The investment group sets a tough climate plan for Big Oil

LONDON, Sept. 15 (Reuters) – Investors managing more than $ 10 trillion on Wednesday unveiled an ambitious plan for energy companies looking to tackle climate change, including sharp cuts in greenhouse gas emissions greenhouse and reducing oil and gas production.

The unprecedented initiative, dubbed the net zero standard for oil and gas, details 10 standards needed to help money managers compare companies ’strategies and understand whether they are aligned with United Nations-supported efforts to reduce global carbon emissions to zero by 2050.

Oil and gas companies such as BP (BP.L) and Royal Dutch Shell (RDSa.L) have published goals and strategies aimed at combating climate change, but the huge variation in scope, definitions and ambition makes the analysis and comparison are extremely difficult for investors. .

At the same time, pressure has increased on portfolio managers and banks to ensure their investments match the 2015 Paris agreements to limit 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, there is growing concern that too many plans are scarce and unlikely to provide material aid by reducing absolute emissions at the rate needed to limit global warming.

“We need to have a level playing field now in terms of disclosure because it is not possible to compare and contrast across the industry,” said Adam Matthews, who is head of investment responsible for the Church of England Pensions Board and who preside over the process of the investment company develop the new initiative.

Other investors supporting the plan are Amundi (AMUN.PA), Europe’s largest asset manager, along with British legal and general investment management, HSBC Global Asset Management (HSBA.L) and the Caisse des Depots based in France, among others.

Since the fossil fuel industry is responsible for most of the world’s emissions, the investment group said it will introduce a minimum set of standards to ensure that energy companies’ plans are “credible.”

NET ZERO OBJECTIVES

Among these is the requirement to achieve net zero carbon emissions by 2050, achieving emission reduction targets along the way, while aligning capital spending and production plans with the zero net goal.

The rules also require commitments to independently disclose and verify strategies.

Shell, the Italian company Eni (ENI.MI) and Norwegian Equinor (EQNR.OL) have set targets to become net emissions in 2050, which means that all emissions they produce will be offset by technologies carbon capture or other solutions, such as reforestation.

Other companies, including BP and TotalEnergies (TTEF.PA), aim to reduce emissions from part of their operations to zero by 2025.

The investment group behind the new plan recognizes that liquidating oil and gas production “can be a very legitimate strategy,” Matthews said.

While it has not set a deadline for companies to meet the standards, investors are willing to vote against transition plans and the appointment of certain directors if they feel business boards are not doing enough, Matthews said. .

The new standard will be piloted by leading energy companies such as BP, Shell, Eni, Repsol (REP.MC) and TotalEnergies before a wider adoption by the sector, said the investment group.

Shell said in a statement that it was pleased to participate in the pilot and that “establishing a standard approach that would allow investors to fairly assess the progress of companies would be a valuable development.”

This group said its plan had been developed by the Group of Institutional Investors on Climate Change with the support of the Transition Pathway Initiative and in consultation with Climate Action 100+, non-governmental organizations with specific experience in the sector, as well as own oil and gas companies. .

(This story corrects the investor in paragraph 7)

Reports by Ron Bousso and Simon Jessop; edited by David Goodman

Our standards: the principles of trust of Thomson Reuters.