. Today, we’re additionally announcing that we’re aiming to eliminate our dependency on diesel fuel by 2030.

Cloud providers around the world rely on diesel-powered generators for backup power to support continuous data center operations. While diesel fuel accounts for less than 1% of our overall emissions, we believe it’s important to help accelerate the global transition away from fossil fuels. We’re charting a new course using low-carbon fuel sources, including hydrogen and energy storage. We recognize the challenges this might entail and that we need help in developing a robust supply chain for these fuels and advancements in battery technology, but we’re ready to work with partners across the world while leveraging investments from our Climate Innovation Fund to make this a reality.

On July 1, we extended our internal carbon tax to every part of our operations, including Scope 3. Additionally, we’ve updated our Supplier Code of Conduct. Suppliers will now calculate and report their Scope 1, 2 and 3 greenhouse gas emissions data. In the upcoming months, we’ll be working with our suppliers on a phased approach to develop a timeline, new ideas, tools and processes. This reporting is the first significant step toward helping our suppliers reduce their emissions in alignment with Microsoft’s goals of transparency in emissions reductions.

Removing our own carbon emissions

Our climate commitments require us to reduce our carbon emissions by more than half by 2030 and remove the rest, while also removing all of our historical emissions since we were founded in 1975 by 2050. We aren’t waiting until 2030 to get started. This fiscal year, Microsoft is taking concrete steps to remove 1 million metric tons of carbon from the environment. As the first step, this week we will issue a groundbreaking request for proposal (RFP) to source that carbon removal from a range of nature- and technology-based solutions that are net negative and verified to a high degree of scientific integrity.

To ensure that our funding will maximize carbon being taken out of the atmosphere, we are doubling down on scientific verification of each project, and using this RFP to harvest and share best available science and market intelligence on carbon removal. Each project will be rigorously vetted and verified by Microsoft as well as our third-party scientific and market advisors, including NGO Winrock International and the advisory firm Carbon Direct, which brings together leading climate science academics.

This is a first-of-its-kind approach and we don’t expect to get everything right. We will learn what works and doesn’t, improving our approach along the way. We will also publicly share our learnings from this process so others can accelerate their own carbon removal efforts.

Using our balance sheet

We’re announcing our first investment from the $1 billion Climate Innovation Fund that Amy Hood announced in January. We will invest $50 million in Energy Impact Partners’ (EIP) global platform for innovation of new technologies to transform the world’s energy and transportation systems, the two sectors that account for the majority of greenhouse gas emissions. EIP is a leading venture capital firm focused on decarbonized, decentralized energy industry transition that shares learnings among partners and facilitates collaboration.

Investing in climate equity and environmental justice

Finally, we’re taking a step beyond what we announced in January. We recognize that climate and environmental issues don’t affect every community the same way and that we need to address environmental equity as a broader issue. Today, we’re announcing a new innovative partnership with Sol Systems, a renewable energy developer and investor, for 500 megawatts (MW) of renewable energy that includes investments in communities disproportionately affected by environmental challenges.

This is the single largest renewable energy portfolio investment Microsoft has ever made, and is about a quarter of all of our previously procured renewable energy. Prior to this partnership, the total amount of renewable energy Microsoft has procured is approximately 1.9 gigawatts. To put it in context, 500 MW would power more than 70,000 homes in the US per year.

Some communities are disproportionately affected by environmental issues. The data shows that black and African American people in the United States are exposed to 1.54 times more hazardous pollution than white people and to 50% higher rates of particulate pollution than the general population. Researchers connect exposure to these increased level of pollutants to higher rates of asthma, lung cancer and heart disease.

Our work with Sol Systems is a first-of-its-kind initiative tying the purchasing of renewable energy to environmental justice and equity in under-resourced communities. Putting into action planning that started in December 2019, this partnership will:

  • Develop a portfolio of 500MW of solar energy projects in the US in under-resourced communities, working with local leaders and prioritizing minority and women-owned businesses
  • Provide at least $50 million for community-led grants and investments that support educational programs, job and career training, habitat restoration and programs that support access to clean energy and energy efficiency
  • Focus on communities that are economically under-resourced, disproportionately impacted by pollution and/or lack access to the benefits of the clean energy transition
  • Ensure that community benefits are realized with accountability measures, including using third-party evaluators to quantify and document social and environmental outcomes of the initiative

As a result of this agreement, Microsoft will be closer to achieving its goals of shifting to 100% renewable energy by 2025 and help address issues of climate equity and environmental justice.

Conclusion

Our mission is to empower every person and organization on the planet to achieve more. This is in line with our belief that “the purpose of business is to produce profitable solutions to the problems of people and planet.” That’s why we’re working every day to address the climate crisis. It is good for the planet and it is good for Microsoft.

We cannot achieve our sustainability ambitions alone – this update reflects an extraordinary amount of hard work and dedication across Microsoft and with customers, partners, NGOs and others around the world. Working together, we can build a more sustainable future.

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Microsoft announces it will be carbon negative by 2030

REDMOND, Wash. — Jan. 16, 2020 — Microsoft Corp. on Thursday announced an ambitious goal and a new plan to reduce and ultimately remove its carbon footprint. By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

At an event at its Redmond campus, Microsoft Chief Executive Officer Satya Nadella, President Brad Smith, Chief Financial Officer Amy Hood, and Chief Environmental Officer Lucas Joppa announced the company’s new goals and a detailed plan to become carbon negative.

“While the world will need to reach net zero, those of us who can afford to move faster and go further should do so. That’s why today we are announcing an ambitious goal and a new plan to reduce and ultimately remove Microsoft’s carbon footprint,” said Microsoft President Brad Smith. “By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”

The Official Microsoft Blog has more information about the company’s bold goal and detailed plan to remove its carbon footprint: https://blogs.microsoft.com/?p=52558785.

The company announced an aggressive program to cut carbon emissions by more than half by 2030, both for our direct emissions and for our entire supply and value chain. This includes driving down our own direct emissions and emissions related to the energy we use to near zero by the middle of this decade. It also announced a new initiative to use Microsoft technology to help our suppliers and customers around the world reduce their own carbon footprints and a new $1 billion climate innovation fund to accelerate the global development of carbon reduction, capture and removal technologies. Beginning next year, the company will also make carbon reduction an explicit aspect of our procurement processes for our supply chain. A new annual Environmental Sustainability Report will detail Microsoft’s carbon impact and reduction journey. And lastly, the company will use its voice and advocacy to support public policy that will accelerate carbon reduction and removal opportunities.

More information can be found at the Microsoft microsite: https://news.microsoft.com/climate.

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications, (425) 638-7777, [email protected]

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at https://news.microsoft.com/microsoft-public-relations-contacts.