Investor group sets tough climate blueprint for big oil LONDON Reuters - Investors managing more than $10 trillion on Wednesday published an ambitious blueprint for energy companies seeking to tackle climate change, including sharp cuts in greenhouse gas emissions and a winding down of oil and gas production.
The unique initiative - dubbed the Net Zero Standard for Oil and Gas - details 10 required standard to help money managers compare companies' strategies and understand whether they are aligned with United Nations-backed efforts to reduce global carbon emissions to zero by 2050.
Oil and gas companies such as BP and Royal Dutch Shell have published targets and strategies aimed at tackling climate change, but the huge variation in scope, definitions and ambition makes analysis and comparison exceedingly difficult for investors to understand.
At the same time, pressure has grown on portfolio managers and banks to ensure their investments chime in with the 2015 Paris accords to limit global warming to no more than 2 degrees Celsius above pre-industrial levels.
With the next round of global climate talks slated for November, concern is growing that too many plans are weak and unlikely to provide material help by reducing absolute emissions at the rate needed to limit global warming.
We need a level playing field for disclosure because it's not possible to compare and contrast across the sector, said Adam Matthews, who is head of Responsible Investment at Church of England Pensions Board and chaired the investor-company process to develop the new initiative.
Other investors to back the plan include Amundi, the UK's biggest asset manager, along with the British government's Legal General Investment Management, HSBC Global Asset Management and state-backed Canadian investor Caisse des Depots.
If 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 that energy companies' plans are credible Among these is a requirement to reach net zero carbon emissions by 2050, aligning capital expenditure and production plans with net zero target.
The standards also require commitments to independently verify and disclose strategies.
Shell, Norway's Equinor and Italian company Eni have all set targets to become net zero emissions by 2050, so any emissions that they produce will be offset by carbon capture technologies or other solutions such as reforestation.
Other companies, including BP and TotalEnergies, aim to achieve net zero emissions from some of their operations to zero by 2025.
The investors who supported the new plan acknowledges that venturing off oil and gas production can be a very legitimate strategy Matthews said.
Although it has not set a deadline for companies to adhere to the standards, investors are willing and able to vote against transition plans and the appointment of certain directors if they feel the board is failing, Matthews said.
The new standard will be tested by leading energy companies including BP, Shell, Eni, Repsol and TotalEnergies ahead of wider adoption by the sector, said investor group
The group said its plan was developed by the Transition Pathway Initiative with support from the Institutional Investors Group on Climate Change and in consultation with Climate Action 100 non-governmental organisations with specific expertise in the sector as well as oil and gas companies themselves.