Shell layoffs: What to know about Shell’s latest clean energy layoffs

The energy industry may not seem like a fast-paced place, but it has seen a tremendous amount of innovation in recent years. Shell (NYSE:SHEL) is among companies investing heavily in clean energy initiatives as the market moves toward these solutions for the long term. However, there are headlines today regarding Shell’s layoffs in its green energy division, suggesting that the company may be moving away from its offshore wind business.

Shell is reportedly planning to cut jobs in this segment as the company and its competitors battle rising costs in the renewable energy space. These trends appear to be common and sector-specific. As a result, Shell appears to be taking a more strategic approach to how it will invest in such initiatives in the future.

Let’s take a closer look at what was announced and what it means for investors.

Shell layoffs send SHEL shares tumbling

Layoff announcements are not always good news for stocks. Seeking efficiency is one thing, and that seems to be the main impetus behind this move. Shell intends to cut approximately $3 billion of structural spending from its books by the end of 2025.

However, in this case, if Shell completely moves away from its clean energy initiatives, the company will become what it once was – a fossil fuel player and nothing more. Many investors seem to like the company’s ESG efforts. And while for some investors environmental, social and governance requirements are no longer what they once were or are not as important, for many they are certainly important.

With the development of artificial intelligence (artificial intelligence) and the emergence of other energy-intensive technologies, we will need much more energy in the coming decades. Shell’s ability to power both the fossil fuel and increasingly electrified parts of the economy is now in doubt. Of course, having clearly defined areas of strategic focus is generally a good thing, and that’s how management is making this announcement.

So far, it is unclear exactly how many jobs will be lost and whether it will be a complete departure from this space or not. But Shell’s future appears to be different than many investors might have thought a year or two ago after this news.

As of the date of publication, Chris MacDonald did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s Editorial Guidelines.