Royal Dutch Shell plc said Monday that it plans to link executive compensation to its long-term goal of reducing the net carbon footprint of its energy products.

The supermajor made the announcement in a joint statement developed with institutional investors on behalf of Climate Action 100+, an initiative led by investors with more than $32 trillion in assets under management.

The plan to link compensation to emissions reductions would require shareholder approval.

“Meeting the challenge of tackling climate change requires unprecedented collaboration and this is demonstrated by our engagements with investors,” said Shell CEO Ben van Beurden. “We are taking important steps toward turning our net carbon footprint ambition into reality by setting shorter-term targets.

“This ambition positions the company well for the future and seeks to ensure we thrive,” as the world’s leading countries and companies work to meet the goals of the 2015 United Nations climate accord, aka the Paris Agreement.

Last year, Shell was the first international oil and gas company to set a target to reduce the net carbon footprint of the energy products it sells, expressed as a measure of carbon intensity, taking into account full life-cycle emissions.

Shell is aiming to reduce the footprint of its products by around 20% by 2035 and by one-half by 2050, which would be in step with “society’s drive to meet the goals of the Paris Agreement,” management said.

“Today, Shell is building on that long-term ambition with the commitment to setting specific net carbon footprint targets for shorter periods, of three or five years. Shell will set the target each year, for the following three- or five-year period. The target setting process will start from 2020 and will run to 2050.”

The targets would be linked with other measures to its executive compensation policy, a proposal that would be up for a vote by shareholders at the annual general meeting in 2020.

“The announcement is part of a drive to increase transparency around the topic of climate change and to create clear benchmarks for performance,” management said.

Shell plans to publish its progress initially in its sustainability reports. In line with the recommendations of the Task Force on Climate-related Financial Disclosures, Shell also intends to integrate disclosures into the annual reports and other filings, with third-party assurance of the figures.

“We applaud the joint statement by Shell and lead investors for Climate Action 100+,” said Climate Action 100+’s Anne Simpson, inaugural chair of the steering committee. She is also the director of board governance and strategy at the California Public Employees’ Retirement System.

“The commitment by Shell to fully respond to the engagement shows the value of dialogue and global partnership to deliver on the goals of the Paris Agreement on climate change,” Simpson said. “Shell is setting the pace, and we look forward to other major companies following its lead.”

Investor engagement with Shell was led by Robeco and the Church of England Pensions Board. It also included representatives of Eumedion, the Dutch platform for institutional investors, as well as the European Institutional Investors Group on Climate Change.

“When it comes to meeting the demands of the Paris Agreement on climate change, we believe it is necessary to strengthen partnerships between investors and their investee companies to accelerate progress toward reaching such an ambitious common goal,” said Robeco’s Peter Ferket, chief investment officer. “As institutional investors in Shell, we continue to support Shell on its journey in the energy transition, aiming for other companies to follow suit.”

The Church of England Pension Board’s Adam Matthews, co-lead of the Climate Action 100+ dialogue with Shell, said, “investors like ourselves will be able to track Shell’s performance through the Transition Pathway Initiative, an independent academic tool at the London School of Economics, which is supported by funds with $11 trillion in assets.

“This joint statement is the first of its kind, sets a benchmark for the rest of the oil and gas sector and shows the benefit of engagement -- aligning institutional investors’ long-term interests with Shell’s desire to be at the forefront of the energy transition.”