UNIVERSITY OF MINDANAO BANSALAN COLLEGE

R. Delos Cientos Street, Poblacion Dos,

Bansalan Davao del Sur

DEPARTMENT OF ACCOUNTING EDUCATION (DAE)

ACC BAHR
Sustainability and Strategic Audit

CASE ANALYSIS TITLE:

Analyzing the Sustainability of Shell Pilipinas Corporation

PRESENTED BY:

DELOS REYES, ARIENNE

PRIMOR, CHERIE LOU
ACLON, LADYROSE
BURLAZA, JHEA
DOBLE, MARK ANTHONNY
ORGANIZA, ROMELYN

3RD YEAR MANAGEMENT ACCOUNTING

PRESENTED TO:

ATTY. MA. HANNAH LOUISE BONILLA, CPA

MARCH 2025
GENERAL OVERVIEW

The 2023 Annual and Sustainability Report (ASR) of Shell Pilipinas is entitled:
“Providing Today’s Needs and Pioneering for a Cleaner Future.” It is the eighth ASR,
and it covers Shell Pilipinas’ environmental, social, safety, governance, and financial
performance in 2023. This report has been prepared in accordance with the GRI
Standards, following the industry sector-specific GRI 11: Oil and Gas Sector 2021. The
report also complies with the Sustainability Reporting Guidelines for Publicly Listed
Companies of the Philippine Securities and Exchange Commission (SEC) as well as the
Task Force on Climate-related Financial Disclosures (TCFD), and the Sustainability
Accounting Standards Board (SASB)

Shell Pilipinas utilizes the GRI Standards: Core option to systematically report on its
environmental and social impact. This includes key areas such as carbon emissions,
energy efficiency, occupational health and safety, and community engagement. By
following this framework, Shell ensures its sustainability performance is communicated
in a clear, consistent, and globally comparable manner, allowing stakeholders to assess
its progress objectively. Additionally, by integrating SASB metrics, Shell offers deeper
insights into industry-specific risks and opportunities, particularly those that impact its
financial performance. In the oil and gas sector, crucial concerns such as greenhouse
gas (GHG) emissions, regulatory compliance, and water management play a significant
role. Shell addresses these issues with detailed reporting, enabling investors and
regulators to make well-informed decisions.

Recognizing the increasing financial risks associated with climate change, Shell
Pilipinas also adheres to the TCFD framework, which focuses on how climate-related
risks and opportunities affect the company’s financial health. This includes reporting on
how regulatory shifts, evolving carbon pricing mechanisms, and extreme weather
events could impact business operations. By incorporating TCFD guidelines, Shell not
only discloses its exposure to climate risks but also outlines its adaptation strategies,
such as investing in cleaner energy alternatives and improving operational resilience in
response to climate uncertainties.

Consultations and Alignment Business

Unit heads identified stakeholder concerns, business accomplishments, and key
performance indicators noted within the reporting period.

Stakeholder Review and Materiality Assessment

The feedback and concerns from stakeholders, industry trends, and the Company’s
sustainability goals informed the identification of key material topics.

Data Gathering and Review Business

Unit heads answered data templates based on sustainability reporting frameworks and
were also invited for one-on-one interviews to contextualise their performance data.

Writing and Evaluation

The report underwent several levels of reviews and approvals from the business
representatives, business unit heads, and function heads.

Final Review

The report was designed, relevant photos and graphics were added, and the report was
then sent to the Corporate Disclosure Committee for review and final approval.

Publication and Dissemination The printed and digital copies of the 2023 ASR are
distributed to shareholders and other stakeholders, especially during the Annual
Stakeholders’ Meeting and other engagements. It is also made publicly available on
Shell Pilipinas’ website.

With this reporting process, Shell Pilipinas ensures the completeness, accuracy,
balance, clarity, comparability, reliability, and timeliness of this report´s content.
Involving internal and external stakeholders in this process also ensures that the
materiality of the topics reflect the current concerns and aspirations of Shell Pilipinas as
it Powers Progress for more Filipinos.

Pilipinas Shell continues to support and contribute to the SDGs to address shared
development challenges, including tackling the challenge of climate change and making
cities sustainable. Achieving these global ambitions requires collective action and
collaboration across all sectors, and we are determined to contribute and do our part.
The Shell Pilipinas Corporation shows how transparent their sustainability reports by
openly discussing both its achievements and the challenges it faces. the company's
Annual and Sustainability reports provide a balance view of its performance, reflecting a
commitment to honest and comprehensive disclosure.

