By Ron Bousso and Simon Jessop
LONDON (Reuters) – Investors with more than $ 10 trillion on Wednesday released an ambitious plan for energy companies seeking to tackle climate change, including drastic cuts in greenhouse gas emissions and a slowdown in the economy. oil and gas production.
The unprecedented initiative – dubbed Net Zero Standard for Oil and Gas – details 10 standards required to help fund managers compare companies’ strategies and understand whether they are aligned with United Nations-backed efforts to reduce emissions global carbon emissions to net zero by 2050.
Oil and gas companies such as BP and Royal Dutch Shell have published goals and strategies to tackle climate change, but the huge variation in scope, definitions and ambition makes analysis and comparison extremely difficult. for investors.
At the same time, pressure has grown on portfolio managers and banks to ensure their investments match the 2015 Paris accords aimed at limiting global warming to no more than 2 degrees Celsius above pre-industrial levels.
With the next round of global climate talks to take place in November, concern grows that too many plans are unclear and unlikely to provide material help by reducing absolute emissions at the pace needed to limit global warming. .
“We now need to have a level playing field when it comes to disclosure because it is not possible to compare and contrast across the industry,” said Adam Matthews, who is responsible for responsible investment at the Board. Church of England pensions and chaired the investor-company process to develop the new initiative.
Other investors supporting the plan include Amundi, Europe’s largest asset manager, as well as UK Legal & General Investment Management, HSBC Global Asset Management and Canadian state-backed investor Caisse des Deposits, among others.
Since the fossil fuel industry is responsible for the lion’s share of global emissions, the investor group said it was introducing a minimum set of standards to ensure energy companies’ plans are “credible.”
NET ZERO OBJECTIVES
Among these is the requirement to achieve net carbon emissions by 2050, meet emission reduction targets along the way while aligning capital spending and production plans with the goal of net zero.
The standards also require commitments to independently disclose and verify strategies.
Shell, Italian company Eni and Norwegian company Equinor have all set a goal of becoming net zero emissions by 2050, which means that any emissions they produce will be offset by carbon capture or carbon capture technologies. other solutions, such as reforestation.
Other companies, including BP and TotalEnergies, aim to reduce emissions from part of their operations to net zero by 2025.
The investor group behind the new plan recognizes that cutting oil and gas production “can be a very legitimate strategy,” Matthews said.
Although he has not set a deadline for companies to adhere to the standards, investors are ready to vote against transition plans and the appointment of certain directors if they believe boards of directors are not. are not doing enough, Matthews said.
The new standard will be piloted by major energy companies, including BP, Shell, Eni, Repsol and TotalEnergies, before wider adoption by the industry, the investor group said.
This group said its plan was developed by the Institutional Investors Group on Climate Change with support from the Transition Pathway Initiative and in consultation with Climate Action 100+, non-governmental organizations with specific expertise in the sector as well as oil and gas companies themselves. .
For a factbox on Big Oil’s climate goals, click
(Reporting by Ron Bousso and Simon Jessop; Editing by David Goodman)