In step with global efforts to cut carbon emissions, Shell announced in 2020 plans to become a net-zero emissions energy company by 2050. This strategy is also playing out in China against the backdrop of China's aim to reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060.
Patrick Tai, FCMA, CGMA, the CFO of Shell's companies in China, oversees a finance team of 80 people and is also the finance functional leader for Shell's mobility, lubricants, and controller teams. FM spoke to him to find out his priorities in 2022 and how he supports the company's overall strategy.
(Editor's note: This interview has been edited for brevity and clarity.)
Could you tell us about Shell's businesses in China?
Patrick Tai: Our businesses fall into two pillars in China. One is the growth pillar where we have marketing, and that includes mobility and lubricants. We also have the renewables and energy solutions business in this pillar. The second pillar is what we call the transition pillar. We have the chemicals and integrated gas businesses in this pillar.
How is the finance department organised in Shell China?
Tai: We basically have three different building blocks. One is business finance, which includes the mobility, lubricants, integrated gas, trading, and supply teams.
Then we have our centre of excellence. They are the custodian of the Group's guidelines and financial control framework, and this includes the teams managing treasury, tax, and controllership.
The third block is what we call finance operations, which manages most, if not all, of our transactional activities such as accounts receivable, accounts payable, planning, appraisal, etc. They work closely with the other two blocks to deliver day-to-day finance activities.
I provide finance functional oversight for the mobility and lubricants segments and head the controllership in Shell China. I'm also the country's finance functional lead and am responsible for the overall finance talent development in China.
What is Shell China's business strategy, and how does it connect to the current global emphasis on decarbonisation and energy transition?
Tai: Within Shell, we have our "Powering Progress" strategy, which we just refreshed last year. We aim to reach net-zero carbon emissions by 2050. Then just coming closer to where I'm working on in terms of the mobility business, we have more than 1,700 retail stations and more than 2,000 electric vehicle (EV) charging points in China today. We are investing and picking up the pace in the EV sector.
Let me just give you a snapshot; the EV charging points that we installed over the last six months is more than the total number of what we installed in the last three years in China. China's EV market is also the largest and the fastest growing in the world. We believe we can contribute quite a bit there.
On our path of energy transition, our existing portfolio of assets will continue to be there to provide the clean-energy solution to existing customers. While doing that, we're also investing in renewables and energy solutions such as hydrogen and nature-based solutions in China. We are also exploring opportunities to bring in our carbon-capture and -storage technology to China.
The second aspect of our strategy is also to venture into new territories. Take our mobility business as an example, we're looking for revenue growth beyond the fuel business. So we're looking for ways to diversify our retail portfolio. Customers at our retail stations can refuel gasoline, charge their electric vehicles, or even stop by the convenience store to grab a cup of coffee.
What are your top three priorities in the next 12 months?
Tai: If I look at the near term, one of my priorities is the talent pipeline management. I have to ensure that we continue to attract talent and to manage smooth talent transitions, especially for the talents who are willing to work beyond the corporate head office, Beijing, and Shanghai.
My second priority, apart from keeping the existing shop running, is to look at new business development opportunities, and EV will be a big one. I think for us it's thinking about how we balance risk and value because it's a new business. Sometimes, the challenge is the tendency to be too risk-averse and focusing only on the uncertainty. But I think as the CFO, I need to help the company see that we can look at opportunities from the lens of value, at the future potential, and then understand how these would fit in our overall strategy.
The third component is wearing my hat as one of the country leadership team members. One of my missions is to make sure that everyone in the finance community subscribes to our new strategy and knows the role they can play in this particular process, and finally to operationalise the plan as well.
The pandemic is still ongoing, and there may be other surprises and headwinds coming your way this year. What does CFO leadership look like in such an environment?
Tai: To me the key is to be able to think strategically because, in an uncertain world, we tend to be overwhelmed by a lot of burning issues. A leader needs to be able to navigate through the complexity, be able to see the big picture, and identify the key challenges and priorities for the organisation. To me that's number one.
For those of us who are finance leaders, you will always need to put on the lens of value versus risk and be able to strike a balance. For example, when you look at a new investment, you can come up with a hundred different risks, but you can't always mitigate the risk to zero. Every business decision carries some risks, and at some point in time you'll need to take a view and then really manage the change.
Thirdly, as a leader, I need to be resilient. We will run into setbacks, and we run into issues. I think the key is the ability to be able to rebound to your positive attitude and move forward.
How do these play out in your day-to-day work?
Tai: On any given day, colleagues may approach me with various challenges and priorities.
For me, the key is to understand the extent to which this would actually impact our business bottom line, how significant are these issues compared to others that I have on my plate, and to what extent will they impact short-term versus long-term targets. All these issues sometimes seem to be quite urgent.
But if you always put yourself in firefighting mode, you get too bogged down with short-term problems — which can make you quite happy because you helped to address the problem — but it also means that you lose an opportunity to really empower your team to make their own decisions.
On resilience, we are in a cyclical business, and that means despite all the best effort by yourself and the team, you'll sometimes still see the market headwind impact your business bottom line.
A finance leader needs to be able to really see things through and to maintain the optimism because, when people get too pessimistic, short-term headwinds could also impact the long term. As a leader, you need to be able to continue to communicate that optimism and motivate your team so that people can turn the page and move forward.
— To comment on this article or to suggest an idea for another article, contact Alexis See Tho at Alexis.SeeTho@aicpa-cima.com.