ENVIRONMENTAL SUSTAINABILITY

Shell has made considerable progress in reducing carbon emissions within the three
scopes. In recent years, this company has claimed a gradual decrease in Scope 1 and
2 emissions, whereas improvements in Scope 3 remain a target area. Clear
sustainability targets have been set by the company for decreasing greenhouse gas
emissions, confirming its commitment to sustainability.

For energy consumption, Shell is transitioning toward renewable energy sources. It is

investing in a range of renewable technologies and initiatives that aim to create a
sustainable energy future with a less overall environmental impact.

Carbon Emissions Overview

Scope 1 Emissions: Direct emissions from the operation of sources that are owned or
controlled. Shell has reported a decrease in these emissions in the last few years,
owing to energy efficiency improvements and reduced fossil fuel use.

Scope 2 emissions: These originate from the generation of electricity, steam, heating,
and cooling that is purchased. Unlike Scope 1 emissions, Scope 2 emissions have been
on the decline mainly because of improvements in energy efficiency and a switch to
cleaner energy.

Scope 3 Emissions: They are indirect emissions generated along the value chain, these
can include both upstream and downstream emissions. Shell has made some inroads in
reducing Scope 1 and 2 emissions, while Scope 3 offers even tougher challenges, and
the company is developing strategies to tackle this area.

Targets for Greenhouse Gas Emissions

Shell has set clear and measurable greenhouse gas emission reduction targets. This
set of targets aligns with international climate goals and displays the company's efforts
toward achieving net-zero emissions by 2050. Progress toward the set targets is
monitored on a regular basis so that the company is kept accountable for its
sustainability efforts.

In respect to energy consumption, Shell is implementing energy efficiency measures

throughout its operations, including improving process efficiencies and investing in
energy-saving technologies. The transition to renewable energy is an important part of
Shell's strategy. The company is investing across a wide range of renewable energy
projects-wind, solar, bioenergy, and others-to make sure a diversified portfolio of energy
supplies will serve the world in its recovery from fossil fuels. Meanwhile, Shell is also
looking at innovative solutions that support the more orderly transition to a sustainable
energy future, hydrogen, and electric vehicle charging infrastructure.

SOCIAL RESPONSIBILITY

Shell collaborates with local communities through its social arm, the "Pilipinas Shell
Foundation," which provides projects in education, skill training, livelihood development,
and energy access. They use their core business experience and technological
resources to increase people's access to energy, mainly in Sub-Saharan Africa and the
Asia-Pacific region. The company's comprehensive Code of Conduct addresses safety,
anti-bribery and corruption, fair competition, and other critical concerns. The Chief
Ethics and Compliance Officer oversees Shell's Ethics and Compliance program, which
is backed by the Shell Ethics and Compliance Office, legal counsel, and the company's
subsidiaries.
Shell Pilipinas in the Philippines aggressively promotes gender equality measures such
as increasing female representation in senior positions, implementing gender-neutral
policies, and launching campaigns such as "Eh Kasi Babae." Their goal is to foster an
inclusive environment for all. They hope to create an inclusive environment for all
employees, including those from diverse backgrounds, through targeted recruitment
strategies and support programs. Shell collaborates with local communities through its
social arm, the "Pilipinas Shell Foundation," which provides projects in education, skill
training, livelihood development, and energy access. They use their core business
experience and technological resources to increase people's access to energy, mainly
in Sub-Saharan Africa and the Asia-Pacific region.

14. Shell offers various programs in the Philippines focused on employee well-being,
training, and career development. The company emphasizes creating a supportive and
inclusive work environment, investing in extensive training and development programs
to enhance technical competencies and promote a culture of safety and risk awareness.

Employee feedback reflects this commitment. For instance, a former analyst noted that
Shell provides good benefits, a conducive workplace, and ample training opportunities,
highlighting the company’s strong adherence to quality standards.

Additionally, Shell has implemented programs to support employee well-being and

work-life balance. The ‘Life Matters’ program, resulting from the Staff Benefits Forum,
promotes quality of life by balancing workplace responsibilities with personal pursuits,
family relations, and external social activities.

Furthermore, Shell’s Human Resources careers offer a stimulating work environment,

covering a broad spectrum of specialties, providing vast opportunities for personal and
professional development.

