Shell unveils $1.4bn fund for energy transition "start-ups and scale-ups"

Anglo-Dutch major Shell announced on November 3 it is creating a dedicated $1.4bn fund to invest in "innovative companies" over the next six years that are working to accelerate the energy transition.

The announcement by CEO Ben van Beurden comes as Shell faces heightened scrutiny over its emissions, as well as a call by an activist investor to break the company up, splitting its oil and gas operations from its expanding  energy transition business.

Shell Ventures' managing director Geert van de Wouw confirmed on November 3 that the new fund would be investing in "start-ups and scale-ups across the full spectrum, from seed to Series A to growth equity, that are working to accelerate the energy transition."

"In line with Shell's efforts to accelerate progress against our net-zero target, our investment will be laser-focused on renewable energy, storage and utilisation, mobility, transportation and logistics, circular economy, and nature-based solutions," van de Wouw said.

"Our unique approach to venturing, with a focus on technology deployment, has enabled many of our portfolio companies to develop strategy relationships with Shell businesses," he continued. "A win-win in my book, as Shell gets accelerated access to innovative technologies and business models, while our portfolio companies are able to achieve scale."

Van Beurden separately on social media described the energy transition as "the single largest technological revolution of this time."

"Technology will continue to transform our lives and the energy industry, improving safety and efficiency and helping us to accelerate the transition to net zero," he said.

Shell Ventures was set up in 1996, initially only investing in oil and gas companies. But its focus has since shifted to investments in the energy transition.

Shell is under pressure to prove its commitment to the transition, after a Dutch court in May ordered the major to beef up its targets for reducing emissions, including Scope 3 ones from the use of its products by customers. The company is appealing against that ruling. It has since announced more ambitious emissions goals, but is yet to commit to Scope 3 cuts.

Meanwhile Third Point, a group owned by billionaire activist investor Daniel Loeb, has acquired a stake worth almost $750mn in Shell and is calling for the major's break-up. According to Reuters, Third Point argues that Shell has "too many competing stakeholders pushing it in too many different directions," resulting in an "incoherent" strategy. Third Point wants to see the creation of several standalone businesses, including a legacy one to handle oil and gas operations and another that would be devoted to "aggressive" investment in renewables and other low-carbon technologies.

Shell's management has rejected the proposal, however. 

“If you were to split that into component pieces, I think that can sound really interesting from a financial perspective,” CFO Jessica Uhl said on October 28. “But in terms of real solutions, I think that breaks down and our ability to integrate and bring these different pieces of the puzzle together will be how we uniquely make a difference in the energy transition.”