Shell plc

We periodically review and, if necessary, update our standards and manuals in light of developments in risks, including those associated with climate change. We are in the process of transitioning to new Safety, Environment & Asset Management Standards as part of the Shell Performance Framework. Our approach continues to evolve as we increase our understanding of changing policies and the differing pace of energy transition in different regions.

Project-level risk management processes

At a project level, assessing climate-related risks is an important part

of making initial investment decisions. Projects of a certain size or

which carry unusual risks are required to follow Shell's Opportunity Realisation Standard, which sets out the rules for managing and delivering opportunities in the organisation. Each project is assisted

by experts from our global subject matter groups during its development, implementation and operation.

Projects under development that are expected to have a material GHG impact must meet our internal carbon performance standards or industry benchmarks. An exception process is in place to manage specific incidental cases. Performance standards are under development for power and hydrogen projects. Our performance standards are used for measuring a project's average lifetime GHG intensity or energy efficiency per asset type. Projects with a material GHG footprint that meet the performance standards or industry benchmarks will often set more ambitious emissions targets for themselves. GHG abatement plans help determine the nature of these targets, and we assess the effects of a project's emissions alongside economic and technical design factors. Applying these criteria ensures that our projects can compete and prosper in the energy transition.

The performance standards are approved by the Executive Vice President accountable for implementation in the relevant businesses, and by the Executive Vice President Safety, Environment and Asset Management.

We assess the future GHG emissions of projects against performance standards and by considering the GHG emissions from the use of the products that are to be manufactured. These assessments can lead to projects being stopped or designs being changed.

We expect the performance standards to evolve as our portfolio changes in the energy transition.

Management and Board reviews

Climate change matters and risks resulting from GHG emissions are reviewed and managed in line with other significant risks through the Board and EC. Management, the Board and Board committees review the risk of climate change and the energy transition to understand and assess emerging issues that may impact our strategy or our responses to this risk at an operational level. For example, as part of the annual planning cycle, the EC and the Board assess how climate change and GHG emissions may affect the pace of the energy transition, business emission reduction plans and the implications for Shell's current portfolio.

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.

In addition, each business and function regularly reviews its risk profile, risk responses and assurance activities throughout the year to ensure climate-related risks are managed effectively. These insights are used to provide management with updates on the operational management of climate change and the energy transition risks. During these updates, business and functions management review whether our risk responses are effective in addressing the four sub-components of the climate change and energy transition risk. These reviews help us to update Shell's plans and guide our day-to-day operational decisions such as maintenance schedules and our risk response plans.

Internal audit process

Shell's Internal Audit and Investigations (SIAI) team provides independent and objective assurance and advises management and the Board on the adequacy and effectiveness of our risk management and internal controls.

For example, SIAI conducted five audits during 2023 that included the testing of controls related to GHG emissions measurement, reporting, forecasting and abatement projects.

Annual assurance letter process

Each member of the EC must submit an annual assurance letter to the CEO that their business's or function's activities have been conducted in accordance with the requirements set out in the HSSE & SP Control Framework. This assurance includes the assessment of the effectiveness of the internal controls in managing climate- and energy-transition-related risks.

Integration of the climate-related risk management

process into Shell's overall risk management

Our climate-related risk management process follows the approach set out by the Shell Performance Framework, ensuring that it is integrated into the overall risk management processes of the Group.

Climate-related risks are considered from a strategic and operational perspective to ensure we maintain a comprehensive view of the different types of climate risks we face and the different time horizons in which they may affect us. The monitoring and review of risks is a key risk management process in Shell.

The EC, the Board and Board committees review climate-related risks and their impact on the Group. This allows management to take a holistic view and optimise risk mitigation responses, to ensure that climate-related risk responses are properly integrated into the relevant activities.