These initiatives demonstrate Shell’s dedication to fostering employee growth,

satisfaction, and overall well-being in the Philippines.

Shell ensures ethical business practices and prevents corruption through a

comprehensive framework that includes a strict Code of Conduct, anti-bribery policies,
compliance training, and rigorous monitoring. The company maintains a zero-tolerance
policy toward bribery and corruption, explicitly prohibiting the direct or indirect offer,
payment, solicitation, or acceptance of bribes in any form.  Employees are required
to declare potential or actual conflicts of interest, which are reviewed by management to
maintain transparency.  To promote accountability, Shell provides a Global Helpline
for confidential whistleblowing, ensuring protection against retaliation. The company
also conducts regular internal audits, risk assessments, and third-party due diligence to
monitor compliance and detect irregularities. Additionally, Shell is committed to
transparency, publishing annual reports on its ethical efforts and collaborating with
organizations like the Extractive Industries Transparency Initiative (EITI). With strong
leadership commitment, Shell fosters a culture of integrity, ensuring ethical business
conduct across its operations.

Shell plc operates under a single-tier Board of Directors structure, led by Non-Executive
Chair Sir Andrew Mackenzie and Chief Executive Officer Wael Sawan. The board
comprises both executive and non-executive directors, bringing diverse backgrounds
and expertise to the company. Shell is committed to fostering diversity through its Board
Diversity Policy, which promotes inclusive representation to enhance decision-making
and strategic direction. The board includes individuals such as Ann Godbehere,
Abraham Schot, and Jane Lute, who offer varied perspectives. Additionally, Shell
actively supports gender diversity, exemplified by senior executive Katie Jackson’s
appointment as chairwoman of an industry body promoting inclusivity in the energy
sector. These initiatives reflect Shell’s dedication to building a governance structure that
values diversity and corporate responsibility. (Shell, Energy Voice)

Shell integrates sustainability into executive compensation by incorporating

environmental performance criteria into its remuneration policies. In 2022, the company
linked the pay of more than 16,500 staff to its target of reducing the carbon intensity of
its energy products by 9-12% by 2024, compared with 2016 levels.  Additionally,
Shell’s Long-term Incentive Plan (LTIP), Performance Share Plan (PSP), and annual
bonus scorecard include performance indicators that assess progress in delivering their
energy transition strategy, aligning employee incentives with the company’s climate
objectives.
Shell maintains a policy of not making payments to political parties, organizations, or
their representatives, and it does not participate in party politics.  However, the
company engages in lobbying activities to advocate for its commercial interests. In
2023, Shell reported lobbying expenses totaling $7,080,000.  Additionally, Shell’s
U.S. political contributions in the 2024 election cycle amounted to $226,171, with
lobbying expenditures reaching $5,920,000.  Despite these disclosures, concerns
have been raised about undisclosed lobbying activities, particularly in emerging
markets, indicating that Shell’s transparency in political engagement may have gaps. 

Shell prioritizes cybersecurity and data protection through a dedicated

cybersecurity framework that aligns with international standards such as ISO
27001 and the NIST Cybersecurity Framework. The company employs advanced
threat detection, encryption, and multi-layered defense systems to safeguard
sensitive data. Regular penetration testing, employee training programs, and incident
response protocols further strengthen its cybersecurity posture. Additionally, Shell
collaborates with government agencies and cybersecurity organizations to mitigate
emerging threats and ensure compliance with data privacy regulations like GDPR
(General Data Protection Regulation)

SUPPLY CHAIN AND STAKEHOLDER ENGAGEMENT

Shell aims to work with suppliers, including contractors, that behave in an economically,
environmentally and socially responsible manner, as set out in our Shell General
Business Principles and Shell Supplier Principles. Our standard contract terms require
adherence to these or equivalent principles. They require contractors and suppliers to:
protect the environment in compliance with all applicable environmental laws and
regulations; use energy and natural resources efficiently; and continually look for ways
to minimise waste, emissions and discharges from their operations, products and
services. In 2023, we worked with around 25,000 suppliers globally.
Collaboration with suppliers is crucial to achieving Powering Progress. By delivering,
learning and improving together with honesty, integrity and mutual respect, we can
accelerate our shared progress towards achieving net zero.

In 2023, our operated and non-operated ventures spent around $48.6 billion on goods
and services from suppliers around the world.

