Norway’s oil fund sides with climate activists against ExxonMobil and Chevron

The world’s biggest sovereign wealth fund will side with climate activists against ExxonMobil and Chevron in an attempt to force changes on emissions policy after the investor came under pressure for supporting European oil and gas companies.

Norway’s $1.4tn oil fund will back shareholder proposals at Exxon’s and Chevron’s annual meetings next Wednesday for the US oil and gas majors to introduce targets for cutting greenhouse gas emissions from the use of its products.

That stands in contrast to the fund’s refusal to back similar proposals — designed to ensure the world limits warming to under 2C to meet the Paris climate agreement — at European majors such as BP, Shell, and TotalEnergies, the French group whose annual meeting is on Friday.

Carine Smith Ihenacho, the fund’s chief corporate governance officer, told the Financial Times there was a difference between how European and US oil majors viewed so-called Scope 3 emission targets, which occur when their products are burnt or consumed.

“Exxon don’t really believe in the value of setting Scope 3 targets. We think the company should do so. Chevron, we don’t think they are ambitious enough in their transition plans . . . Both BP and Shell have good Scope 3 targets, they have good transition plans,” she said.

Norway’s oil fund is one of the most influential investors, owning on average 1.5 per cent of every company globally.

But its drive to take a lead on environmental, social and governance (ESG) investing has put it on a collision course with some of the world’s biggest companies as well as drawing criticism and cries of hypocrisy from environmental pressure groups.

Mark van Baal, founder of Follow This, the prominent activist group behind the shareholder proposals at the oil majors, said he welcomed the oil fund’s support on Exxon and Chevron but was “surprised” it failed to do the same with BP, Shell and Total.

“The fund have a huge responsibility. This voting jeopardises their credibility as stewards of the global economy. Basically, they are saying to Shell, BP and Total: you don’t have to reduce your emissions this decade. We expect them to correct this oversight next year,” he added.

Ihenacho said the issue was not “black and white” and that one group was “hopeless” and the other “great”. But she stressed that European oil majors were ahead on the issue.

Van Baal said BP and Shell had made “empty promises” for 2050 as European companies took “baby steps” on climate change. “In a field of laggards, it’s very easy to be the leader,” he added.

The Norwegian fund has voted against some of its biggest shareholdings this year including Apple and LVMH over executive pay, and JPMorgan and Goldman Sachs for combining the chief executive and chair roles.

It has also started filing its own shareholder resolutions on climate change at US companies.

But the fund, whose inflows come from Norway’s petroleum revenues, has faced accusations of hypocrisy for telling energy companies what to do when its home country earns record sums from oil and gas.

Ihenacho retorted that climate risk was financial risk for the fund. “Our job in the fund is to create value for future generations but in a responsible way.

“We don’t have a view when it comes to Norwegian policy in any way. When you look at how you can create long-term value from a financial perspective, it makes sense for the fund to have companies that can live in a net zero society.”

Exxon and Chevron both urged shareholders to refuse to support Follow This’s proposal and said oil and gas companies would play an important role in the energy transition. “We believe setting Scope 3 targets can have significant unintended consequences for society,” Exxon added.

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