Shell continues to value and recognise the importance of engagement and co-operation
with its stakeholders. We work with governments, non-governmental organisations
(NGOs), coalitions, industry bodies, academic institutions, national oil and gas
companies and other businesses. We do this in compliance with antitrust rules and
regulations. These collaborations include individual conversations, working together on
a project or areas of advocacy, or sponsoring a particular group or event.
These efforts help us to learn, share best practice, achieve specific objectives, set
future goals and build trust with our stakeholders.

The customers feedback is gathered through mechanisms like the Voice of the
Customer survey and partnerships promoting sustainability. For example, Coca-Cola
Beverages Philippines, Inc. (CCBPI)—the bottling arm of Coca-Cola in the Philippines—
and Shell Pilipinas Corporation further strengthen the collective campaign for a World
Without Waste by launching Shell Select stations as collection points in Davao and
increasing its tapped stores in Manila. Under CCBPI’s Tapon to Ipon: Basta Klaro,
Panalo program, clear PET plastic bottles of any brand can be efficiently collected for
recycling at these designated collection locations. This partnership is in line with Coca-
Cola’s global commitment to collect and recycle the equivalent of every bottle and can
that it sells by 2030. It also accords with Shell’s aim to develop a more efficient waste
management system, particularly for the disposal of clear PET bottles sold in Shell
Select stores, which can be efficiently collected for recycling at these designated
collection locations and given new lives within a circular economy.

The Shell respond to sustainability-related controversies or criticisms by acknowledging

the significant of engaging with stakeholders to address concerns related to its
operations. This engagement allows Shell to learn, share best practices, and build trust
with stakeholders.
PERFORMANCE AND FUTURE GOALS

The future of energy

Aviation has always powered progress. As we all move into recovery and get ready to
take to the skies again, the industry will surely resume its role in expanding horizons
and broadening opportunities to live, learn and work for people all around the world.

Our future growth will enable even more individuals, communities and businesses to
enjoy the benefits that aviation brings. However, we must look to grow responsibly, and
this means tackling emissions today, along with a clear, long-term approach to
sustainability.

As we aim to become a net-zero emissions energy business by 2050, we also make it

our mission to develop our portfolio of products and services to help fulfil our customers’
requirements in a way that will enable them to achieve their own decarbonization
ambitions.

Our pathway to net-zero

Aviation is recognised as a sector where emissions are hard to abate. No single solution
or player can deliver the decarbonization for the industry that is needed. All parties that
benefit from flying must come together, using all available measures to tackle emissions
today, for a sustainable tomorrow.

Improved aircraft efficiency

First, by avoiding emissions, through improved aircraft and engine efficiency and by
powering ground operations with renewable energy. Lower carbon technologies, such
as hydrogen and electricity could eventually play a key role in avoiding emissions. But
these are unlikely to have a significant impact until 2040 or later.

Sustainable aviation fuel

Next, by proactively reducing emissions, through the increased use of Sustainable
Aviation Fuel (SAF). Made from renewable and waste sources, SAF is a potential game
changer.

Offsetting emissions

And finally by offsetting emissions, in the short to medium-term. Until avoid and reduce
measures are in place to create impact at scale, the use of carbon credits will play a
vital role. Used alongside other measures like SAF, high-quality offsets, such as nature-
based solutions, can help aviation tackle net emissions today, ensuring the industry
continues to support growth and prosperity, as it builds towards a truly sustainable
future.

A sustainable future

Inspired by the Paris Agreement, our drive to help customers towards a sustainable
future is grounded in Shell’s own ambition to become a Net-Zero energy Net-Zero
energy business by 2050 or sooner, in step with society.

Work together towards a lower carbon future

Shell Aviation is fully committed to collaborating with all players in the aviation
community, to work together towards a lower carbon future. We aim to play our part in
full; as a supplier of renewable and conventional fuel, as a technology and innovation
partner, and as a strong advocate for solutions that will work today and tomorrow.

Our first energy transition update since 2021 is an opportunity to take stock of our
progress, to reflect on what we have learned, and to look forward as we transform Shell
into a net zero emissions energy business by 2050.

Our energy transition update shows how we are delivering against our climate targets.

As we focus on areas of competitive strength, we are investing $10-15 billion on low-

carbon energy solutions between 2023 and the end of 2025. We are also investing in oil
and gas production with lower emissions as we provide energy today while helping to
build the low-carbon energy system of the future.
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